Reference no: EM131520627

Question: S is a company which has traded very successfully within its domestic market for many years. It has achieved high levels of profitability in providing ground and soil sampling and testing services for a large range of clients in both the public and private sectors. This sampling is mainly undertaken to assess the suitability of former industrial land for building and public use. In recent years, S has experienced strong competition and its Managing Director ( L) has recognised that it is becoming more difficult to obtain new business from within its domestic market. Increasingly, it has been found necessary to offer more than the original basic ground and soil sampling and testing services in order to retain the loyalty of existing clients. This has necessitated a whole range of other services being offered such as testing for the presence of polluted substances in buildings, chemical analysis of water sources, geological surveys and providing for unfit land to be cleaned prior to becoming available for public use. While these other services have been relatively successful, L is increasingly concerned about the prospects for sustaining the company's profitability because of increasing competition and saturation of the domestic market. With this in mind, L has asked you, as Management Accountant, to advise on the rationale for an overseas expansion strategy and the issues to be considered in its implementation.