Page 10 - CIMA May 18 - MCS Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

TASK 2 – INTERNATIONAL EXPANSION
Suggested solution

To: CFO
From: Financial Manager
Date: Today
Subject: International Expansion

The key issue is that further growth will be essentially coming from new markets for Menta.
Despite having many years’ experience of providing our services, and being dominant in Centralia
and neighbouring countries we have fairly limited experience of the international market.
Similarly we have no presence in Country X that would enable us to conduct meaningful surveys
of customer opinion.

The public transportation industry is now highly competitive and it is virtually guaranteed
therefore that the existing service provider(s) will have reacted to our venture, with additional
promotional marketing and potentially even price cuts to attempt to secure customer loyalty.
Being able to predict demand will therefore be more about winning custom from Country X’s
existing market players. The key challenge lies in both developing a strategy for winning
passengers from these existing players and in predicting the likely success of that strategy.

There are a number of different approaches that we might take to addressing this issue.

We could use research techniques or Big Data analysis to e.g. search social media for comments
on existing suppliers in the public transportation market. We should analyse these to identify both
positive and negative comments and specific comments on the services offered. Given this
knowledge, we may be able to identify services (e.g. city routes) that are well accepted in our
existing markets that might make them more or equally desirable to prospective customers in
Country X.

If we can establish the acceptability of our service mix and location of our depots in Country X
then we could conduct focus groups in Country X to gather more detailed information about how
customers perceive our brand, which is of course a key strength for MENTA in Centralia. It may be
necessary to modify existing service mixes, e.g. more emphasis on buses being available at
different times of the day rather than at the usual peak times in morning and evening rush hours.
This will depend on detailed research on the working patterns within the major cities in Country X,
understanding the demographics of the population, average commuting distance to work etc.

There is no suggestion that MENTA will have marketed this small presence aggressively enough
because it is likely to been uneconomic to have done so. It is very likely therefore that the local
manager will have tried to have built up the business up on the basis of his own efforts and the
small number of the staff at his disposal. We are aware of the threat of the high and increasing
marketing spend by our competitors and we will need to be sure that the local management are
supported in this context if we are serious about establishing a presence in Country X.

We can address this by a planned launch of our presence and a greater emphasis on testimonials
and feedback from our existing satisfied customers emphasising the key factors of “safe, reliable,

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