Globalization Case Study – University Board Games Goes Global
Bob Moog has a child's imagination coupled with killer business instincts. When the board-games company he created in 1985 sought through global expansion 2 years later, Moog faced the usual two options: export the product or manufacture it overseas for local distribution. Moog chose the latter. “we decided for a number of reasons to manufacture our board game, '20 questions,' in Holland for distribution throughout Europe,” said Moog, President of University games Corp. Of Burlingame, CA. International sales make up 8 percent of University Games revenue. Moog predicts that international sales will rise to 35 percent in the next 3 years because of new overseas ventures. This year, the company expanded into Australia. Unlike the European ventures, however, Moog decided that it was more economical to import its products into Australia from the US manufacturing facility. “Our anticipated initial sales in Australia just did not warrant a manufacturing operation there at this juncture,” Moog said. “If sales pick up down the line, we may then examine local manufacturing.” Moog's dual strategy is not unique. One of the toughest questions a company confronts when pondering an international sales strategy is: to export or not to export? While exporting is often the least risky method of selling overseas, it frequently involves significant transportation, logistics, and tax-related costs that may make it uneconomical when compared with foreign manufacturing. On the other hand, foreign manufacturing, while potentially more competitive way of entering an overseas market has its own bugaboos. Political instability, fluctuating market conditions, and the huge capital costs to set up overseas manufacturing operation are daunting challenges. Determining the best way to go often involves solving a perplexing conundrum. With exporting, a company must evaluate the various modes of transportation that would be involved...
Please join StudyMode to read the full document