David Yaseen American Public University System March 03, 2019 Abstract Foreign capital and…
David Yaseen
American Public University System
March 03, 2019
Abstract
Foreign capital and investment is important for a business to expand in other markets of the world. The objective of this paper is to present the details regarding the operation and the entry strategy of DynCorp International which is one of the reputed aviation service providers in the world. This company is deciding to enter the markets of Bosnia, Bolivia and Somalia. Different details and information have been furnished in the analysis of the paper.
1. Examine the countries where your company does business according to where they rank on the Hofstede cultural dimensions. Think of some examples of how a U.S. manager would need to modify his or her behavior when communicating with associates from one or more of these foreign countries.
There are many countries with which DynCorp International does business. These include Bolivia, Somalia, Angola, Haiti, Kosovo and many more. Among these countries, Bolivia, Bosnia, and Somalia is the target country of the company. These countries are also members of the World Bank and IMF as well. Although Somalia is more active than the other two countries, they are no less involved in the operation of the World Bank and the IMF. Apart from that Bolivia is also associated with the World trade organisation as well. All the countries receive monetary assistance from the side of the institutions and hence abide by the rules and the regulations (Upson, Sanchez & Smith, 2017). A manager from the US needs to modify his behaviour while talking to officials of one these countries. Communication between the officials needs to be professional and polite.
2. Does your company operate in any countries that are considered very politically or economically risky?
Yes, DynCorp International operates in countries which are risky to operate. For example, Somalia has a lot of political turmoil inside the country. The country has not been able to perform in terms of economy in the last few years which have also reflected in the median income and the job growth of the country as well. Low job grown and decreasing median income has resulted in protest and unrest from the side of the people of the country. Apart from that, Bolivia is also moderately risky to operate as people of the country have a history to protest against the president of the country (Tulung, 2017). These protests can create a problem for the business and hence makes the operation of the company risky.
3. Does your company primarily operate in civil law or common law countries? What are some of the implications of this?
All three countries where DynCorp International is working are mainly following common law. Therefore, none of the countries have laws and regulations codified or written in the constitution. Apart from that, judicial decisions are binding in nature and hence different from the common law countries. One of the biggest advantages of common law countries is that nothing is prohibited if it is not against the interest of the nation as a whole. This gives flexibility to the company in terms of improvisation and operation (Klingebiel & Joseph, 2016). Another implication of the fact that DynCorp International operating in common law countries is that government laws have no out of the line influence on the operation of the company.
4. Has your company purchased any insurance from the U.S. Overseas Private Investment Corporation (OPIC)?
Yes, DynCorp International has purchased insurance from OPIC in order to secure the operation in the emerging countries. OPIC allows companies to have a strong foothold in the emerging economies of the world. OPIC also provides matching security to the investors which also ensure a healthy inflow of investment in the country where DynCorp International operates (Ahi, Baronchelli, Kuivalainen & Piantoni, 2017). One of the biggest advantages of the OPIC is that it adheres to the laws and the regulations of human rights and hence pushes the clients towards a healthy operation as well.
5. What are some key intellectual property protections, if any, that your company possesses? When do these protections (e.g., patents) expire? How does your company intend to recoup lost revenues due to any patent or other intellectual property protection expirations?
There are a number of intellectual property protections by DynCorp International which increases the value of the goods and the services of the country. It holds the patent for the transportation of cargo within the selected countries. Apart from that, cargo operation and freight corridor management is also another area where the company has its intellectual property protected. That means no other company in these countries can claim the goods and the services until the patents expire (Williams & Vrabie, 2018). Most of the patents of the company expire in 5-7 years and the company is trying to use competitive pricing in order to increase the revenue so that lost revenues due to the patent can be recovered from the market.
6. Find the Corruption Perceptions Index (CPI) score for two countries where your selected company does business, one country with a relatively high score and one country with a relatively low score. Search for news stories about corporate financial scandals in these two countries. Prepare a short summary of news stories about financial scandals in these countries. Briefly describe what you perceive are the risks of corruption, such as paying bribes, that your selected company might face in these countries.
Somalia scores 10 out of 100 in the corruption perception index whereas Bosnia scores 38 which are comparatively better than that of Somalia. While different institutions of the government are using terrorist forces for a stronger foothold in the country (Ilhan-Nas, Okan, Tatoglu, Demirbag, & Glaister, 2018). According to reports the institutions in Somalia have been found to finance the terrorists in order to have greater control over the country. Although, the direct corruption in Bosnia is less it is still more than many other developed economies of the world. It not only harms the potential economic performance of the country but it also reduces the credibility of the economy as a likely destination for investment inflow.
7. Determine your company’s mode of entry into foreign markets. This should be based upon a serious analysis of your company’s risk-return tradeoff. In your opinion, has your company taken the right approach?
Risk-return trade-off determines the preferences of the company. Some of the companies are risk averse while some are risk takers and this influences the entry strategy of the companies in a new country. In this case, DynCorp International is a risk taker and wants to have a higher return in the long run even if it makes lower return or losses in the short run. This is also the reason for the choice of countries. Now given these preferences the country wants to undertake a Greenfield investment where the commitment and the involvement of the company are the most (Ang, Benischke & Doh, 2015). However, the investment and the risk associated with the Greenfield investment is high compared to the other means of entry. Given the aims of the company to earn a higher return in the future this entry method is perfect for DynCorp International.
8. Does your company have an exit strategy? Recall that exit strategies are to be determined before entry into the foreign market, rather than after entry.
Despite the risk-taking attitude of the company there are some of the exit strategies in place which can minimise the loss of the company. Given the fact that DynCorp International is introducing new technologies in the aviation industry of the respective countries, a merger or acquisition is the best exit strategy for the company (Fu, Lei, Wang & Yan, 2015). In the case of bankruptcy, the company will be compelled to associate itself with existing companies of the market. Liquidation is another exit strategy that the company is in place if the merger deal does not convince the management of the company. In this process, the company reduces the price points of each of the properties of the company so that it is sold in the market quickly.
9. Critically and objectively evaluate how ethical your company’s global operations are and determine if they are good corporate citizens (i.e., do they have a well thought-out corporate social responsibility program for the long term?).
DynCorp International is a good corporate citizen as it has ethical standards for the operation of the company. The company does not import labours and the workers from the source country and uses the local labours. In addition to that, the company also does not violate the rules and the regulations of the respective countries in which it operates. It also has incorporated corporate social responsibility as one of the important responsibility of the company in the countries as well. The company also have a plan to use a part of their profit to fund the education of the lower segment of the people of the country as well. Better education in the target countries would create more advanced labours in the market (Hollender, Zapkau & Schwens, 2017). This not only would help the company to produce a higher value but it can also allow the company to have an expanded customer base in the long run.
10. What is the corporate mission statement of your target company, assuming it has one? How well do the company’s actions adhere to its stated mission?
The mission of the company is to improve aviation support in the field of aviation in different parts of the world. The operations of the company are in line with the mission as it really focuses on different parts of the world. Its innovation and implementations are also in line with the mission statement of the company.
11. With respect to its strategy formulation, would you categorize your company as a shareholder model or a stakeholder orientation? Why?
As per the strategy formulation of the company, it is categorised as a stakeholder orientation model. One of the basic features of this model is that the focus of the management of the company remains on the well being and the interest of the stakeholders more than on the shareholders (Lee, Lee & Min, 2018). DynCorp International is not only providing services, but it also has the mission to influence the lives of the people as well. Therefore the business is oriented towards the interest of the stakeholders. In the initial years of operations in the selected economies, the company would not be able to generate returns for the shareholders as it would adhere to its mission statement.
12. Is the company a stateless corporation? If not, is the company on its way to becoming a stateless corporation?
DynCorp International is not a stateless corporation currently as its operation is mainly limited to the USA. A stateless corporation is a company that operates in different countries of the world. As per the mission of the company and the current activities to enter the new emerging markets, it can be said that the company is on its way of becoming a stateless corporation (Karakaya & Parayitam, 2018). The mission statement of the company also suggests that the company will also enter other types of economies in the future depending on the financial success of the company in the existing market.
13. What type of organizational structure is the company currently using?
Currently, the company is using a hierarchical structure for the operation of the company. In this structure, there are few low-level workers of the company who are supervised by an immediate manager of the company. Again these lower managers are groped and supervised by another mid-manager of the company. These mid-managers then report to the respective higher managers who work under the CEO, CFO, and CTO of the company. The company has been following this structure for a long time now and it does not have any intention to change it in the near future.
14. Do you think the company may benefit from a hybrid or matrix structure? Why or why not?
The company would be able to rip better benefits if it uses structures like a matrix as it categorises the managers and the employees based on the expertise. Surdu, Mellahi, Glaister & Nardella (2018) stated that different workers of the company are pooled as per their expertise under a manager. Apart from that, empirical studies have shown that matrix business structure has been a key influencer in the process of scaling up a business. DynCorp International has a clear focus on scaling up the business and enter the other markets of the world which can be easily realised by using the matrix organisational structure. Information inflow is a great fuel for the operation of DynCorp International. A matrix organisational structure helps in the rapid inflow of information into the organisation and hence it would be more helpful for the company.
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