Sample on Global Business Strategy
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7106 Downloads I Published: 20 Jan ,2017
In modern era, Global Business Strategy is an important factor which determine the success or failure of business at internal level. Global business strategies can be defined as a action plan which help organization to achieve their mission, vision, values and objectives. Every business whether profit making or a non profit making needs to develop some global strategies so that they can operate in effective manner and achieve their goals. This report is based on Mark and Spencer which is a UK based multinational retailer. Further the company is specialized in sale of clothing, home products and luxury food products and services. The impact of micro and macro environment on performance of the company has been highlighted in this report. In addition to this, benefits, opportunities and challenges of globalisation has been explained in this report.
Every business whether profit making or non profit making requires to analyse its macro and micro environment in order to identify factors which can affects its operations. In order to understand the micro environment SWOT analysis is termed as the best tool. It explains the strength weakness opportunities and threat of a businesses (Ulrich, 2013). Further by doing this analysis organisation becomes effective in determining their future plans and strategies. Identification of opportunities helps them to understand their future chances of growth and development. On the other hand, by analyses of threat company can determine what are the factor which can cause barrier to growth and success of organization. After these factors are identified companies can easily frame action plan in order to overcome the same.
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On the other hand, macro environment of company can be analysed with the help of PESTEL analysis. When businesses operates at international level they have to take care of some macro environmental factors which can affects the operations of business (Dunning, 2014). Further every company has there own kind of factors. The PESTEL analysis model highlights the political, economical, social technological, environment and legal factors and conditions prevailing in the country (Regmi and Gehlhar, 2005). Further all these have directly or indirectly affects the operation's of company. It consists of various sub factors such as government rules and regulations, tax policy, economic condition of country, rate of technological advancements, per capital income, standard of living, purchasing power of people in country etc.
Thus, it can be stated as both the techniques are very useful in order to analysed the impact of macro and micro environmental factors on operations of an organization (Barrett, Cooper and Jamal, 2005).
Mark & Spencer is a British retail company which operates with more than 800 stores scattered in more than 30 countries of the world. Further it is largest clothing retailer in UK which has also established itself as a food retailer (Marks & Spencer, 2015). It has been observed that most of the store of the brand sell products and services related to both food as well as clothing. Since 2000 the brand has started to diversify in some other areas such as technology, furniture and home wares.
When businesses operates at international level it is required by them to take care of the global business environment. International business means doing business in more than one country of the world. In such cases organizations are required not only to frame different strategies but are also required to take care of micro and macro environmental factor of the country (Burt and Sparks, 2005). Mark & Spencer is big retail brand which operates in more than 30 countries of the world. Further it is not easy to manage activities at such a big level and compile with political, economic, social and technological condition of a country. It is required by the brand to understand these conditions as if they are unable to cope with the same (Regmi and Gehlhar, 2005). Changes in economic condition of global business environment will have direct impact on sales and profitability of the company. Other than this, if there is any kind of technological advancement then the brand will be able to manufacture and deliver products in more cost effective manner. Further it will increase the revenue of the brand. If the political condition in some countries changes then also sales will be affected (Browne and et. al., 2005). Thus, it can be stated that any change in global business environment will directly affect the sales of Mark & Spencer.
Globalization can be defined as a process in which businesses eliminates the geographical barrier and starts operating at international level. The benefits of globalization are mentioned below as:
Increase brand awareness- Globalization will help Mark & Spencer to increase its brand awareness by expanding their operation in other countries. More and more customer will become aware about the brand which will directly increase its sales (Hare, 2005).
Increase in mart share- When companies operates in domestic market there market share is limited as there are limited number of customer available. Globalization will help Mark & Spencer to increase its market share by exploring some new markets and customers (Jones, Comfort and Hillier, 2005).
Increase in growth and profitability- When organizations operates in domestic level their opportunities for growth and development is limited (Whitehouse, 2006). Thus, globalization will help Mark & Spencer to create more customer and explore new markets which directly increases the growth and development opportunities for businesses.
Competitive advantage- Globalization helps organizations to gain competitive advantage as operating in global market creates their brand image. Further it also encourage customer to prefer products and services of Mark and Spencer over its competitor.
Availability of financial resources- The key challenge which is faced by organizations while expanding their operation to international market is making arrangement regarding financial resources (Burt and Sparks, 2005). Huge capital will be required by Mark & Spencer in order to operate in more than one country.
Understanding the cultural environment- One of the biggest challenge for Mark & Spencer is to understand the cultural environment of country in which it is planning to operate. Most of the companies are not able to understand the culture and it directly results in failure of international venture.
In modern era, companies which operates at domestic level are finding it very difficult to increase their opportunities for growth and profitability (Van Yperen, 2006). Thus, in such situation the best remedy to overcome this problem is globalization. It helps businesses to increase their market share, sales and profitability. Many big brands to the world have understood the importance of globalization and have established their operations at international level. Mark & Spencer is a well-known brand in apparel industry and it has also diversified its range of products and services in food industry (Jones, Comfort and Hillier, 2005). At present it is operating in more than 30 countries of the world. International expansion has helped the brand to explore some new markets and customers. Therefore, it can be stated that globalization is beneficial for companies.
On the other hand, it has been observed that along with increase in growth opportunities it also becomes difficult for companies to manage their operation in different countries. The social, political economical and culture background differs from country to country (Pretious and Love, 2006). Thus, they are required to analyze the same in order to understand the specific need and demand of customer of different market. If these factors are not managed properly then it may also result in heavy loss of human and financial resources. Therefore, it can be said that globalization is necessary for companies but to only certain extent so that operations can be effectively managed and brand image can be maintained easily in global market (Benefits and Risks of Financial Globalization, 2004).
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Different organization operating in international market uses different structure according to their size and nature of products and services. Some of the structure are mentioned below as:
Functional structure- In such kind of structure multinational companies uses corporate function as a base of their structure. Further the main functional units of which companies lays emphasis are customer service, manufacturing, designing and human resources (Bakewell, Mitchell and Rothwell, 2006). The structure is in centralized form and all major operations are based in home country. Other than this, other international market are responsibilities of employees and all the operations are managed by the foreign employees of the company.
Geographical– It is most commonly used organizational structure in multinational companies (French and Geldermann, 2005). In such kind of structure the head office is located in home country and semi independent offices and operations are established in other countries where organization operates.
International division- in such type of structure the company expands its operations to international market without disturbing its functioning in home market. The main focuses of company lays on home market and its international division is left completely free to adapt the foreign market trends.
However, it can be stated that businesses choose organization structure as per their need and requirements. Further business enterprise also faces issues related to supply chain, outsourcing and communication (Burt and Sparks, 2005). The pressure on producers to high quality products is increasing day by day. This means that they are required to procure best quality of raw material and other related things. Main issue in this aspect is that it is not easy to find those suppliers which can provide best quality products. The increasing competitiveness in industries all across the world has forced businesses to rely more on their supply chain in order to manage and maintain their value chain. At the time of operating at global level businesses also faces issues regarding communications (Pretiou and Love, 2006). One of the major problem in this is related to intercultural communication where languages and culture act as main barriers. Managers operating at global level sometimes are not able to understand the messages and they are required to take help from intermediaries in order to understand the same. Along with the changes in time and working hours of countries also makes it difficult for businesses operating in international markets to communicate with each other in effective manner.
Mark & Spencer is a UK based clothing and food retail company which was established in the year 1884. At present the brand is operating in more than 30 counties of the world and it has over 85000 employees working in its different international ventures. In addition to this, it has tied up with more than 2000 supplier scattered all over the globe. Main regions in which the brand operates consist of Russia, Europe, Asian and Middle East. Total 49% of its revenue is generated from its international ventures that deals in clothing and home ware products. The remaining 51% comes from its food products (Regmi and Gehlhar, 2005). In UK Mark & Spencer has more than 600 stores which makes it very convenient for customer to easily find and purchase its products and services. Its expansion in potential markets such as India and China has helped in manufacturing products and services in cost effective manner. Further due to high population in these market the brand has found many opportunities for growth and developments. Due to the recession occurred in 2009 the sales of the brand was affected as it deals with luxurious clothing products and people were discouraged to satisfy their luxurious needs (Marks & Spencer, 2015). With the passage of time the company has overcome the stage of recession and now it has been growing really well. Further, it has already established a good brand name and image in global market. Mark & Spencer is also giving tough competition to other market players by diversifying its range of products and services offered. However argued that there are many issues and challenges which are faced by Mark & Spencer at the time of carrying out its international operations. One of the main problem is that the culture and business environment differs from one nation to another (French and Geldermann, 2005). Further while operating in any country, the brand is required to take care of its culture, employment laws and labor related practices. If these things are not addressed than company's operations directly gets affected. Penalties and fines are also imposed on the brand if they are not taken into consideration (Browne and et. al., 2005). Another disadvantage of Mark & Spencer international operation is that the taste and preferences of customers also varies from country to country. It become very complicated for the brand to understand the changing market trend in every nation where it operates.
It is also required by the brand to manufacture and deliver products according to the needs of different countries. During international operations Mark & Spencer also faces problems related to recruitment. The brand needs to determine whether it should appoint local people of host country as managers or should send expatriates. In addition to this, van Yperen, (2006) has explained that the expatriates are well aware of the culture and operations of a businesses enterprise whereas local people knows the market and trend of host country in more effective manner. Therefore, it can be stated that it is not necessary that international expansion is always beneficial for organizations such as Mark & Spencer. There are some disadvantage which is associated at the time of operating internationally. Thus, businesses needs to be very careful at the time of developing their strategies regarding international expansions. Critical evaluation of international operations of Mark & Spencer.
Global business strategy assist businesses to achieve their long term goals and objectives by providing suitable directions. From the above report it can be concluded that due to limited growth and development opportunities every organization is required to take a step towards globalisation. It will help to develop new opportunities for growth and expansion by exploring some new markets. It can be also stated that there are some ethical issues which can be faced by companies such as conditions regarding employment and human rights in host country. It can be also concluded that according to the need and size of organization structures are selected when companies perform in global market. It has been observed that there is always a conflict between corporate strategy and social responsibilities. Therefore in order to overcome the same the best solution is to look forwards for sustainable development. It can be also stated that Mark & Spencer has always taken care of its ethical and social responsibilities which has contributed a lot in the success of its international ventures.
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