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    Megahertz Communications: Case Discussion

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    Jainish Porwal
    Megahertz Communications saw opportunities for growth in developing foreign markets like the Middle East, Africa, and Eastern Europe that had potential for media and broadcasting expansion. However, as a small firm expanding internationally, Megahertz found it difficult to raise the working capital required to finance its export activities. Banks were hesitant to lend to the company due to risks of delayed payments. Ultimately, Megahertz solved its financing problem by selling the company to a larger Canadian firm, though other options may have included forming joint ventures with local businesses in target countries.

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    Megahertz Communications: Case Discussion

    Uploaded by

    Jainish Porwal
    94 views2 pages
    Megahertz Communications saw opportunities for growth in developing foreign markets like the Middle East, Africa, and Eastern Europe that had potential for media and broadcasting expansion. However, as a small firm expanding internationally, Megahertz found it difficult to raise the working capital required to finance its export activities. Banks were hesitant to lend to the company due to risks of delayed payments. Ultimately, Megahertz solved its financing problem by selling the company to a larger Canadian firm, though other options may have included forming joint ventures with local businesses in target countries.

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    Megahertz Communications @04163610

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    Megahertz Communications saw opportunities for growth in developing foreign markets like the Middle East, Africa, and Eastern Europe that had potential for media and broadcasting expansion. However, as a small firm expanding internationally, Megahertz found it difficult to raise the working capital required to finance its export activities. Banks were hesitant to lend to the company due to risks of delayed payments. Ultimately, Megahertz solved its financing problem by selling the company to a larger Canadian firm, though other options may have included forming joint ventures with local businesses in target countries.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    94 views2 pages

    Megahertz Communications: Case Discussion

    Uploaded by

    Jainish Porwal
    Megahertz Communications saw opportunities for growth in developing foreign markets like the Middle East, Africa, and Eastern Europe that had potential for media and broadcasting expansion. However, as a small firm expanding internationally, Megahertz found it difficult to raise the working capital required to finance its export activities. Banks were hesitant to lend to the company due to risks of delayed payments. Ultimately, Megahertz solved its financing problem by selling the company to a larger Canadian firm, though other options may have included forming joint ventures with local businesses in target countries.

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    Megahertz Communications

    Case Discussion:
    1. What was the motivation for Megahertz’s shift toward a strategy of
    export-led growth? Why do you think the opportunities for growth might
    be greater in foreign markets? Do you think that developing countries are
    likely to be a major market opportunity for Megahertz? Why?
     Countries such as the Middle East, Africa, and Eastern Europe had long-
    term media and broadcasting potential; therefore, Megahertz saw this as
    an opportunity to profitably expand its business in these regions.
     Companies can gain a competitive advantage over competitors in foreign
    markets who do not provide a good service, and thus create an
    opportunity to grow in these markets by providing better than the
    competitors or something that they lack.
     Yes, Megahertz has a chance to grow in developing countries because
    communication is one of the most important aspects of a growing
    economy. Megahertz can make communication easier for these countries'
    broadcasting systems.

    2. Does Megahertz’s strategy for building exports make sense given the
    nature of the broadcast industry? Why?
     Megahertz was a huge success in the United Kingdom in its early years.
    As a result, Ashley Coles, the managing director, was inspired to expand
    the company's business to other developing countries.

    3. Why do you think Megahertz found it difficult to raise the working


    capital required to finance its international trade activities? What does the
    experience of Megahertz tell you about the problems facing small firms
    that wish to export?
    The bank gradually declined to lend money to Megahertz because there
    was a risk that the company would not be paid on time. The company
    lacked funds to purchase component parts, resulting in inconsistent cash
    flows.
    Small businesses that want to export, lack the necessary funds. Banks are
    hesitant to lend them money because they do not trust that their customers
    will pay on time, and thus the company will fail to repay the loan.

    Jainish Vijay Porwal @04163610 1


    4. Megahertz solved its financing problem by selling the company to
    AZCAR of Canada. What other solutions might the company have
    adopted?
    The company may have formed a joint venture with local businesses in
    those countries. This would allow local businesses to run their operations
    by being close to the customer, while Megahertz provided all of the
    necessary systems, engineers, and so on.

    Jainish Vijay Porwal @04163610 2

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