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Unit 3: EXIM Strategies

help to protect the company’s profit margins. By 2002, however, it was clear that the Notes
company’s growth was too slow to achieve these goals anytime soon. As an alternative
solution, in 2003, Coles agreed to sell Megahertz Communications to AZCAR of Canada.
AZCAR acquired 80% of Megahertz broadcast systems to gain access to the expanding ED
market and Megahertz’s contacts in the Middle East. For Megahertz, the acquisition gave
the company additional working capital that enabled it to take full advantage of export
opportunities.
Questions:
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?

2. Does Megahertz’s strategy for building exports make sense given the nature of the
broadcast industry? Why?
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?
4. Megahertz solved its financing problem by selling the company to AZCAR of Canada.
What other solutions might the company have adopted?

Source: Charles WL Hill and Arun Kumar Jain, International Business, 6th Edition, 2009, Tata McGraw
Hill Publishing Company Ltd., Delhi, p.676-678.

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