EXPANSION STRATEGYBy Joe Vanderstelt, Brendan Prost,

Alex Tallman, and Danielle Winterberger

Background

New Company – expand or no?

Currently operating within the United States

Currently possess a strong client base and connections within the United States

Poaching and security

Our Decision

Choose two new markets for Sanctuary to expand into, expanding domestically is an optional as well?

Choice one: The United States

Choice two: The United States

Our rationale…

Germany

Attractive Attributes of Germany:

World’s second largest market for software and IT services (U.S. having the largest)

Highly educated workforce

However, we decided against expanding to Germany because…

Source: Case Study Prompt

Germany

General Observations:

Labor unions have a strong foothold in Germany

Germany is a bad environment for restrictive covenants, putting our customer base and possibly confidential information at risk.

Can we afford the risks and limitations that come with hiring German labor?

Source:

"Economy Rankings." Doing Business. International Finance Corporation, 2010. Web. 15 Nov 2010. <http://doingbusiness.org/rankings>.

GermanySpecial Research Observations:

Ease of Doing Business: Germany: 2010- 21 2011-22 United States: 2010- 5 2011- 5

Starting a New Business: Germany: 2010- 84 2011-88 United States: 2010- 9 2011- 9

Germany is becoming progressively less conductive for market growth while the U.S. is maintaining its strong global positioning.

Are we willing to accept these harsh conditions?

Source:Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and Liberty,

2008. Web. 15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html>

United Kingdom

Why would the United Kingdom be a potential option?

More college graduates than Germany

Averages wages were also lower than United States and Germany

However, we did not choose to expand into the United Kingdom because…

Source:Case Study Prompt

United Kingdom

United Kingdom market for software: around $18 billion – 5.5% annual growth

United States market for software: nearly $90 billlion – 5.3% annual growth

Is an extra 0.2% annual growth rate worth sacrificing nearly $72 billion dollars in the market?

Source:Case Study Prompt

United Kingdom

In 2009, 66.1% of online fraud perpetrators were found to be operating in the United States of America, while only 10.5% are operating in the United Kingdom

In 2009, 88.4% of internet fraud complaints within the United States are the result of purchases that a person had not agreed to.

The PCI (payment card industry) Data Security Standard

required all companies that allowed credit card purchases to implement multiple systems in order to secure cardholder data.

Would it be reasonable to leave such a demanding market?Sources:“Internet Fraud, Scam and Crime Statistics – 2009.” Internet Crime Complaint Center. Federal Bureau of Investigation, 2009. Web. 08 November 2010.

< http://www.consumerfraudreporting.org/internet_scam_statistics.htm>“Consumer Fraud in the United States: The FTC Surveys.” Keith B. Anderson, Bureau of Economics. Federal Trade Commission: February 25, 2009. Web.

08 November 2010. <www.ftc.gov/bcp/workshops/fraudforum/docs/b.Day1Panel2.ppt>

Case Study Prompt

China

Why is China an attractive market?

Low Labor Costs .64 vs 21.97

High annual GDP growth 10.2% vs 3.2%

However, we did not choose China because…

Source:Case Study Prompt

China

Why not China?

General Observations:

Low amount of consumer technology Internet users per 1,000:

85.1 vs 630 Personal Computers per 1,000

40.9 vs 762.2

Source: Case Study Prompt

ChinaResearch Observations:

Lower “E-readiness” Rankings. 56/70 (4.3) vs. 5/70 (8.6)

Lower “Ease of Doing Business” Rankings. 79/183 vs. 5/183

Weakness of Chinese banks considering the dynamism of credit and the uncertainties over the amount of non-performing loans.

Sources:

Doing Business Home - World Bank Group. Web. 12 Nov. 2010.<http://www.doingbusiness.org/>.

"Country Insights | GlobalEDGE." GlobalEDGE - Your Source for Global Business Knowledge. Web. 12 Nov. 2010.<http://globaledge.msu.edu/countries/>.

India

India: Gross national income per capita: 2,930

United States: Gross national income per capita: 48,430

Can they afford us…?

Source:Case Study Prompt

India

India: Poaching is very hard to prevent or maintain. Investor protection: 44/183 Enforcing contracts: 182/183United States: Poaching is much more severely approached. Investor protection: 5/183 Enforcing contracts: 8/183

Do we want to risk losing our highly skilled talent?

Sources:Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and

Liberty, 2008. Web. 15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html>Case Study Prompt

India

Ease of doing business: United States: 5/183 India: 134/183

Starting a business: United States: 9/183 India: 165/183

Global competitiveness: United States: 2/133 India: 49/133Source:Reynolds, Morgan. "Labor Unions." The Concise Encyclopedia of Economics. Library of Economics and Liberty, 2008. Web.

15 Nov 2010. <http://www.econlib.org/library/Enc/LaborUnions.html>

United States

Creating Efficiency – Dr. Robert Wiseman

“What seemed to us to be a simple sales process was actually long, complicated, and very dependent on relationships with very senior level people at the banks” – Smalley

We possess a current brand name that we’re trying to grow, and starting from scratch again would not be to our current advantage

In the future, an international expansion could be to our advantage