Disadvantages Associated With Starting Their Own Essay

Disadvantages Associated With Starting Their Own Essay

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There are many disadvantages associated with starting their own branch in India. First is that this option is the most expensive. They would have to pay for all the marketing, equipment, building, manufacturing, production, and staffing that they would need to operate. Mercan Systems would not be able to share any costs with another company. The financial investment needed would depend on the number of regions they choose to operate in (two, four, or nationally) and if they use a direct salesforce or dealers, but it would still be significantly higher than any other alternative. Starting another branch in an international market that they do not already have a location in, is a large change and project to take on. It requires an immense amount of effort, time, planning, costs, resources, employees, funds, and research to successfully start a new branch there. This would also bring high risk since Mercan Systems has no experience in the Indian market and would not have a joint company to gain knowledge, relations, or contacts with in the market. It may not be practical to enter a completely new market alone, without any help from existing companies who are already established there.
If any of the previous alternatives for entering the market are chosen, one other consideration to take into account is the pricing strategy. If Mercan Systems chooses to enter the market, they can either use a price skimming or a penetration pricing approach. When using price skimming and selling through dealer channels, the basic module would be priced to the dealers at Rs. 5,500 and to consumers at Rs. 5,900. This would give Mercan Systems an estimated Rs. 650 unit contribution. If a direct salesforce is used under the price skimming method, the pric...

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...75,000. In addition to this goal, Mercan Systems should also strive to increase their profit margin by 15% by the end of their second year with a consistent growth of 25% every year for the next three years after (see Appendix C for Profit Projection). Mercan Systems should also strive to increase their brand awareness and recognition by 15% during their first year of the joint venture. This can be measured through external research and more specifically, focus groups. These focus groups would consist of random samples from the population. Participants would be asked questions regarding identifiability of Mercan Systems’ products as well as their organization as a whole. Based on the research gathered, they can measure and make sure that at least 15% of the random samples are aware of their company and water purification products after their first year of operations.

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