Megahertz Communications

1. What was the motivation for Megahertz’s shift toward 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? ➢ Since EU is already matured and served by large established companies. They saw that there was a need in other part of the world (Africa, Middle East and Eastern Europe). And there was money to be made in foreign markets. The opportunities are big since they were able to be a turnkey company. Megahertz has a great chance to do well in developing countries because there is always a need for broadcasting companies; in order for the nation to develop they need of a strong way of means of communication and that’s the need of a nation which is still growing.

2. Does Megahertz’s strategy for building exports make sense given the nature of the broadcast industry? Why? ➢ Yes, the broadcast industry was booming in the United Kingdom. This signalled Megahertz to looking into foreign markets especially the developing nation since UK is already ahead in terms of economy.

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 banks did not trust that Megahertz’s clients would be able to pay on time. Yes, small firms face the fact that they cannot raise capital on their own and that banks simply do not trust them because their customers might not pay them. If this happen there is no way the company can pay them on time.

4. Megahertz solved its financing problem by selling the company to AZCAR of Canada. What other solutions might the company have