CRITICAL SUCCESS FACTOR: THE CASE OF CHOBE DESIGN FURNITURE COMPANY

CRITICAL SUCCESS FACTOR: THE CASE OF CHOBE DESIGN FURNITURE COMPANY

Abstract

Internationalization is a modern business operation strategy that has considerably transformed the corporate world. It is apparent that businesses that lack effective strategies of penetrating international market have little chances of succeeding in the present era of globalization. This means that Chobe Design Furniture’s decision of extending its activities to the international market is timely and strategic. However, penetrating the global market is challenging and demands informed decisions. Consequently, this report conducts a critical examination of both internal and external marketing strategies of Chobe Design and the critical success factors to inter into a foreign market. Furthermore, the report evaluates the most appropriate industrial market strategies for Chobe Design Furniture in order to propose effective recommendations for a successful venture.

 

CRITICAL SUCCESS FACTOR: THE CASE OF CHOBE DESIGN FURNITURE

Introduction

Critical success factor refers to the main input areas where an organisation should perform well in order to achieve its mission. These factors can change over time depending on the nature of the market and the consumers’ needs. Primarily, critical success factors include aspects such as product quality, employee attitude, manufacturing flexibility and brand awareness. According to Bullen and Rockart (1981), critical success factor regards to areas or attributes in which adequate results ensure that the individual or organization has a competitive advantage. This entails streamlining company’s procedures in order to realize its goals. A company should consider various factors when evaluating the idea of venturing the foreign market. Particularly, the company with the intention of entering foreign market should conduct an extensive market research and examination. Howell (2010), states that a significant preliminary step before assuming the procedure of international marketing includes examining business environment. Furthermore, the company should have an effective market entry plan. Designing a market plan can help Chobe Design identify the available opportunities and challenges that may arise because of the changed environment. Consequently, the business will be able to capitalize on the potential opportunities while checking threats. The company can utilize businesses tools such as SWOT, PEST and SMART in establishing knowledge of the business environment. Evaluation of both external and internal critical success factor is essential in empowering Chobe Design’s internationalization strategy.

 

EXTERNAL CRITICAL SUCCESS FACTORS

Various aspects affect external critical success factors. These include environmental elements such as economic health, the prevailing climate, technological advancement, political and social-cultural factors among others. Chobe Design must consider these factors because they will help the company attain adjusted objectives and address emerging challenges in the new market including attracting new customers due to value added services or obtaining financing for a new product line. The model below summarizes factors that are likely to affect Chobe Design in its internationalization endeavour.

Political/Legal factors

According to Howell (2010), political environment affects international business decisions considerably. Considering political environment is important especially when evaluating whether to invest in particular economy and developing market penetration strategies. This means Chobe Design must establish clear knowledge of all policies set by the South Africa government that are likely to affect their activities. This is because firm’s marketing strategy must fall within the specified regulations. Furthermore, the company should evaluation the possibility of adjustment of regulations in future because a change in the government’s regulations is likely to affect the organization strategy. Keegan & Sclegelmilch (2001) supports the significance of this practice by stating that enterprises engaging in foreign market should have knowledge of the significance of the control from national governments and its effects on business procedures.

 

Economic factors

Aspects such as the exchange rate of the target country may hinder a company that needs to enter a foreign market especially where the exchange rate is low (Ahlstrom & Bruton, 2010 p.134). This means that Chobe Design should be sensitive to the South Africa’s economic situation when setting the prices for their commodities. This is essential in ensuring that the company’s products are retailing at affordable prices. Furthermore, economic pressures can force the company to adjust its production level in order to survive in the market. Julian (2005) asserts that evaluating the economy of a country is essential because nations with poorly performing economies have consumers who have reduced incomes. Consequently, Chobe Design should consider the economy of its target country in order to quantify the feasibility of doing business in that particular area. This would inform the company on the likelihood of generating profit from its venture.

 

Social Acceptance

Social habits affect the decisions of the consumers substantially (HowelL, 2010 p. 47). Chobe Design should establish knowledge of consumption habits presented by the South Africans in order to examine the acceptability of their products. The company should trade in products or designs that conform to the consumers’ interests and tastes. Furthermore, enterprises must have knowledge of the culture of its target consumers in order to avoid clashing with the people’s beliefs. A strategic approach that can enable Chobe Design address these challenges include hiring local managers who understands the culture of the local people and the business environment.

 

Technology Factor

Technology has the potential of making the company have a competitive advantage that can enable it to conquer the international market. This is because technology may simplify and fasten production procedures while improving operation and service delivery procedures (Balocco, Perego & Perotti, 2010). Chobe Design should adopt modern technologies such as online marketing to ensure that their services are attractive to the consumers. Effective technologies can improve the company’s internal success factors making it outshine its competitors.

 

Environmental regulations

The society and governments are increasingly becoming sensitive towards the effect of business activities on the environment (Julian, 2005 p.34). Consequently, Chobe Design can hardly ignore environmental consequences associated with the introduction of its business in South Africa. Furthermore, the company must understand and observe all essential environmental regulations specified by the foreign country. Chobe Design should ensure that their operation procedures and products are eco-friendly. The company should also ensure that their products are harmless to enhance public safety. This will prevent resistance and improve the company’s public image.

 

INTERNAL CRITICAL SUCCESS FACTORS

Internal success factors empower strategic choices and provide businesses with the opportunity of attaining their goals. Chobe Design should consider these factors when establishing its gains that relates to marketing effort, managing internal barriers and planning production strategies. Essential internal factors include maintaining high standards and building healthy relationships with stakeholders.

 

Brand/Quality           

Brand or quality is an important factor to consider because only companies with strong brands are likely to succeed in the contemporary highly competitive international market (Ahlstrom & Bruton, 2010). Chobe Design should focus on quality and the capability of producing product variants that satisfies customers’ needs. Consequently, the company should consider the need of improving its processes to reduce cost while committing its resources to growing new products. Moreover, the company should ensure that customers are always provided with the products of the value that justifies the amount paid (Kleindl, 2007).

 

Innovation/Market Demand

Innovation is a calculative approach that can enable Chobe Design penetrate the South African market successfully. The company should set objectives that are attainable by accessing manageable position marketing mix to matches demand. The company should ensure that it has a wide range of products to cater for the customers’ diverse interests. Shortages are detrimental because they make the company lose potential customers, which affects company’s reputation substantially (Ahlstrom & Bruton, 2010 p. 78). Consequently, Chobe Design should remain innovation by creating new products that are unique.

 

Customer Service

According to Shavinina (2003), customer service is an important aspect that has the potential of defining the success of businesses in the international market. Chobe Design should establish effective strategies that are capable of satisfying customer needs by delivering services that are sensitive to consumers’ concerns. Furthermore, the company should ensure that it has experienced staff in order to deliver attractive customer services.

 

Communication

Successful execution of business procedures demands effective communication (Wigley, Moore & Birtwistle, 2005 p. 535). Chobe Design should utilize various communication tools to popularize its business. Selecting a uniform communication language is essential because different languages can confuse customers and damage the company’s identity. For example, all promotion messages should promote common logo and emphasize similar theme. Furthermore, the company should utilize the feedback strategy effectively. For example, it can utilize market feedback to examine if the targeted consumers are aware of the new product. This would provide the marketer with the opportunity of establishing whether the communication strategy was right or misleading the customers.

 

Effective marketing (channel relationship)

Calculative marketing and channel management is essential in order to avoid risks and failures. According to Wigley, Moore & Birtwistle (2005), a supplier can create revenue when he or she gains reseller’s attention. Chobe design should incorporate its new products into the reseller’s habit and workers should identify the significance of the introduced products that have complete potential of bringing success to the reseller. The company should utilize strategic procedures to establish high control of distribution channels.

 

Competitive Strategies

A competitor orientation is very important for an organisation because each firm must develop an awareness and understanding of its competitors. This should include identifying competitor’s strengths, weakness, and the authority of their marketing strategies. Chobe Design should have knowledge of competition forces within the South Africa’s market. Particularly, the company should identify the challenging competitors and the firm with the highest market command (Shavinina, 2003).

 

Recommendations

A successful venture demands Chobe Design be sensitive of the highlighted factors in order to develop a strategic market entry plan. Initially, the company should have the capability of embracing diverse culture.  It should establish regional offices in areas it opts to introduce its activities to understand attitude of local consumers and provide them with convenient services. The company should also establish partnerships with local companies in order to enhance their chances of success. This is because success is not attained by setting objectives to dominate the market, but it is realizable by understanding consumers and responding to their needs (Tang, Atkinson & Zou, 2012). Furthermore, Chobe design should conduct a market analysis to identify the most appropriate organization model for the South African market. Depending on the analysis findings, the company can adopt the centralized, decentralized or the hybrid system. The company should also examine its readiness to internationalization by identifying its weaknesses and the possibility of correcting them in order to assume maximum benefit from the company’s profile. Lastly, the company should be highly flexible because effective strategies for preparing the company to go international may demand restructuring of some operational and organizational procedures. For example, the company should be willing to modify its products to ensure that they are in line with the consumers’ values and tastes.

Conclusion

It is apparent that with high knowledge of the critical success factors, Chobe Design has high potential of venturing the foreign market successfully. The company should pay attention to each of the highlighted attribute in order to increase its chances of succeeding in the international market. Venturing the international market is challenging because of the diversity and competitions in this markets; however, companies that are able to establish advantage from critical success factors have high chances of outshining others. Consequently, Chobe Design should prioritize this strategy in order to establish an effective market plan that is capable of propelling the company into high performances. However, the company should understand that useful strategy is indispensible because opportunities are ever limited, but challenges are simply overwhelming.

 Reference List

Ahlstrom, D., & Bruton, G. D. 2010. International management: strategy and culture in the emerging world. Australia, South-Western Cengage Learning.

 

Balocco, R, Perego, A, & Perotti, S 2010. ‘B2b eMarketplaces: A classification framework to analyse business models and critical success factors’, Industrial Management & Data Systems, 110, 8, pp. 1117-1137, Business Source Complete, EBSCOhost, viewed 31 December 2012.

 

Bullen, C.V, & Rockart J. 1981. A primer on critical success factors. Cambridge, MA: MIT

 

HowelL, M. T. 2010. Critical success factors simplified: implementing the powerful drivers of dramatic business improvement. Boca Raton, CRC Press.

 

Julian, C. C. 2005. International joint venture performance in South East Asia. Cheltenham [u.a.], Elgar.

 

Keegan, W. J., & Schlegelmilch, B. B. 2001. Global marketing management: a European perspective. Harlow [u.a.], Pearson Education Limited.

 

Kleindl, B. 2007. International marketing. Mason, Ohio, Thomson Higher Education.

 

Shavinina, L. V. 2003. The international handbook on innovation. Oxford, Pergamon. http://www.sciencedirect.com/science/book/9780080441986.

 

Tang, L, Atkinson, B, & Zou, R 2012. ‘An entropy-based SWOT evaluation process of critical success factors for international market entry: a case study of a medium-sized consulting company’, Construction Management & Economics, 30, 10, pp. 821-834, Business Source Complete, EBSCOhost, viewed 31 December 2012.

 

Wigley, S, Moore, C, & Birtwistle, G 2005. ‘Product and brand: Critical success factors in the internationalisation of a fashion retailer’, International Journal Of Retail & Distribution Management, 33, 7, pp. 531-544, Business Source Complete, EBSCOhost, viewed 31 December 2012.