Market Entry Plan Essay

The Aluminum market in Europe does not ease up a sincere prospect to be expanded. Alcoa claimed that it allow shut down pat(p) the factory in Portovesme, Italy, and reduce the output of the factory in Spain. This is beca subroutine Alcoa and European commission have argued for the power supply contract for a spacious time. More over, the European debt crisis led to a depressed economy. Thus, Alcoa decided to turn its market out of Europe and then start to look for other marine markets. Although, Africa is unrivalled of the poorest continents of the world, in some countries, much(prenominal) as Mozambique, the economy has been increment steadily.From this prospective, we recommend Alcoa to open up the market in Mozambique, southern Africa. We conducted the interrogation establish on sources from on-line resources. Our proposal focuses on analyzing the operation of Alcoa and the prospect of a invigo treadd market. 2. About Alcoa Alcoa is the worlds some storied produc er of atomic number 13 and construct aluminum, and it is the crowinggest miner of bauxite and refiner of alumina. Alcoa has over 61,000 employees and over two hundred locations in 31 countries. Alcoa not only provides hard exclusively(a)oy extrusions, forgings, Alcoa wheels, further alike has its expertise in other light metals.The sales of Alcoa were $25 billion in 2011. 2. 1 draft History Aluminum ac come with of America (Alcoa Inc. ) has 120-years narration. During the 1920s, Alcoa monopolized aluminum production in North America and produced to a greater extent than 63 per centum of the world output. At the end of World fight I, Alcoa produced excessive capacity, especially for civilian uses. However, the war made Alcoa real numberize that it was real distinguished to improve the quality of product, and Alcoa posted more(prenominal) money in search and development. In 1925, Alcoa raiseed the front external market, Canada, and it held over half the rimary alu minum in the world. In 1958, Alcoa started the first major overseas mine-to-metal venture in Suriname. later the successful venture in Suriname, Alcoa decided to expand the offshore ventures. In 1960s, Alcoa true operations in Australia and brazil nut. At the same time, Alcoa drove the outline to focus on commercial real estate construction and fabricated products. The Easy-Open aluminum technology made Alcoa hold a large contri thoion of the canned beer market. In the 1970s, Alcoa continuously expanded the overseas market and utilise mathematic modeling to control the production.In the 1980s and the 1990s, Alcoa focused on producing non-aluminum products and was bear on about safety. From 2000 to present, Alcoa has made strategic mergers and acquisitions, such as Alumax, Reynolds. 2. 2 commercial wearprise Operation Alcoa Business scheme (ABS) is the core used to manage Alcoa wrinklees. here(predicate) are its three principles ?Make to Use The first principle is based on customers will and consume, such as single- cut production, on demand desolate free, at the lowest possible damage, made safely. ?Eliminate WasteThe imprimatur principle aims at exposing and solving problems and focuses on cost cutting and cost saving during all their manufacturing and business processes. ?The People Linchpin the System The third principle is concerned with creating on environment which satisfies people. Also, Alcoa tries to identify and solve problems, and necktie to their transition from make to inventory to make to use. 2. 3 harvest-feast Scope Alcoa produces various products, such as flat-rolled products, hard alloy extrusions, and forgings as well as Alcoa wheels, fastening systems, and precision.Here are some important products of Alcoa ?Aerospace Alcoa is the world leader in single-crystal technology for advanced castings that withstand the organic temperatures of clean-burning aero engines. ?Automotive Alcoa builds a better car, truck, trailer or ves sel. The reason for this is use more aluminum to reduce the overall weight of the vehicle, which significantly reduces nursery gas emissions. ?Building & Construction Alcoa has always offered unique advantages for designing the shape, carriage and sustainability of modern structures.These brand-new aluminum components can achieve green building standards. Alcoa also provides high-performance glass, which allows for efficient light control, lower energy consumption, corrosion-resistance and impedance from the harmful effects of UV rays. ?Packaging Aluminum packaging solutions relinquish freshness, convenience, and security for food, beverages and other products. For sample, the aluminum bottle offers premium, high-end packaging options. 2. 4 Targeted mart According to the statistics, Asia, North America and Western Europe are the pinnacle three aluminum consumption field of battles in the world.In Asian region, such as mainland China, Korea and India, these developing countr ies have an increasing demand for aluminum. However, the total cadence of aluminum consumed in America, Canada and Japan experienced a downward trend. At this point, Alcoas target market should pay more attention to China and India. Besides, although Africa is endowed with natural resources, aluminum resources have no commercially employ value. Therefore, all the producing raw materials are dependent on imports from hostile countries in South Africa. In other words, Africa is mainly producing primary and indorseary aluminum products.As a result, if Alcoa exports other forms of aluminum products to Africa, Alcoa will gain a Brobdingnagian profit. Figure 1 Target Market of Alcoa 2. 5 fortissimo and Weakness Alcoa is the worlds largest miner of bauxite and refiner of alumina. Also, it has a retentive history started in 1888 so the company is an expert in administration and producing. In addition, Alcoa is the leading producer of primary aluminum and fabricated aluminum all over the world. Alcoa has received many records and good will, such as light speed Best Corporate Citizens 2012Corporate Responsibility Magazine.What is more, advanced techniques and unremitting feat in innovation make its products and services play an important authorities agency in the aluminum market. However, Alcoa is faced with the problem of pollution. For example, Alcoas pollutions made the residents who lived half dozen kilometers away from the factories get sick. As a result, Alcoa was punished by the disposal in Australia. 3. New Oversea Market Mozambique Located in southeastern Africa, bordered by the Indian Ocean to the east, Mozambique is one of the poorest countries in the world.Mozambique is grand in rich and extensive natural resources, and its economy is based for the most part on agriculture. Today, the economy is growing very fast in Mozambique, and the genuine legal system makes Mozambique become a hope in this poor continent. We recommend Alcoa to enter thi s market, because of the prosperous development of Mozambique. 3. 1 Economy in Mozambique Mozambique is in the poorest region in the poorest continent of the world, Sub-Saharan Africa. Besides, it was considered as the second poorest earth, with a per capita GDP below the African average. 4 percent of the universe of Mozambique was below the poverty line in 2008. But, economic growth in Mozambique has been strong since the countrys civil war ended in 1992, and it has emerged as one of the fasted growing economies. Since 1996, economic growth has been stable the economic growth rate was around 6. 2 percent in 2009. The pretension rate has been around its lowest level in a decade. Also, the real income grew rapidly, and it tripled in the same decade. Moreover, the real income has grown by 14 percent in 2001 and 11 percent in 2002.However, Zimbabwe, a neighboring country, has declined 8 percent in 2001 and 6 percent in 2002. Currently, more foreign firms have invested in Mozambique, and these firms are mostly in the aluminum labor and mining industry. The foreign enterprises can enjoy tax privileges in Mozambique. In 2010, UK exported around 112 million pounds to Mozambique with imports at almost 78 million pounds. A British mining group has invested 1. 3 billion dollars in the country, which cover aluminum industry, tourism, and it leads to much foreign exchange.The large towns and cities have been promoted by the tempt of foreign enthronization however, the influence does not apply to the rural area in Mozambique. We can infer that the economy in Mozambique is the hope of this region, comparison to other country in Sub-Saharan Africa. 3. 2 Political System in Mozambique During the civil war, the politics and economy were disrupted. Since the end of the civil war, the political situation in Mozambique has been stable. The giving medication is determined to maintain national unity, and implements sequester and pragmatic politic policy.Mozambique held th e first democratic elections on October 1994, under outside(a) scrutiny. Although some limitation exists, for example, the electoral process was boycotted in municipal elections in 1998 this election system can help the electorate to express their will. Mozambique now has developed an elected democracy, which gives rise to a strong legal system. Moreover, a good legal system protects private property and provides incentive to people to invest and produce by both domestic and foreign investors. 3. 3 internationalistic RelationshipMozambique has very close relations with its formerly British-ruled neighbours in Africa, because these countries divided experience that fought against white rule. This led to Mozambique joining the Common riches in 1995. Mozambique also dispatched troops to contribute to the United Nations, helping them in peacekeeping mission affairs in Burundi, and participated in South African Development Community peacekeeping training and planning. 3. 4 Aluminum in dustry in Mozambique 3. 4. 1 Brief Introduction of the Market Alcoa is located in 31 countries all over the world. However, it is only located in two countries in Africa Morocco and Guinea.To start up a new business in Africa is a brand new challenge for Alcoa. Mozambique is growing rapidly in new years. The Aluminum industry has a very significant impact on this countrys economy. In order to attract foreign investment and capital, Mozambiques government takes special policy. The country is not the producer of minerals, but the overseer and factor of mining activities. This is good news and a great chance for Alcoa to enter the aluminum market in Mozambique. The development of Mozambiques economy urges big companies entry like Alcoa to provide cash and advanced technique.The labor wage is low there, which is also a benefit for Alcoa. Aluminum is a lynchpin element in Mozambiques economic growth. The export of aluminum accounts for most 60% of the countrys total export amount. The strongest rival is Mozal, which is the largest company among the country. However, the potential market is still huge. The construction of buildings and machines for production are all relative with aluminum. The fast growth of economy in Mozambique will begin the demand of aluminum. The domestic market can not satisfy the demand and will turn to foreign companies or investment.It provides a great probability for Alcoa to gain a sizable market share in this new market. 3. 4. 2 Operation in Mozambique ?Geography Mozambique lies beside the Indian Ocean in southern Africa, and this convenient location is good for delivering goods or trading with others through marine transportation. Besides, it is relatively easier to generate electricity here by victorious advantage of sea water at a coastal position. ? inborn Resources Mozambique is well endowed with natural resources, such as coal, titanium, natural gas, hydropower, tantalum, and graphite. However, the countrys natural reso urces are not fully exploited.Mineral resources such as gold, gemstones and bauxite have not been mined yet. Mozambiques natural wealth can satisfy Alcoas demand for natural resources. ? conveyance of title under(a) great efforts, Mozambiques transportation cornerstone has been improved in recent years. The Africa Infrastructure Country Diagnostic (AICD) aimed at improving current infrastructure conditions in Africa. The first phase of the AICD focused on 24 countries that together account for 85 percent of the gross domestic product, population, and infrastructure avail flow in Sub-Saharan Africa.Mozambique was included in these 24 countries. Transportation plays an essential role in a companys business plan to purchase raw materials or deliveries of finished goods to customers. ?Local governing Policy Since its first trade policy review in 2001, Mozambique has taken actions to liberalize its trade regime. Its tariff was reduced in 2002 and again in 2007, with maximum rates l owered from 30% to 20%. Therefore, it is a piece of good news for foreign companies to like a shotly invest in this market. ? men Mozambique is a developing country.Compared to developed countries, Mozambiques labor cost is relatively low. As a result, it helps Alcoa reduce costs and increase revenue. Take the minimum wage for a 19-year old worker or an apprentice for an example in Mozambique, the wage is 80. 5 US dollars per month, Australia is 1597. 1 US dollars per month, Brazil is 299. 6 US dollars per month, Jamaica is 215. 0 US per month, and China is 182. 5 US dollars per month. ?Economic Condition The economy was boosted in many aspects, such as mining, financial service and construction, which helped to push GDP real growth rate to 7. 2 percent in 2011.Moreover, the consistence of high foreign direct investment (FDI) inflows, along with strong agricultural growth and infrastructure investment will drive growth to 7. 5 percent and 7. 9 percent in 2012 and 2013. Good econom ic conditions indicate Alcoa can gain huge potential profits. Figure 2 Real GDP growth of South Africa ?Advanced Technology Alcoa is the worlds third largest producer of aluminum so it implies that Alcoa has advanced technology and equipment. It well known that Mozambique has abundant resources, but aluminum firms in Mozambique can only produce limited types of aluminum products out of technology problems.Under this situation, with its advanced technology, Alcoa can produce aluminum products which are extremely demanded by Mozambiques market. 3. 5 Competitors Mozal Mozal, an aluminum smelter is belong to BHP Billiton, is located in the Maputo province of southern Mozambique. Mozal was the first major project for BHP Billiton in Mozambique and it was Mozambiques largest private investment in the past 30 years. BHP Billiton is a leading global resources company and one of the worlds largest producers of major commodities.Mozal is one of the largest smelters in Mozambique the output o f Mozal is more than 500,000 tones of aluminum per year. In the two construction phases, the project of Mozal contributed more than one hundred sixty million to the local economy. Especially the employment of Mozambican, which make good use of the local labor and stimulate the locals contractors and suppliers profit. The local government and the Mozals operations teams have created a great achievement by cooperation. Harmonious industrial relations were created during the construction period no long time were lost because of any industrial action.The local government and the Mozal have benefited a lot from needs-based infrastructure, social and community development projects. Its a harming of win-win cooperation. 4. Evaluation Alcoas expansion in to Mozambique is a bold act as Alcoa does not have much experience of open up a new business in Africa. However, as one of the most famous companies in aluminum industry, it can provide adequate funds and mature management to support th e operation in Mozambique. This countrys development relies greatly on foreign companies investment.Government in Mozambique will provide preferential policy to Alcoa. Besides, the low labor cost in Mozambique helps Alcoa to save operation cost. Although Mozal, the strongest competitor, has taken the largest project in Mozambique, the potential for Alcoa to enter this market is strong. Alcoa has built up a good reputation, with a long history and rich experience in aluminum industry, and this cannot be competed by Mozal. We recommend that Alcoa should seize this opportunity to enter the aluminum market in Mozambique with its advanced technology and experienced management.