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This assignment is about a fast food retailer company which has spread its business to many countries. It has a number fast-food out-lets and the reason for this is the better understanding of business strategies and effectives utilization of the strategies. First there will be a discussion of the different of companies working in different industries. After that there is a briefing about the environmental factors which can affect any business in global market and a solution to overcome this. Many ways are suggested in the assignment by which a company can enter into the foreign market.
Task 1 The key differences between global business operations
Task 1.1 An analysis of the key differences between organisations working in different sectors, industries and contexts.
In any country there are many companies operating in different sectors. All companies working in different sectors employ unique styles of operations. Even companies which belong to same sector or the branch of same company have different working style. There are many differences such as:
Different culture & values - The companies which are operating in the different sectors have different trends and patterns of working whereas the people who work there will follow the different values.
Different organisation chart - The companies which are from different industries have a different hierarchy of authority and responsibilities because the organisation chart depends upon the size and nature of the business.
Different pricing strategies - The companies working in different sectors have different pricing strategies for its products. For example, a food retailer keeps prices low whereas the automobile company demand high prices.
Different process - The companies from different industry or sector have different process for completing its products. For example in automobile company there is a multistage process whereas in the food company 2 or 3 stage process only.
So, all companies are unique in product processes regardless of them sharing the same sector or industry.
Task 1.2 An assessment of the responsibilities of organisations operating globally
Due to the globalization companies are facing tough competition from the domestic competitors as well as international companies. So, that is why to continue its existence in the market companies are now expanding their business operations to the foreign counties. There are many responsibilities of the companies to survive in the foreign market which are as follows
To analyse the needs of the customers - The first and most important responsibility of any business is to identify the needs of the customers of any country. This is because the needs, wants, demands and taste of the people differ from country to country. If the company does not identify the needs of the country then how will it be able to give the required product or services? Hence, it will not be able to capture the market.
To offer the need solution for the customers - The next responsibility is to prove a better solution for the needs and requirement of the people.
To understand the effect of business environmental factors - There are many factors which affect the business. The purchasing power of the people is defined by the environmental factors of the country (Bhatt 2000).
To analyse the business own capabilities - A business can product or service on the basis of capabilities it have. So a business should analyse that whether it will be able to make better product or service with the help of resources available to it (Cherry 2003).
To get the feedback from customers and continuous improvement as per the feedback - The next responsibility is to get the feedback from the customers about the products and services offered by the company and then make change if recommended by the customers.
There is a company McDonald which delivers the fast food to the people. This has expanded its business to many countries and before and after entering into any new country these responsibilities has been fulfilled by the company because it was initially failed into Indian market because it did not carefully analyse the needs of the customers.
Task 1.3 An evaluation of the strategies employed by organisations operating globally
To enter and survive successfully into the foreign country market a business need to use many strategies. Every strategy has its own advantages and disadvantages and business can use any of the strategy according to its needs, market condition and nature of the business. the strategies to operate in foreign country are as follows
Joint venture - In this two company who deal in same types of products and services joint with each other and share each other resources (Cherry 2003).
Franchising - In this one famous company sell its name to the other person to operate the business on the name of that particular famous company. There are three types of franchising can be done such as product, process and business format franchising.
Manufacturing in Foreign countries - The developed countries establish its manufacturing unit into developing countries to save cost of manufacturing. In this a company find it better to manufacture in developing country due to lower costs of labor, materials, Custom duties the manufacturing is undertaken in host country. The local conditions of the developing country should support the manufacturing and marketing activities. E.g. GE, USA putting their BPO unit in India (Bhatt 2000).
Wholly owned subsidiary - This is a kind of branch of the main company branch. In this a company of a country establishes its subsidiary or a branch of the main company in the foreign country. All resources of the main company are available for the foreign country branch. The main company owns 100% control over the subsidiary. E.g. IT companies.
There are so many other strategies available for the companies to run expand its business in the foreign market. The strategy which is use by the McDonald is the franchising because these companies sell the process of making fast food. The people who buy the franchising of McDonald they use its name and make the food with the process recommend by the main company. Here the company get the benefits to increase its market reach and the franchisee get the brand name which he need not to promote because it is a well known name (Cherry 2003).
Task 2 The impact of external factors on organisations
Task 2.1 An analysis of how the performance of a national economy impacts on the activities of business organisations
There are many environmental factors which affect the working of the business and economic factors is one of the important factor of environment of the business which has very strong impact on the business because the economy of the country is responsible for determining the other parameter for customers (Bhatt 2000).
Income and purchasing power - The economy of any country affect the income of the people living there. If any country has strong economy the country will be considered as a developed country and the income of the people will also be high. When the people get high salary then they can spend more money on the new products. Hence, the purchasing power of the people will increase. This will impact on the working of the business because the business has to increase in the production activity so that it can match its supply with the demand.
Create Demand - The strong and power economic condition give the safety to the resident of the country about security of the future. If the people will have the surety about the safe future then they can spend large part of income on shopping and try new and latest product. This will also affect the activities of the business because the business has to produce new and innovative product to retain the customers and to attract the new customers. In case of food and Beverages Company the company has to keep change in the taste and flavours as per the customers need (Cherry 2003).
High manufacturing cost - If the country has sound economy then employees will demand high salary and company will get the raw material, machinery and plan at higher cost. So, all these cost will lead to the higher manufacturing cost for the company.
Base for determining the price of product - The economic condition of the country are basis for the company to determine the price of its products because if the price will be high and not supported by income of the people then it can lead to failure of the company.
The McDonald Company has different price of its food product indifferent country because prices are decided after the analysis of the economic condition of the country (McNeeley 2003).
Task 2.2 An explanation of the measures taken by governments to influence the activities of business organisations
The political and legal factors are also two important factors which affect the business very much because in the developing country the political people influence the business activities for their own benefits but as a whole political people or the government of the country make rules and regulation for country progress and the businesses as well. The government should find the business activities beneficial for the country people then only it can allow the foreign company to enter into the country. It make some rules regarding the activities of the business which are as follows.
Fix the FDI % -The government of the country decides how much percentage of FDI should be allowed in the country because the foreign companies use the local resource and if it allows the 100% FDI the country could have the scarcity of natural resources.
Tariff and non-tariff barrier for export and import - The government of the country impose the tariff and quota to limit the import in the country because the imported item decrease the demand of local products and local companies are adversely affected by the import.
Company regulatory act or regulatory bodies - The government of the country appoint the regulatory bodies to keep eye on the unfair practices of the business. The government of the country makes some rules and regulation which support the welfare of the business. if any of the company has any problem then it can use the resolution of the act (Cherry 2003).
Task 3 The impact of global factors on business organisations
Task 3.1 An explanation of the implications of global integration on business organisations
The global integration has very strong impact on the business because there are many problems which business were facing in the home country market but now all those problems has been overcome with the help of global integration (Logan 2005).
Help in decreasing the labor cost - International marketer can have low cost labor from other developing countries and earn more profit. For example software programmer cost is quite less in India so many US companies have established their business in India for software development.
Help in testing new products - the companies' want that the Judges for testing the products should be different because due to the good image of the company local customers may like the product no matter whether product is good or bad. Testing products in the host country rather in the home country or established market is good idea to capture the foreign market. For example Pepsi tried soda in brazil instead of US (McNeeley 2003).
Help to find new users for the product - The global integration help the business to find the new users for its products. For example the demand of the company products in the local market in not enough to cover the manufacturing cost then the global integration help the business to find new customers for its products so that it can survive for long time.
There are many advantages which a business can get from the global integration but beside this there many disadvantages of the global integration on the business.
Scarcity of national resources - With the help of global integration many of the local company manufacture the products in home market and sell in foreign market but they use the national resources to manufacture the products. This lead to the scarcity of national resources for national people (McNeeley 2003).
Scarcity of quality product for national people - If any company is doing international business then it will send all its quality products to the foreign market and low quality products will be served for the national people.
Task 3.2 An assessment of the effect of international trade on domestic products and services
The international trade means import and export of the products in the country. If the foreign products are brought by any country then it is called import and if national products are sold to another country then it is called export. The international trade has both types of impact on domestic products and services.
If the domestic products or service are exported then it gets many advantages such as
Popularity of domestic product or services will increase - If the domestic products or services are exported to any foreign country then foreign customers will also come to know about the existence of the products or services.
Demand of the product will increase in national as well as foreign market - When the local people come to know that the products has been exported then they will start buying the product or services hence the demand of the product or services will increase in national and local market (Cheery 2003).
More chances of improvement - With help of feedback from the national and international customers business can better implement the new and innovative changes in the company products or services.
There are many disadvantages to the domestic products or services from the import of foreign products or services (Logan 2005).
Decrease in the demand of domestic products - If the foreign products or services are imported then customers will be more attracted towards the foreign products or services. Hence, the demand of national products or services will decrease.
New innovation required which lead to high cost - To survive in the tough competitive environment the companies need to do new innovation in the products which lead to increase in the price of its products.
Task 3.3 A review of the impact of the global economy on businesses
The economic conditions of the country are very much affected by the global economic condition. Whereas the economic condition of the country affects the business activity therefore the global economy directly or indirectly affect the business. The global economic is constituted by the combination of the economy of the developed countries.
International trade rules - The global economy affect the international trade among the countries and the business which wants to do business in foreign country then the global economic condition need to be studied by the business other it could lead to the failure of the business (McNeeley 2003)..
WTO and IMF revised the bank rate for all its member countries - World trade organisation and international monetary fund's are two big organisations which work with the global economic conditions and these organisations decide the bank rate for all the big banks of its member countries. Business gets the loan to operate the business operation. If the economic condition is bad the bank will give loan at higher rate and hence the business is affected by the global economy.
Task 3.4 An assessment of how ICT has facilitated globalisation
Information and communication technology (ICT) has play a very important role in promoting the globalization because with the help of information and communication technology the business can get many benefits such as (Doole and Lawe 2005).
Can find about the new technology in other country - With the help of ICT a business can find about the new innovative technology in any other country through the internet, telephone, Television or satellite communication. Now a day's customers want the innovative and latest technology product. If they cannot get in their own country then they can buy from foreign country because now people can easily travel any country.
Can find about the foreign companies for merger, acquisition or joint venture - The ICT help the companies to find about the suitable company for merger or joint venture? The company can get this information through the people who live the foreign country or the official website of the company available on the internet. This provides the method to the company to enter into the foreign market (Doole and Lawe 2005).
Can study the effect of business environmental factors - A company can come to know about the government rules and regulation about the foreign companies. On the other hand the business can get to know about the economic and natural climatic condition of the countries through internet or communication medium
Can share information with foreign branch easily and speedy - With the help of communication and information technology the various branch of companies located in different countries can easily share the information about the progress of the branch.
There McDonald company has got many benefits through the ICT had its has expanded its business to many countries with the help of ICT because it analyse the foreign market and business opportunities in the foreign market and accordingly it offer the product to the foreign customers as per their taste and preferences (Doole and Lawe 2005).
Task 4 A review of the current issues impacting on business activities
Task 4.1 A review of the global environment in which businesses are currently operating in your named country
McDonald is a very popular fast food retailer company operating in many countries. This is very well known in United Kingdom. It is also affected by the macro and micro environmental factors of the UK.
Macro environmental factors - These are the external factors which affect the business and the effect if these factors are very adverse, negative and uncontrollable. A PESTEL analysis is done to find the effect these macro factors (smith 2007).
PESTEL analysis for McDonald
Low - The effect political factors is high in case of McDonald in UK.
High - The economic condition of the country effect the business the price of the McDonald products is fixed after studying the economic condition of the county.
High - The effect of social factors is also very high because the taste and preferences of the people is very important for the fast food company.
Low - For the fast food retailers the technology doesn't matter very much.
High - In the UK there are many rules and regulations regarding the operation of the company.
Micro environmental - Every business is affected by macro environmental factors which are controllable by businesses up-to some extent (Smith 2007).
Porter five forces model for McDonald
Bargaining power of buyer - High - The bargaining power of buyer is high because there are many small stores which are offer the same product at lesser price.
Bargaining power of supplier - High - The bargaining power of supplier is high because the local people can supplies the same kinds of products.
Threats of new entrants - High - The people with small place can run a fast food shop and easily enter into the fast food market.
Threats of substitutes - High - Other food items are also competitors for the McDonald.
Competitors - High - The normal food restaurants and other fast food retailer such as Subways etc are competitor for McDonald.
Task 4.2 Proposed strategies to address issues affecting business activities in this named country.
There are many factors which affect the business and there are many strategies which a business can use to address these problems (Singh 2006).
Market Research to find the taste and preferences of people - The business can use market research to find the taste and preferences of the people because when it introduced its product into the Indian market without proper marketing research. The result was a business failure.
Environmental study - While entering into the new market a business need to indentify the effect of environmental factors such as economic and legal factors because these factors has very strong impact on the business.
Location study - The McDonald is a fast food retailer so it should open it store at busy place because its franchising cost is very high. So before opening the store the business should carefully study the location where it wants to open its store (Singh 2006).
In this assignment there is global context of the McDonald a fast food retailer company has been discussed because it's a multinational company. There are many international market entry strategies which a business can use and the above given company has used franchising as a enter strategy into foreign markets. There is affect use of macro and micro environmental factors have shown been shown in the context of McDonalds. However, McDonalds tends to overcome the micro environmental factors such as, supply and demand, existing competition, governmental policies, and consumer preferences through effective market research. With the help of globalization a business can get many advantages and disadvantages. All these advantages and disadvantages have been discussed above in the assignment.