Megahertz Communications

Megahertz Communications

A strategic commitment is "a decision that has a long-term impact and is difficult to reverse, such as entering a foreign market on a large scale." (p. 399) Megahertz's strategic commitment was motivated by the long-term growth potential for media and broadcasting in the Middle East, Africa, and Eastern Europe. Their export strategy aimed to provide a turnkey solution to emerging broadcast and media entities, offering to custom design, manufacture, install, and test broadcasting systems. Megahertz also hoped to take advantage of the areas not being well served by other companies, and all three regions lacking adequate supply of local broadcast engineers.

Using location economies Megahertz hoped to enable them to have a differentiated product offering from their competitors, thus giving them sustainable competitive advantage in a global marketplace. Location economies are "cost advantages from performing a value creation activity at the optimal location for that activity." (p. 363) Megahertz International hoped to create a value chain by hiring salespeople with significant experience in these regions and opening a foreign sales office in Italy. Megahertz also had exhibitions at a number of conferences that focused on the targeted regions, as well as sending mailings and e-mail messages to local broadcasters.

Due to the marketplaces that Megahertz has been successful in, such as: Namibia, Oman, Romania, Russia, Nigeria, Poland, South Africa, Iceland, and Ethiopia, developing countries are likely to be a major market opportunity for Megahertz. In developing countries media plays a huge role. Education is the one thing that helps a country become successful. Carl Sagan, US astronomer, once said, "All of the books in the world contain no more information that is broadcast as video in a single large American city in a single year. Not all bits have equal value." In developing countries, it is important to have media, because the education system is lacking.

Their entry mode strategy was through exporting. Megahertz's strategy for building exports makes sense given the nature of the broadcast industry because it is an industry where differentiation is key. Megahertz is also a small company. Perhaps they did not have the pull for a joint venture, nor the finances for a acquisition. When they made their decision to export, they should have gone with an (EMC) export management company, which are specialists who would act as an exporting marketing department for Megahertz, because one big impediment to exporting is the simple lack of knowledge of the opportunities available. The advantages of going with an EMC include finding opportunities and avoid common pitfalls. Common pitfalls include; poor market analysis, poor understanding of competitive conditions in the foreign market, failure to customize the product to the needs of foreign customers, lack of an effective distribution program, poorly executed promotion in the foreign market, and problems securing financing. If Megahertz would have used an EMC, they may not have had to sell to AZCAR because they could have taken control of their problems securing financing.

Once the decision was made to export, Megahertz ran into problems finding ways to