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MEGAHERTZ

COMMUNICATION

SUMMARY
Established in 1982, UK based Megahertz Communications
Britain Leading independent broadcasting system builders
Providing turnkey solution to emerging broadcast media
entities

Export strategy aimed at emerging markets such as Africa,


Middle East and Eastern Europe

PROBLEMS
Pre-shipment financing major problem due to high risk

Bank concerned about reliability of new markets


Lending companies charged significantly higher interest rates
Currency fluctuations reduced value of payments received

WHAT WAS THE MOTIVATION FOR MEGAHERTZS 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

The EU Market especially Western Europe is already matured


and also in EU the market already well served by Large
Companies

On the other hand, the Middle East, Africa and Eastern


Europe are growth market with significant long term potential

DOES MEGAHERTZS STRATEGY FOR BUILDING


EXPORTS MAKE SENSE GIVEN THE NATURE OF
THE BROADCAST INDUSTRY? WHY?

Yes it does make sense, Megahertz strategy was simple. The


company aimed to provide a turnkey solution to emerging
broadcast in Africa, the Middle East and Eastern Europe

Their gain success in these market because the company


offered to custom design, manufacture, install and test
broadcasting system. In a region where there was a lack of
broadcast engineers. These service is proven to be important
than a nature of the broadcast industry at that time.

WHY DO YOU THINK MEGAHERTZ FOUND IT DIFFICULT TO RAISE THE


WORKING CAPITAL REQUIRED TO FINANCE ITS INTERNATIONAL ACTIVITIES?
WHAT DOES THE EXPERIENCE OF MEGAHERTZ TELL YOU ABOUT THE
PROBLEM FACING SMALL FIRM WISH TO EXPORT?

Megahertz found that preshipment financing was a major problem. The


company found that bank are more cautious about making capital loans
especially to the company that deals with the customer from Africa or
Eastern Europe. Even though Megahertz already show the letter of credit
the bank still perceived that transaction is to risky.

This problem illustrated the small firm who doing export especially in the
area that bank consider it risky. But in tradeoff usually those area have
good potential of growth

MEGAHERTZ SOLVED ITS FINANCING PROBLEM BY


SELLING COMPANY TO AZCAR OF CANADA. WHAT OTHER
SOLUTIONS MIGHT THE COMPANY HAVE ADOPTED

Megahertz could have considered export financing schemes


supported by the UK and EU and taking on additional
investors in the company

They could use counter-trade example is Switch trading


which involves third party