Corey & Jones Corp. is a well established firm with a long term history of moderate but positive performance. The firm produces high precision valves and has a very strong reputation with...
Corey & Jones Corp. is a well established firm with a long term history of moderate but positive performance. The firm produces high precision valves and has a very strong reputation with its customers, who incorporate the valves into their products. Notably their regional marketing has been very solid and reflects both their quality and their well developed marketing and sales relationships. Very importantly, repeat customers dominate the firm’s sales. However, the firm is
also in a highly competitive regional market, where competition is fierce, and annual sales have stabilized at a relatively flat $5 million per year.
The Firm recognizes its need to expand and grow sales in order to further develop and sustain its business. They realize that to accomplish this they must expand their customer base beyond the current regional market. They also believe they have sufficient production capacity to support a 50% sales increase – before any need to add new equipment. You have been asked to review the firm, assess their plan, and provide recommendations for an effective strategy to support the expansion.
According to the brief description of Corey & Jones Corp, the company seems to be doing well in its current situation and environment. Despite existing in a fiercely competitive market, the company continues to generate a significant amount of revenue. The company has also established a loyal client base within the region and this attests to their customer retention capability.
Expansion into new markets presents growth opportunities but will also expose the company to risks associated with new regions. The company should consider addressing the competition in their current market prior to engaging new markets. This is because competitors aware of such a move would take advantage of the momentary weakness when the company is setting up shop in the new market. Corey & Jones Corp will need to strengthen their operations in their current market and this would work by protecting their market share and providing the company ample time to focus on their expansion program. Corey & Jones Corp should also consider targeting ignored customer segments within the industry that may exist in their current market. This can be achieved by introducing complementary products or services that would attract new customer segments while retaining the old clientele.
To support the expansion strategy, the company will need to not only budget for the new market but also factor in the nature of the customers in the new target market. The company should be flexible enough in order to handle emerging issues with the customers in the new market. It is thus advisable to start up small in the new market given the company has an estimated extra production capacity of 50%. Growth in the new market will determine when to ramp up the operations to full capacity.