For Wendy Lewis

Executive Summary

The SWOT analysis of ToolsCorp. reveals various strengths and opportunities of the company that can be leveraged on so as to maximize the value of the company for its various stakeholders. The company generally operates in an industry characterized by high gross margins due to the nature of the products that the company makes and sales. There is also limited competition within this industry due to the huge capital outlays required to get a business within this industry up and running. This therefore saves the company a lot of financial resources which can rather be put into more productive use. With the development of technology, the company can be able to leverage on the provision of 3D modelling services to its potential customers with unique fabrication and design needs for the various products the company makes. This will likely attract more customers as well as allow the company charge a premium for these services and hence further improve the bottom line position of the company. However, the huge operation costs and huge barriers to entry into new firms may impede the growth of the company especially with plans in the pipeline to make the company break into the global marketplace.

In line with the intended venture into the global market place, the company should consider China as its first global venture. This is because China offers immense profitability opportunities for the company due to its growing middle class company that drive up the demand for various consumer durable products that the company manufactures. Furthermore, China is a strategic manufacturing base for a company like ToolsCorp. due to the availability of cheap labor that will help the company reduce its high operation costs. However, even in all these, the business environment is heavily regulated by the Chinese government as far as investments by foreign companies within the geographical boundaries of the country is concerned.

As a matter of fact, the Chinese government has laid down regulations that protect its local industries from aggressive foreign competition from the foreign companies investing by expanding their business bases to China as the host country. The Chinese government requires that such foreign companies have at least 20% of their business stake owned by local Chinese companies or individuals. In this regard therefore, it follows that ToolsCorp. will have to acquire a majority stake in a local Chinese company engaged in the same business industry as ToolsCorp. Acquisition of a suitable target company will be the relatively best strategic move to venture into the global marketplace. This is because it will place the company in a good position to acclimatize itself and ramp up its exposure of the Chinese market.

Furthermore, the ToolsCorp should have to acquire a subsidiary company in China with physical stores spread in various parts throughout the vast countries. These physical stores shall be used as retail stores in which the company’s products can be displayed for sale. They shall also provide chance for the company’s potential customers to touch and test the various products and hence enhance their chance of buying these products. In addition to these physical retail store, ToolsCorp should adopt an online selling strategy in its China market. This online strategy will enable potential customers to make view the various products and make orders for the desired products. These orders shall then be processed and delivered to the customer’s location.

As culture is deeply embedded in China, ToolsCorp. will have to adapt its business in China to reflect the locals’ ways of life. This can be achieved through ensuring that the Chinese subsidiary has at least 98% of the entire workforce as local Chinese. Also by customizing the designs of some of the products such as lawn furniture to reflect the Chinese architecture and culture will boost uptake of the company’s products within China. Furthermore, to boost its position within China, the company should consider sponsoring corporate social responsibility activities such as supporting the local cultural festivals and building schools. These activities will boost the perception of the company among the locals as a company that identifies, reflects and champions their culture and hence improve the demand for the company’s products and profitability levels within the Chinese market.

In the future, plans are underway for ToolsCorp to expand to other countries in Asia as well. This is because Asia offers great growth potential for growth-oriented companies. Countries such as Japan and South Korea are ranked as developed countries implying that their populations have relatively high disposable incomes. These high incomes shall therefore boost uptake of the company’s products. However, this shall depend greatly on the market experience in China.