The German company “Solawerk AG” is the designer and manufacturer of sophisticated solar powered electronic products mainly focussed on the telecommunications industry.
One of its successful products is a miniature mobile phone charger that is solar powered. This product has been in production for several years and the main customer is a leading German telecommunication group.
While the product is selling well the high production costs in Germany mean that the profit margin is small and the firm’s shareholders have requested that management should investigate ways in which the production costs can be reduced.
The management is also very interested in further expansion to the South Asian Market.
Please Select Country of your choice
- Discuss and explain the various modes of entry in Selected country market which can be used as a strategy for further expansion. For at least three of the most attractive modes analyse benefits and possible problems. However, the products are dedicated for the both German market, and for Host country markets.
- For the most suitable country design a strategy for Human Resource planning, performance management, training & development and for remuneration. Analyse separately three different groups of employees:
- a) Home Country Nationals
- b) Host Country Nationals
- c) Neither Home nor Host Country nationals
Assume That your company will provide equivalent of AUS$ 500,000 per month at current exchange rate. The estimated values of sales growth are given in the Table 1.
Table 1 Estimated values of sales growth
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| 10% | 20% | 30% | 20% | 10% |
The Initial Investment is 10 000 000 Total costs are assumed to 50 % of revenue in the first year and 50% of revenue for subsequent years. Assume that inflation rate is 5% higher as it is Australia. Calculate NPV
