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Expansion Strategy

Expansion Strategy. By Joe Vanderstelt, Brendan Prost, Alex Tallman, and Danielle Winterberger. Background. New Company – expand or no? Currently operating within the United States Currently possess a strong client base and connections within the United States Poaching and security.

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Expansion Strategy

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  1. Expansion Strategy By Joe Vanderstelt, Brendan Prost, Alex Tallman, and Danielle Winterberger

  2. Background • New Company – expand or no? • Currently operating within the United States • Currently possess a strong client base and connections within the United States • Poaching and security

  3. Our Decision Choose two new markets for Sanctuary to expand into, expanding domestically is an optional as well? Choice one: The United States Choice two: The United States Our rationale…

  4. Germany Attractive Attributes of Germany: • World’s second largest market for software and IT services (U.S. having the largest) • Highly educated workforce However, we decided against expanding to Germany because… Source: Case Study Prompt

  5. Germany General Observations: • Labor unions have a strong foothold in Germany • Germany is a bad environment for restrictive covenants, putting our customer base and possibly confidential information at risk. Can we afford the risks and limitations that come with hiring German labor? Source: "Economy Rankings." Doing Business. International Finance Corporation, 2010. Web. 15 Nov 2010. <http://doingbusiness.org/rankings>.

  6. Germany Special Research Observations: Ease of Doing Business: • Germany: 2010- 21 2011-22 • United States: 2010- 5 2011- 5 Starting a New Business: • Germany: 2010- 84 2011-88 • United States: 2010- 9 2011- 9 Germany is becoming progressively less conductive for market growth while the U.S. is maintaining its strong global positioning. Are we willing to accept these harsh conditions? Source: Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and Liberty, 2008. Web. 15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html>

  7. United Kingdom Why would the United Kingdom be a potential option? • More college graduates than Germany • Averages wages were also lower than United States and Germany However, we did not choose to expand into the United Kingdom because… Source: Case Study Prompt

  8. United Kingdom • United Kingdom market for software: around $18 billion – 5.5% annual growth • United States market for software: nearly $90 billlion – 5.3% annual growth Is an extra 0.2% annual growth rate worth sacrificing nearly $72 billion dollars in the market? Source: Case Study Prompt

  9. United Kingdom • In 2009, 66.1% of online fraud perpetrators were found to be operating in the United States of America, while only 10.5% are operating in the United Kingdom • In 2009, 88.4% of internet fraud complaints within the United States are the result of purchases that a person had not agreed to. • The PCI (payment card industry) Data Security Standard required all companies that allowed credit card purchases to implement multiple systems in order to secure cardholder data. Would it be reasonable to leave such a demanding market? Sources: “Internet Fraud, Scam and Crime Statistics – 2009.” Internet Crime Complaint Center. Federal Bureau of Investigation, 2009. Web. 08 November 2010. < http://www.consumerfraudreporting.org/internet_scam_statistics.htm> “Consumer Fraud in the United States: The FTC Surveys.” Keith B. Anderson, Bureau of Economics. Federal Trade Commission: February 25, 2009. Web. 08 November 2010. <www.ftc.gov/bcp/workshops/fraudforum/docs/b.Day1Panel2.ppt> Case Study Prompt

  10. China Why is China an attractive market? Low Labor Costs • .64 vs 21.97 High annual GDP growth • 10.2% vs 3.2% However, we did not choose China because… Source: Case Study Prompt

  11. China Why not China? General Observations: Low amount of consumer technology • Internet users per 1,000: • 85.1 vs 630 • Personal Computers per 1,000 • 40.9 vs 762.2 Source: Case Study Prompt

  12. China Research Observations: • Lower “E-readiness” Rankings. 56/70 (4.3) vs. 5/70 (8.6) • Lower “Ease of Doing Business” Rankings. 79/183 vs. 5/183 • Weakness of Chinese banks considering the dynamism of credit and the uncertainties over the amount of non-performing loans. Sources: Doing Business Home - World Bank Group. Web. 12 Nov. 2010.<http://www.doingbusiness.org/>. "Country Insights | GlobalEDGE." GlobalEDGE - Your Source for Global Business Knowledge. Web. 12 Nov. 2010.<http://globaledge.msu.edu/countries/>.

  13. India India: • Gross national income per capita: 2,930 United States: • Gross national income per capita: 48,430 Can they afford us…? Source: Case Study Prompt

  14. India India: • Poaching is very hard to prevent or maintain. • Investor protection: 44/183 • Enforcing contracts: 182/183 United States: • Poaching is much more severely approached. • Investor protection: 5/183 • Enforcing contracts: 8/183 • Do we want to risk losing our highly skilled talent? Sources: Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and Liberty, 2008. Web. 15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html> Case Study Prompt

  15. India Ease of doing business: • United States: 5/183 • India: 134/183 Starting a business: • United States: 9/183 • India: 165/183 Global competitiveness: • United States: 2/133 • India: 49/133 Source: Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and Liberty, 2008. Web. 15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html>

  16. United States • Creating Efficiency – Dr. Robert Wiseman • “What seemed to us to be a simple sales process was actually long, complicated, and very dependent on relationships with very senior level people at the banks” – Smalley • We possess a current brand name that we’re trying to grow, and starting from scratch again would not be to our current advantage • In the future, an international expansion could be to our advantage

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