Marketing, Sales, HR and Management

Rick Politician
87345
5/12/2007
I BUS 300
Chapter 13 Homework
a.
This decision depends on whether the Canadian firm plans to sell their new medical products in other areas besides Europe.

If Europe were their only market for these medical products, the firm would be best served by entering into a strategic alliance with European pharmaceutical who could manufacture and sell the product.  This would allow the Canadian firm to free themselves of half the high future capital costs of setting up a manufacturing plant and a marketing department for their new product.

Also, the risk of selling in Europe would be cut dramatically.  Not only would they have to risk only half the money, the Canadian firm would have the benefit of knowledge of the European pharmaceutical.  They would have a better knowledge of how to set up a manufacturing plant in Europe, know the local laws and requirements, have an established network of distribution, sales and customer service and have an established reputation in Europe.

If Europe was not the Canadian firm’s only market, they should manufacture the products at home and not set up a subsidiary in Europe.  By manufacturing all of the medical supplies in one place, the firm will experience economies of scale allowing them to cut down on costs and have full control over the manufacturing of their products, securing quality standards.  Having manufacturing in Canada would allow the firm to sell their products in the large Canadian and U.S. markets as well.

Having a marketing subsidiary in Europe is probably not a good idea.  There are established foreign sales agents who know their territories.  As long the agents are taught about the medical products and not comprised by carrying similar products, they would be the best bet.

 

b.
By entering into the Japanese market at the time Merrill Lynch did, they gave themselves the chance to have the first mover advantage.  This would mean they could establish brand equity with potential Japanese inventions, hop on the experience curve before rivals and establish ways to increase switching costs.  Switching costs are one way to induce clients not to change investment firms.  Since Merrill Lynch hired 2,000 employees and bought 50% of Yamaichi’s assets right away, they let investors in Japan know that they were there to stay.  This entrenched position could also ward off competitors.

There are also many costs and risks associated with Merrill Lynch’s venture.  First, Merrill Lynch will have to deal with all the Pioneering costs.  They will have to learn about the market, make mistakes and continue to push on.  Also with such a large commitment of resources, if the endeavor went awry, Merrill Lynch could lose unfathomable amounts of money and establish a negative reputation in Japan that they may never be able to bounce back from.