Expanding into Europe Your company wants to expand internationally into Europe, specifically Germany. Your company manufactures machine tool products. While these are high-quality machine tools, periodic maintenance is required and installation requires properly trained technicians.
A recent article about your products in an industry magazine has generated a lot of interest in your product, especially in Germany. You have had to turn down quite substantial orders because you do not have the wherewithal to ship to Europe yet. Each machine costs approximately $500,000 to build and the markup is 100% in the US but at present time and despite the interest that came with the article’s publication your company knows that it will have stiff price and product competition in Germany. You have been tasked by the company to determine the optimal way to sell product to the German market. You have narrowed the options down two three.
For each of the three options outline the advantages and disadvantages. You will need to do some investigation on your own as to the business climate and requirements for doing business in Germany.
a) Sell through a manufacturer’s representative in Europe who requires a 40% commission.
b) Set up a sales and service office in Germany with and staff it with. German nationals.
c) Ship product directly to Germany and handle all service, etc. from the US e.g. send technicians and sales people to Germany for periods of time.
d) Which option would you choose? If you need more information, note what information you would like to have.
Part 2 (15 Points):
Assume you have just set up operations in another country. Download How_to_Build_a_Multinational_Insurance_Program.pdf from blackboard.
Develop a checklist for the insurance manager as what kinds of answers he/she must get to make sure that your organization is properly insured in another country.
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