The Emergence Of Globalisations Growing Pressures Business Essay

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The emergence of globalisation coupled with the growing pressures of global competition amongst organisations from different geographical locations in this present century has resulted in a drift from the traditional business strategic approach to an effective total global strategy which seeks to explore available competencies and resources of a global competing organisation under the platform of a planned and guided structure designed to achieving its set goals with the view of gaining perceived competitive advantage, reduction in aggregate operational costs, improved global customer services, increased market share / presence and sustainability in order to ensure long-term business survival and sustained level of competition within the global marketplace (Inkpen & Ramaswamy 2006).

Whence, this piece of work critically explores the feasibility of a total global strategy for Crappy Shades Sunglasses Company while drawing on various academic and professional literatures.

According to Yip (1989) the concept of organisations' total global strategy evolves from their home countries by developing a core strategy, internalising the core strategy and then globalising the international strategy. This underpins the feasibility of a proposed total global strategy for Crappy Shades Sunglasses with the development of its core business strategy which is represented by a strong local competitive advantage in the UK marketplace while internalising its core strategy through adaptation and various advertising media such as the internet and then globalising the international strategy by way of integration activities across different geographical locations. However, it could be argued that Crappy Shades Sunglasses is strategically positioned at the low end of the market with a competitive advantage driven by cost leadership and a competitive scope geared towards a broad market target underpinning Porter's Generic Strategies model (Cole, 1997) as well as a perceived added value of low price as evident on the Bowman's Strategy clock model (Johnson & Scholes, 1999).

Nevertheless, Johnson, et al. (2005) arguably noted that a strategic aspect affecting globalisation of organisations is that of Strategic Analysis which seeks to answer 6 major rational planning questions namely: Where are we now?; How did we get there?; Where are we heading?; Where would we like to be?; How do we get there?; Are we on course?. Thus, with regard to the case study, it could be argued that the 6 rational planning questions of Crappy Shades could be presented as follows:

Where are we now? - Crappy Shades is currently at the low end of the market based on Porter's Generic Strategies model (Cole, 1997) with a product portfolio represented by "Question Marks" growth-share matrix underpinning Boston Consulting Group Matrix (NetMBA, 2007) as its rapid growth as the 92nd fastest growing UK SME is preceded by large cash consumption owing to huge investments on IT resources such as EPOS, EDI, SAP etc

How did we get there? - Through a competitive advantage driven by cost leadership and a competitive scope geared towards a broad market target underpinning Porter's Generic Strategies model (Cole, 1997) and low price as evident on the Bowman's Strategy clock model (Johnson & Scholes, 1999). In thesame token, it could be further argued that the strategic analysis of Crappy Shades is driven by certain external environmental factors as well as its resources, competencies and capabilities as shown by the PESTEL and SW analysis in appendix A and B respectively.

Where are we heading? - Considering the prevailing market situation, it could be urged that Crappy Shades product portfolio strategy would potentially degenerate into a "Dogs" growth-share matrix under a declining market growth rate coupled with continuous consumption of cash underpinning Boston Consulting Group Matrix (NetMBA, 2007).

Where would we like to be? - Crappy Shades would like to be positioned at phase 3 Strategic Transformational Change using the risk of strategic drift model (Johnson & Scholes, 1999) as well as in the position of a "Cash Cows" growth-share matrix as shown by Boston Consulting Group Matrix model (NetMBA, 2007).

How do we get there? - This could be achieved through a strategic choice offering such methods as growing organically, merger/acquisition and strategic alliances (Johnson, et al., 2008). However, due to financial constraint, it could be argued that a strategic choice of strategic alliance / merger coupled while outsourcing less competent value adding activities in order to cut down fixed costs coupled with the possible use of a hybrid of cost leadership/cost focus and product differentiation/focus differentiation approach (leagile) would be viable in pursuit of the planned strategies.

Are we on course? - It could be argued that Crappy Shades would be on course with the adoption of the proposed total global strategy under the platform of product development and market development strategies underpinning Ansoffs Market-Option-Matrix (Ansoff, 1989; Ansoff, 1957) while maintaining a flexible organisation structure that outsources less competent activities of the value chain (Gottfredson, et al., 2005).

Nevertheless, as regards the brand name and image, it could be argued that Crappy Shades maintains a brand strength that is acceptable within the UK marketplace owing to its UK identity as a perceived quality inclined manufacturer as well as its reliable and agile customer relationship services. However, the company is positioned at the low end of the market - servicing such low cost retailers like Poundland, Shop-till-you-Drop, Kwik-Save, Sommerfield, 8 'till Late et cetera - based on Porter's Generic Strategies model (Cole, 1997) with a low price as evident on the Bowman's Strategy clock model (Johnson & Scholes, 1999). But drawing on the model of Ansoff's Market-Option-Matrix, it could be argued that the company is presently positioned in the Market Penetration end due to high reliance on marketing tools (Lynch, 2003) like advertisements via the internet, journals, promotions et cetera.

Nevertheless, considering the rationale for a total global strategy it could be argued that a combined strategic choice of positioning Crappy Shades on the Product Development and Market Development ends underpinning Ansoffs Matrix model under the patform of an effective check and control mechanism against associated inherent risks would be more feasible as the present UK market is price saturated with the need for product differentiation features. But this could mean changing the product brand name from Crappy to reflect a more cultural adapting name drawing on the cultural web framework to suite the Turkish marketplace which underpins the marketing approach of Yip's 5 global strategic levers framework (Mintzberg, et al., 2003) under the context of market development while building differentiation features into products meant for the UK marketplace within the context of product development. However, it could be argued that the choice of Turkey as a potential country for implementation of the total global strategy underpins Porter's 5 forces model (Porter, 2008) as the existence of a low degree of rivalry within the Turkish industry offers a potential high market share opportunity underpinning the idea of market participation in Yip's 5 global strategic levers framework (Mintzberg, et al., 2003) compared to the UK marketplace which is characterised by intense competition with similar product sales / price. However, the existence of low entry barriers within the UK market arguably constitutes high entry threats of intensified competition underpinning Porter's 5 forces model (Porter, 2008) thereby fostering the need for offering standardised core products adapted to the local needs of the low competitive Turkish marketplace which underpins the idea of product offering in Yip's 5 global strategic levers framework (Mintzberg, et al., 2003) while offering product differentiation in attempt to maintain its UK market share. Concurrently, the incidence of high bargaining power of some of its MNE customers' characterised by alternative switch to cheaper supply sources underpinning Porter's 5 forces model (Porter, 2008) fosters the need for possible location of certain value adding activities like procurement of available low-cost material resources, cheap manpower resources, in-bound logistics and operations in Turkey through a short-term strategic outsourcing which underpins Yip's 5 global strategic levers framework (Mintzberg, et al., 2003) and a long-term strategy of vertical integration through a strategic alliance / merger (Luffman, et al., 1996: Wheeler and Hunger, 1998) in order to reduce aggregate operating costs geared towards a more competitive cost leadership approach underpinning Porter's Generic Strategies model (Cole, 1997). However, the existence of low suppliers' bargaining power coupled with low threat of substitutes in Turkey as shown in appendix A2 - Turkey PESTEL analysis - fosters the need for integration of a competitive move across Turkey through a uniform marketing approach which adapts the brand name to suite Turkish culture underpinning Yip's 5 global strategic levers framework (Mintzberg, et al., 2003).

Nevertheless, as regards elements of the national business environment driving the global strategy, the choice of Turkey as a destination country is arguably due to its competitive advantage in terms of high sunglasses demand owing to its tropical climate underpinning PESTEL analysis in appendix 2B and Porter's Diamond (Johnson, et al., 2005) which in turn creates a market opportunity driven by homogenous sunglasses needs requiring few product customisation with little or no market communication efforts underpinning Yip's Drivers of Globalisation framework (Johnson, et al., 2008) resulting in global availability of sunglasses with enhanced customer preference underpinning the Benefits of Globalisation framework (Mintzberg, et al., 2003). Concurrently, the availability of cheaper factors of production in Turkey underpinning the factor condition idea of Porter's Diamond (Johnson, et al., 2005) offers lower operating costs owing to perceived economies of scale, sourcing efficiencies, favourable logistics and absence of duplicated activities involving a lean approach aimed at reducing waste while enhancing product quality underpinning Yip's Drivers of Globalisation framework (Johnson, et al., 2008) which in turn offers cost and quality benefits underpinning the Benefits of Globalisation framework (Mintzberg, et al., 2003). In the same token, Turkey's favourable government trade policies and the need for global market participation underpinning Yip's Drivers of Globalisation framework (Johnson, et al., 2008) offers a competitor leverage opportunity with the potential of attacking/counter-attacking competitors underpinning the Benefits of Globalisation framework (Mintzberg, et al., 2003).

Nevertheless, as regards the obstacles within the global business environment, it could be argued that offering home standardised sunglasses products without adaptation to the Turkish environment at the very onset of the internalisation process would result in little customer satisfaction owing to the significant weather/climatic differential in both countries underpinning the Drawbacks of Globalisation framework (Mintzberg, et al., 2003) while being financially robust enough to offer such products across border nations in the absence of intangible asset possession does not guaranty a successful globalisation move underpinning the 7 Myths of Globalisation (Rangan, 1999). Concurrently, the location of certain activities of the value chain in different geographical areas has an inherent risk of volatile exchange rates and slower demand responsiveness which underpins the Drawbacks of Globalisation framework (Mintzberg, et al., 2003) while international trade and investments are empirically determined by the languages and culture of the nations involved underpinning the 7 Myths of Globalisation idea of "distance and national borders matter no more" (Rangan, 1999). However, the quest for a perceived higher market share in Turkey resulting in global market participation underpinning Yip's Drivers of Globalisation framework (Johnson, et al., 2008) arguably fosters the need for over-commitment to the Turkish sunglasses market with the potentiality of sacrificing existing home revenues, profits and competitive positions as a measure for competitive investments underpinning the Drawbacks of Globalisation framework (Mintzberg, et al., 2003). In the same token, it could be argued that the decision to integrate certain value chain activities in Turkey would potentially increase Crappy Shades managerial costs due to complexities involved in coordinating a huge network of information / communication resources as well as increased manpower resources which underpins the Drawbacks of Globalisation framework (Mintzberg, et al., 2003) while the potential existence of higher logistics and material costs in developing countries despite its associated low wage rates leads to low productivity and high total costs underpinning the 7 Myths of Globalisation idea of "manufacture where labour costs are cheapest" (Rangan, 1999). However, it could be further argued that the move for a global strategy facilitated by market drivers such as homogenous customers' needs underpinning Yip's Drivers of Globalisation framework (Johnson, et al., 2008) fosters a uniform marketing approach underpinning the idea of market approach in Yip's 5 global strategic levers framework (Mintzberg, et al., 2003) which in turn results in reduced product adaptation to local customers' behaviour underpinning the Drawbacks of Globalisation framework (Mintzberg, et al., 2003) while such marketing approach might be unacceptable within the context of global rules legislated by government bodies owing to national boundaries and cultural differences underpinning the 7 Myths of Globalisation idea of "government don't matter anymore" (Rangan, 1999).

Nevertheless, as regards the potential differences involved in managing Crappy Shades Sunglasses Company in the event of undertaking global activities, it could be argued that within the context of global activities, the management of the company tend to involve the use of a more flexible and adaptive management style owing to the various identified diversities associated with the international cultural elements of not only the countries involved but also the people from different cultural backgrounds within the business entity (Goldsmith et al., 2003). In the same token, according to Goldsmith et al. (2003) it could be further argued that despite its adaptive nature, the global management style tend to be driven by certain elements of inspiration and honesty geared towards exploring and appreciating the diverse business practices, opinions, beliefs, religion, personal attitude, value, languages and cultural norms of the countries hosting the global activities which underpins the global cultural web framework while developing an effective relationship with the diverse workforce of the company as well as maintaining international contacts with people from the global choice countries that are critical to the success of the global strategy. Concurrently, it could be arguably noted that the management style for undertaking the global activities draws on a global leadership structure that appreciates the various shared viewpoints of the company's employees resulting in a common outlook under the platform of a cultural exchange programme in order to ensure clear solutions to identified problems or challenges within the business environment (Goldsmith et al., 2003). However, Goldsmith et al. (2003) arguably noted that the use of such adaptive and flexible management style within the context of undertaking global activities do require a lot of effort and sustainability as it must be able to accommodate discomforts in the midst of all odd / unknown situations while delegating certain key leadership functions to some of the company's foreign employees.

Nevertheless, as regards the potential challenges involved in managing new employees of Crappy Shades Sunglasses Company, it could be argued that one of the major identified challenges is that of workplace diversity and complexity associated with difficulties in communication and resistance of people to changes within the global organisation (Greenberg, 2004). But beyond such difficulties, Hofstede (2001) arguably noted that the management of global businesses involving new employees is generally confronted by four cultural dimensions namely: power distance; uncertainty avoidance; individualism versus collectivism; masculinity versus feminism; long-term versus short-term orientation. Thus, drawing on Hofstede's cultural dimensions, it could be argued that Crappy Shades peoples management style would be compelled to be flexible and adaptive due to significant differences between Turkey and its UK home cultural dimensions as shown in Table 1 below.

Table 1 - Cultural Dimensions Adapted from Hofstede's Cultural Dimensions

UK Work Approach

Turkey Work Approach

Power Distance

Low i.e. very easy to approach bosses in organisations

High i.e. not easy to approach bosses in organisations

Uncertainty Avoidance

Willingness to take high business risks

Avoid risk taking through the use of certain rules and institutional beliefs

Individualism versus Collectivism

Strong individualism with high propensity of sole decision making driven by individual motivational reward

Strong collectivism driven by interdependence and group reward

Masculinity versus Feminism

Tend to be more competitive

Tend to be more cooperative

Long-term versus Short-term orientation

Pragmatic Short-term orientation towards achievement of business objectives

Long-term orientation towards achievement of business objectives driven by a firm social and interpersonal relationship

Source: Hofstede, 2001: Kwintessential, 2010

APPENDICES

Appendix A1 - Fish Bone Diagram showing PESTEL Analysis of the External Environment of Crappy Shades Sunglasses Company in the UK

Economic

Social

Changing Fashion & Taste

Political

Few disposable incomes

Recession

Competitive Living Standards

Quality Health Level

Competitive Interest Rates

Quality Education

Poor attitude to work

High Taxation

Free & Fair elections

Flexible Employment Laws

High Inflation

Global Climate

Temperate Weather

Modern Manufacturing Equipment

Competitive Waste Removal / Recycling

Good Research & Dev.

Competitive Communication Networks

Good Energy Source

Good IT infrastructure

EFFECTS - STIFF COMPETITION

Good Transport

Environment

Competitive Earning Capacity

Service dominated occupation

Monarchy Government Structure

Favourable Government Leadership

High Production Costs

Competitive Exchange Rate

High Unemployment Rate

Government Stability

Legal

Technology

y

Fair Trade Policies

Strong Consumer Protection

Tough Industry Regulations

Tough Anti-Competitive Regulations

Source: CIA World Factbook, 2010

Appendix A2 - Fish Bone Diagram showing PESTEL Analysis of Turkey as a proposed destination country for integration of Crappy Shades internalised core values and location of value adding activities

Strategic Global Market Location

Economic

Social

Changing Fashion & Taste

Political

Favourable demographics

Recession

Competitive Living Standards

Quality Health Level

High Privatisation Rate

Low Tax Rate

Quality Education

High Interest Rates

Good attitude to work

Flexible Employment Laws

Rising Inflation Rate

Fair Government Stability

Manufacturing dominated occupation

Global Climate

Modern Manufacturing Equipment

Competitive Waste Removal / Recycling

Good Research & Dev.

Competitive Communication Networks

Good Energy Source

Good IT infrastructure

EFFECTS - FAIR COMPETITION

Environment

Competitive Earning Capacity

Government Investors Incentives

Low Exchange Rate

Legal

Technology

y

Rising Unemployment Rate

Low Production Costs

Favourable Trade Policies

Tropical Weather

Weak Consumer Protection

Liberal Industry Regulations

Weak Anti-Competitive Regulations

Good Intermodal Transport system

Source: CIA World Factbook, 2010; Global Financial Magazine, 2009; Turkish Labour Law, 2009; Centre for European Policy Studies, 2000

Appendix B - Resources, Competencies and Capabilities (Using Half SWOT i.e. SW Analysis) of Crappy Shades Sunglasses Company

STRENGTHS

INTANGIBLE

Human Resources

Increased workforce from 150-550

Brand

Crappy shades believes in its brand strength as a UK supplier

Service

They offer (agile) flexible /reliable service

TANGIBLE

Financial Information

Low marketing and selling expenses

Physical Resources

Good road network infrastructure

Technologically advanced

92nd fastest growing SME in the UK with 1 manufacturing plant

WEAKNESSES

INTANGIBLE

Human Resources

Diverse range of industrial relations issues

Unionism leading to strike over a pay dispute in 2007 which cost the company loss of revenue

Threat of lost orders from its customers

Low morale and lack of motivation of employees

Brand

Crappy shades has been in the low end of the market after existing for 9years

TANGIBLE

Financial Information

High operational cost

Growth in the workforce added to increase in operation cost

High inventory eating into their profit

Low sales, low profit

Liabilities in acquiring assets (technology)

Physical Resources

Expansion problem/constraint due to location

Accessibility to the factory only by road

Un-seasonal wet weather leading to 15% drop in sales

No rail / sea transport links

Appendix C - SWOT Analysis of Crappy Shades Sunglasses Company

STRENGTHS

INTANGIBLE

Human Resources

Increased workforce from 150-550

Brand

Crappy shades believes in its brand strength as a UK supplier

Service

They offer (agile) flexible /reliable service

TANGIBLE

Financial Information

Low marketing and selling expenses

Physical Resources

Good road network infrastructure

Technologically advanced

92nd fastest growing SME in the UK with 1 manufacturing plant

WEAKNESSES

INTANGIBLE

Human Resources

Diverse range of industrial relations issues

Unionism leading to strike over a pay dispute in 2007 which cost the company loss of revenue

Threat of lost orders from its customers

Low morale and lack of motivation of employees

Brand

Crappy shades has been in the low end of the market after existing for 9years

TANGIBLE

Financial Information

High operational cost

Growth in the workforce added to increase in operation cost

High inventory eating into their profit

Low sales, low profit

Liabilities in acquiring assets (technology)

Physical Resources

Expansion problem/constraint due to location

Accessibility to the factory only by road

Un-seasonal wet weather leading to 15% drop in sales

No rail / sea transport links

OPPORTUNITIES / THREATS

THREATS

Saturated foot print limiting possible expansion within thesame premises

Transportation restricted to only road modal choice

Tough Industry-Specific and Environmental Regulations

Low Entry Barriers to the UK Market

Global Warming

High Taxes / Interest Rates

Changing Social Patterns

High Inflationary Rate

Financial Constraint

Recession

Technological Changes

Slow Market Growth

Unionism

High Operating / Production Costs

OPPORTUNITIES

Good road network infrastructure

Sophisticated technological resources / advancement

Good Customer relationship management

Flexible Employment Laws

Good Advertising / Communication facilities

Fair Government Trade Policies

Changing Social Patterns

Available Inter-modal Choice of Transport in the UK

Available Energy Source

Low costs of marketing / sales

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