Authored by Monica Dennis

Blundstone Footwear

The Blundstone Footwear Company can lack a strong partner to execute its plans and goals in the new manufacturing facility in Kenya. For it to grow, it requires partners to ensure that set tasks are done on a timely basis in the Kenyan manufacturing plant . Operational problems, which will be faced in Kenya, can greatly affect supply chain management. The company can experience the timing of entry challenge since other footwear manufacturing companies are operating in the region. The Kenyan government has measures in place to protect local infant industries from other foreign giant companies . Thus, Blundstone will face fierce competition from other footwear manufacturing companies operating in Kenya. The Kenyan management can fail to offer a clear direction to employees on the implementation of strategies . As a result, there will be poor communication within the company that will lead to the inability to execute set strategies. Financial Risks The Kenyan currency exchange rate is always exposed to market fluctuations worldwide. As a result, the valuation of Blundstone Footwear Companys asset will be a challenge since the actual value will be impossible to determine . Foreign firms are taxed 37.5% of the revenue generated as compared to Kenyan companies, which are taxed 30%. Therefore, the taxation of foreign businesses in the country is very high and may hinder the Blundstone Company manufacturing process. In Kenya, inflation rates can rise to 11%, presenting a major challenge to the company. Since Blundstone Footwear has branches that are fully established in other nations, they may end up transferring high prices to the Kenyan subsidiary. Hence, it can be a major risk in the expansion program. Country Risks The Kenyan government has normally set intervention and protection policies to protect local infant industries. The Blundstone Footwear Company can face entry problems in the Kenyan market due to measures in place that ensure that foreign companies do not overrule local ones. Some of the barriers to trade include high taxation, import and export licenses, import quotas, and tariffs among others. The government may make a decision not to favor foreign firms such as Blundstone Footwear. In Kenya, there are administrative delays and corruption, which will negatively affect the company. In case it requires documents on time, the business can have to pay registration officers a small fee, which indicates a level of corruption in Kenya. Kenya has the problem of the lack of the relevant legal framework that will ensure proper safeguarding of intellectual property rights for many companies. The footwear production design may be copied by other rival firms in the same sector, being a major challenge . The Kenyan parliament has also set unfavorable laws that mainly affect foreign firms, such as the Blundstone Footwear Company . Some of them require foreign manufacturers to surrender 30% of their business to the Kenyans for ownership or they may risk a fine of 5 million in the local currency. The Kenyan market is faced with numerous economic failures and the mismanagement of local firms. The company will therefore have to deal with such conditions as a high wage increase among others. Finally, Kenyan elections are exposed to political and tribal differences. Frequent post-election violence, such as the one in 2007 and 2013, has resulted in social and political instability. Cross-Cultural Risks Kenya is composed of more than 42 tribes, which have different cultures. Therefore, the company will be faced with cultural differences, to which it has never been exposed. Decision-making will also be a challenge to the organization in Kenya since most decisions will be made at the head office in Australia. Finally, ethical practices may not be adhered to since some of the employees hired may lack integrity, and justice ethics may be a major hindrance to companys operations. Strategies to Mitigate Disadvantages Commercial Risks The company should have strong partners who understand the Kenyan manufacturing sector for the expansion purpose. The organization should also have strategic think tanks, which will help to solve its operational problems. To prevent the timing of entry and competitive intensity issues, Blundstone Footwear should establish the firm in an export processing zone, which offers better protection from rival firms regarding competition. Finally, realistic strategies should be set, and highly trained and experienced employees are to be hired to manage the execution of the set strategies in Kenya. Financial Risks For proper currency risk management, the company should always use the U.S. dollar, which is a stable currency in the global market and does not fluctuate like other currencies. Therefore, the facility will be able to conduct its manufacturing process without any hindrance. As a result of operating and using a strong currency in the region, firms' asset valuation will be accurate and correct . High foreign taxation can be solved by establishing the company in the export processing zone, where there are tax exemptions for the first ten years. Every branch should account for its funds to avoid transfer pricing. Therefore, branch accounting should be encouraged. Country Risks To mitigate country disadvantages, the organization should hire Kenyans in the manufacturing process since the Kenyan government requires foreign firms to offer employment to the locals. In the end, the company will be able to cooperate with the Kenyan government in the best manner, which will embrace and protect international industries. Moreover, Blundstone Footwear should seek intellectual property rights from the Kenyan government . Finally, to solve instability issues, the company should take political violence insurance cover to ensure any damage is fully insured. It should also locate the firm in a region that is not a hot spot of political violence in Kenya. Cross-Cultural Risks The company should embrace all different cultures available in Kenya and ensure that it hires people from different communities. Moreover, the firm should maintain a high level of ethical practices, such as integrity and honesty when operating in this country. Despite few challenges in Kenya, the company should expand its manufacturing plant to this region. About author Monica is the author at She always dreamed of working in this position, working with texts and new information. After all, her credo in life is to develop daily in different fields and be an interesting person. She is fluent in three languages and holds a Masters Degree in Philology and Translator, and is also trying to master new fields in order to be knowledgeable in everything.

Blundstone Footwear 19 Bytes
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