International Business - the Strategy of Joint Venture Implementation - Essay Example

International business Table of Contents Answer 2 3 References 11 Answer 2 With the sunrise of industrialization and globalization, the pace of international business enhanced with a significant extent. This paved the path of the multinational organization to attain a profitable position in the market among many other rival players. Moreover, revolutionary advancement in the technologies also offered the mechanism that improved the growth and popularity of international business. In addition to this, the extensive competition among the rival players in the domestic market also propelled the multinational firms to expand its wings in foreign markets. As a result, the multinational organizations became successful in attaining a wide range of customers of varying life style and income standards. Due to which the profitability of the multinational organizations enhanced to a significant extent that amplified its sustainability and competitive advantage in the market among other existing contenders. However, such an expansion did not proved effective for the firms for long run. This is mainly due to the economic turbulence or downturn that affected the entire world, since 2004. As a result, the gross domestic product (GDP) declined to a considerable extent that affected the flow of foreign direct investment (FDI) as well. Due to economic crisis, the capital market of the international countries crumpled, which significantly increased rate of unemployment. However due to unemployment the per capital income of the citizens reduced thereby declining the purchase and sale of the products and services of various multinational organizations. As a result, the portfolio and image of the multinational organizations also lowered that offered a significant impact over its dominance and reliability. This is mainly due to the rise of the prices of the products and services of the multinational organizations that resulted in collapse of the economy. Along with this, due to unemployment, the rate of social anarchy and deaths increased that hindered the pace of international business (Luo & Tung, 2007, pp. 113-132). Due to economic turbulence, the labour market collapsed that affected the productivity and growth of the multinational organizations as well. Furthermore, due to collapse of labour market, the level of poverty in the international countries also increased to a significant extent that declined the pace of international business. However in spite of varied types of economic discontinuities mentioned above, international expansion is considered as the most essential parameters of an organization. This is because; it helps to enhance the position and reputation of the organization in this age of extensive competitiveness. Moreover, international expansion of the organization also facilitates an organization to develop a strong market image and wide range of customers that might increase its sustainability. Other than this, geographic expansion is also considered as the prime mantra of this era as it enhances the financial backup as well as distinctiveness of the organization in both domestic and international market. Moreover, if the organization is desiring to expand into a new market, then it need to be well accustomed with the political rules and regulations of that penetrating country so as to maintain its operations freely. Other than this, prior penetrating that market, the organization need to well versed with the taste and preferences of the customers so as to enhance its dominance and profitability to a considerable extent as compared to the other existing contenders. Only then, the new entrant might maintain its functionality effectively without any sort of business rivalry or issues (Johansson, 1997, pp. 356-367). At the time of international strategy decision–making process, varied types of macro as well as micro environmental factors are considered. Among the macro factors, the rate of economic condition o the country or economy is offered highest consideration. This is because, if the country or the economy is facing the impacts of economic turmoil, then the per capita income of the citizens might be extremely low. As a result, the rate of unemployment and poverty would high that may not fascinate the customers towards the value-added product lines or services of the organization (Mathews, 2002, pp. 890-899). Due to which, the profit margin and total sale of the organization may not get enhanced that might hinder its portfolio and equity. Apart from this, if the economy is facing a bankrupt condition, then it may surely affect the buying behaviour of the customers to a significant extent as compared to others. Similarly certain types of micro environmental factors are offered attention such as rate of improvement of the profit margin at the end of the next financial year. Furthermore, the amount by which the total sale of the organization increased after entering a new market as compared to domestic market. All these factors are offered highest attention at the time of international strategy decision making in order to make the plans and policies effective for the organization in its future era (Johnson & et.al. 2011, pp. 823-834). Furthermore, cross border merger & acquisition strategy is considered as the fast track approach for expanding in international markets. But, at times this international strategy may not prove worthy for the stakeholders or the organizations due to varied reasons presented below: Lack of proper wage structure in foreign countries: due to improper wage structure of the employees in foreign countries, the inner morale and motivation of the employees towards work decreases. As a result, the rate of performance and productivity of the employees reduces that declines the position and equity of the organization in the market among others (Grant, 2005, pp. 190-213). Poor culture: as the culture of the organizations in varied foreign countries is extremely diverse as compared to that of the domestic country, so the rate of success of the mergers and acquisitions is reducing significantly (Gupta, 2004, pp. 312-323). Lack of experience of the workers: as the techniques used to produce the products and services in foreign countries is quite different, so the rate of coordination and harmonization among the employees or human resources might differ. As a result, the merger and acquisition strategy that took place within two organizations may not offer positive results (Hill, 2010, pp. 412-423). Improper strategies and policies within the organization: due to improper or inconsistent organizational strategies, the employees may offer negative attitudes and behaviours. As a result of which, lockouts or strikes might take place within the organizations thereby eroding its entire dominance and image in the foreign markets. Moreover, merged organization also might fail to offer effective returns to the stakeholders that may hinder its growth and dominance (ESOMAR. 2008, pp. 225-247). However, in order to reduce all the above mentioned negative impacts, the management of the organizations might try to perform vivid market research so as to analyse its policies and strategies. Only then, the wage structure of the employees might be known effectively that may reduce all sorts of negative discrepancies within the organization (Geiersbach, 2010). This is extremely essential for the organizations trying to merge with another foreign market organization in order to increase its portfolio and distinctiveness in the market among other rival contenders. Such type of activities is also essential to improve the sustainability and market share of the organization (Bradley, 2007, pp. 673-683). However, such types of decisions are taken only to cope up with the competitiveness and extreme bargaining power of the customers (Beall, 2010, pp. 823-834). Therefore, in order to enhance the sustainability and competitive position, maximum organizations desire to devise their structures as per the strategies or policies. For example: the Japanese organization, Sony always focuses on global strategy in international level. As per this strategy, the organization desires to offer unique and best value-added products to all the foreign markets at a quite low cost. This is done, in order to retain its uniqueness and consistency in the market that may attract a wide range of loyal customers towards the brand (Meyer, 2004, pp. 712-723). By doing so, the profitability and brand value of the organization of Sony might get enhanced that may improve its position and dominance. Moreover, as the products offered by the organization of Sony are similar in all aspects so the level of supremacy and reliability of a single foreign market might also be used in any other international market as well. This is done in order to enhance its equity and reliability in the market that may amplify its market value and total sale as well. However, in order to make the strategy effective, the structure of the organization is always devised according to it (Kolb, 2008, pp. 558-578). For example: The structure of Sony Corporation: Core strategy Business improvement Effective Brand image Globalizing the core strategies Therefore, it might be clearly depicted that global strategy is maintained by Sony in all foreign countries in order to retain its dominance and improve its business profitability and market value. This proved extremely effective for the organization thereby amplifying its total sale and total revenue thereby reducing the threats and challenges (Morgan, 2009, pp. 812-823). However, if an organization implements such type of policies, then only it might penetrate a foreign market effectively. In addition to these factors, culture is also another essential factor that needs to be decided at the time of geographic expansion. As per the Hofstede cultural model, the culture of an organization mainly rests on six dimensions such as power distance, individualism, masculinity, uncertainty avoidance, pragmatism and indulgence. However, the citizens of one country highly differs in their cultural dimensions from others that highly constraints the homogeneous working environment of an organization (Morgan, 2009, pp. 189-213). As a result, the brand image and dominance of the organization declines thereby reducing its profit margin and uniqueness in the market among others. For example: the organization of Nike Inc is present in both Chinese as well as Indonesian markets. However, the cultural dimension of both countries is entirely different from one another in respect to uncertainty avoidance, masculinity and pragmatism. (Source: Hofstede, 2014) From the figure, it might be clearly depicted that the dimension of pragmatism is extremely high in China as compared to Indonesia. This means, the citizens of China believes that the truth or success entirely depends on situations (Ohmae, 1995, pp. 778-789). Due to which, they always tries to offer inventive products and features to the customers in order to retain the dominance and equity of the organization of Nike Inc in the market among others. However, the citizens of Indonesia do not offer much value to this belief. Due to which, interpersonal conflicts and clashes takes place that hinders the coordination and cooperation of work within the organization of Nike Inc. Similarly, the citizens or employees of China offer high concentration over masculinity as compared to Indonesia. This also leads to conflicts that hinder the homogeneous working culture. However, in order to resolve these issues, Nike Inc implemented the global strategy of Innovation and creativity (Porter, 2008, pp. 556-567). The management always desired to recruit experienced and talented employees within its organization so as to present inventive products to its customers by working in a coordinated way. This strategy proved effective in enhancing its brand image and profit margin of the organizations deciding to penetrate into new foreign markets. This is because, the citizens of the emerging and developed economies such as south and east Africa are extremely pricing sensitive in nature. They always desire to achieve value-added products at a competitive price. Keeping this factor in mind, most of the organizations such as Tate storage products implemented the strategy of high-quality of products at a competitive price so as to attract a wide range of customers (Pride & Ferrell, 2004, pp. 467-478). By doing so, the organization became successful in amplifying the profitability and productivity in the market among others. Moreover, by offering value-added products, the range of customers also enhanced that proved extremely effective for the organization thereby amplifying its image and reliability in the market (Ritzer, 2011, pp. 445-456). Other than this, the organization of Tate storage products also offered excellent distribution channel to its customers that amplified its market value and brand image in the market. Due to the effective distribution network, the loyalty and reliability of the customers also enhanced to a significant extent as compared to many other rival players. Moreover, this strategy also amplified the range of customers to a significant extent that amplified its effectiveness and dominance among others. Thus, it might be stated that Tate storage products amplified the prosperity and efficiency of the organization thereby increasing its portfolio in the market among many other existing rival contenders. Hence, the above mentioned strategies proved extremely effective for the organization of Tate storage products in this age of competitiveness among many other rival players (Ritzer, 2007, pp. 335-356). Now days, in order to reduce the risks and threats of foreign markets, maximum extent of the organizations desired to implement the strategy of joint venture. It is done in order to amplify the market value and profitability of the organization. This is because, by joint venturing with another reputed organization, not only the brand image but also the customer base of the other organization might also get enhanced. Along with this, the portfolio and supremacy of the organizations might also be enhanced to a significant extent thereby amplifying its total sale and distinctiveness. However, enhancement of this strategy of joint venture, varied types of managerial issues came into lime light such as change viewpoints of the managers, conflicts regarding strategy implementation, product development etc. For example: the organizations operating in the country of Japan in the sector of electronic always desired to offer advanced technologies at a competitive cost (Robins, 2000, pp. 334-345). But in maximum cases, pricing strategy created conflicts. This is because, due to the implementation of numerous advanced techniques, the price range may not be reduced but, in order to attract a wide range of customers, competitive pricing strategy is extremely effective (Scholte, 2000, pp. 256-267). Due to such disagreement, miss-confusions or conflicts arise among the managers that hinder the growth and productivity of the organization. Moreover, implementation of varied new features within the products is also not appreciated by all the managers. This also leads to conflicts or clashes among the managers of the organizations, operating in the segment of electronics in Japan. Due to which, the efficiency and brand value of the organization reduces significantly in the market of Japan among other existing rival players (Schirato & Webb, 2003, pp. 223-234). Therefore, it might be depicted that in order to maintain the operations in an effective way, without any sort of clashes, the strategy of joint venture might be implemented in organization an only after analysing the culture of organization B in an effective way. Only then, both of them might operate in an effective way in a new market that may reduce its challenges and opportunities to a significant extent among others. However, in order to amplify the business dealings, maximum extents of the organization make use of internet. This is because; the concept of e-commerce might amplify the portfolio and brand image of an organizations that may balance the operations in a new market (Willmott, 1999, pp. 123-134). E-commerce helps to attract a wide range of customers of varying taste and preferences that may increase the total sale and profitability of the organization as compared to others. Apart from this, due to the introduction of e-commerce, the ranking of the organizations enhanced that amplified its scope of expansion to new markets as well. Moreover, due to introduction of e-commerce, the organization may resolve varied types of issues or queries related to customers within a very small period of time that may increase the dependency and consistency of the brand within their mind. This is extremely essential for an organization operating in a competitive segment like electronics in order to retain its dominance and loyalty in the market among others. As a result of which, the popularity and supremacy of the organization enhances that helps in improvement of its inner strengths and opportunities as well. Other than this, due to e-commerce facilities, the delivery of the products became extremely easy that amplified its uniqueness and consistency in the market among other rival players. Therefore, due to these causes, e-commerce facilities proved extremely effective for the organizations operating in varied segments as compared to many other segments. Thus, all these above mentioned factors or facts need to be considered at the time of geographic expansion. References Beall, A, E. 2010. Strategic Market Research: A Guide to Conducting Research to solve problems. Boston: Harvard Business School Press. Bradley, N. 2007. Marketing Research: Tools & Techniques. New York: McGraw-Hill. ESOMAR. 2008. Market Research Handbook. London: Sage. Geiersbach, N. 2010. The Impact Of International Business On The Global Economy. 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Schirato, T. & Webb, J. 2003. Understanding Globalization. London: Sage Scholte, J. A. 2000. Globalization a Critical Introduction. Basingstoke: MacMillan Press Ltd. Willmott, H. 1999. On the idolization of markets and the denigration of marketers: some critical reflections on a professional paradox, in Brownlie, D, Saren, M., Wensley, R and Whitington, R (eds) ‘Rethinking Marketing: towards critical marketing accountings. London: Sage. Read More