Business Management Essay
Research indicates that for any business organization to thrive and achieve its goals in its business operations, the conformity to industry standards or norms is very vital that is, any firm must hold on to the rules of competition for market share within a particular business setting. Such conformity in any business setting steers clear of unfair rivalry between rival firms in the same industry. Nevertheless, from time to time a company may act against the industry norms by implementing strategic choice policies that contravene such laws in order to augment its market share, sustainability and expansion in the industry.
Therefore, firms endeavor to remain global in scope and such business organizations are subjected to numerous business challenges in there existing business undertakings which calls for strategies that will enhance there survival in the global business environment. Indeed business environment continue to change as firms strive to maintain their market share as well as providing quality services and goods to their customers. In essence business environment implies to mutually internal and external aspects that may either impact upon the growth and general performance of the firm either positively or negatively.
Therefore contemporary business organizations are obligated to build economic and political relations
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On the other hand, there exist enormous threats and weaknesses to present firms which results to such business operations to be cumbersome and consequently if not cautiously taken care of possibly will lead to decrease in productivity and ultimately a decline in finances of business organizations. Company, Product and Target Market Chosen The German company deals with manufacturing and selling of a wide variety of tea products. The Company is among the tea producing companies that have utilized the concept of globalization because of the saturated German market for tea products.
It is therefore considered a pioneer in selling it tea products abroad not and now it aims to expand to France. Furthermore, the company has a well built organization structure with competent employees that boost international marketing. The tea products produced by the German companies are rated to be among the best tea products in the world and reports suggest that it can do well in the foreign markets. The product in question that is the tea not only meets the international standards but it is also accredited with good taste unlike other tea which tastes harsh.
The country selected by the company to market tea is France, which is among the sixteen European countries that use Euro currency as there medium of payment. Therefore the company will not face exchange rate difficulties during its business transactions. Research indicates that France consumption of tea products have dropped significantly over the past few years unlike other European countries like the UK and Germany where the consumption of tea products is recorded to be high.
Good economy, stable exchange rates, flexible import duties, better trade tariffs and more importantly, the single currency used by the two countries are factors that promotes international marketing. Through the concept of Europeanization, France enjoys the benefits associated with economic policies put in place by the European countries since she is a member of that union. Therefore the German Company will not experience many difficulties in form of trade barriers while introducing the tea products in France since less economic legislation regulations are encountered
Situational analysis PESTLE analysis PESTLE analysis is very critical to any business organization which wishes to go international and the German company has utilized this concept in an effort to expand its market share. This analysis simply involves understanding the organizational business environment and how the company has paid attention to the following factors: Political factors; whereby the company has to deal with the political interferences that may be practiced by the French government.
According to research political systems of nations affect the conduct of businesses, for example some countries practice collectivism while others practice capitalism political systems. The France government practices capitalism in that it allows factors of production to be privately owned and the government performs only limited duties that the private sector cannot perform unlike in collectivism and communism that stresses collective goals. So the company has no restrictions and hence we can conclude that it enjoys good external political environment.
Economical factors; which mainly deals with financial forces in the economic environment. Such factors include foreign exchange rates, currencies and global monetary systems like the use of Euro currency, inflation, counter trade, balance of payments, monetary policies, and fiscal policies among others. After carrying out careful analysis of these factors; the company does not face a lot of these challenges but only it may be subjected to few of them like inflation and the balance of payments.
Social factors are other factors that the company has to consider before going international. Forces within the society such as religion, family, social structure and education may impact positively or negatively the way the German company will market its products. Social factors affect our attitude, opinions and interests on the way we view products from certain companies. Technological factors are another key factor to be put in consideration before going global. Advanced technologies are now being experienced by many companies as a result of the concept of globalization.
Globalization has taken centre stage and now the use of e-commerce or internet marketing has been increasingly utilized by many firms. The company should not be left behind and the management should consider the utilizations of such techniques in maximizing the benefits brought about by globalization. Legal factors are another factor that must be analyzed before going international. The way the company operates in terms of operating rules of law for example how the company will cope with the legal rules in France is more important because it avoids conflicts and will enhance the success of the firm.
The company is engaged in legal business practice of marketing tea products which is permitted by the French laws. Market Analysis The market of tea products is reported to be large globally. Although there has been decline in consumption of tea products in France, there still exist considerable market of which if the company will utilize will gain significant market share and thus increase its productivity. There are many producers of tea products in the world particularly in Germany and that is the reason why this particular company opted to market one of its tea brands in France.
Industry analysis The tea industry is performing poorly in terms of market performance in France and thus the company has been faced with the challenge of going international to sell its products. The company has utilized the concept of globalization and thus it has been able to survive and maintain its market share in the industry. In France, tea selling firms are not many and therefore the German company can utilize this opportunity. Competitor analysis Tea industry is considered to be the most flooded market in terms of the products being produced and sold globally.
Since the company is considered to be a market leader in the tea industry in Germany, the company has used competitive strategies that have seen the company compete across the entire tea products market. Since the company has a well developed financial base it has also embarked on growth strategies that have kept its competitors inept in terms of competition. Implications of situational analysis Since the tea industry is characterized with stiff competition, the company needs to be aware of the ever changing external and internal business environments.
The company has the duty to analyze political, legal, social, legal, and technological factors that may affect the overall company’s performance SWOT analysis This will involve in-depth analysis of the strengths, weaknesses, opportunities, and threats that the company will experience as a result of competition from other companies. Therefore it is crucial to understand the aspect of globalization regarding to this analysis and how will influence the policies and businesses undertakings of this company. Opportunities and threats
An opportunity can be defined as any event, or a feature of the external environment which creates circumstances that are advantageous to the business in relation to set of goals to be attained. It is considered to be an attractive endeavor for a company’s functions which if fully utilized will lead to increase in productivity and thus rise in profitability level as a result of international marketing. The most evident opportunity for the German company is the use of e-commerce which is brought about by globalization. The company has to utilize the use of internet in exploring the tea market in France.
There have been significant improvements by the company in terms of accessing market share and has been attributed to the use of internet marketing. However, the company needs to fully utilize the opportunity of accessing other markets where the tea products are reported to be consumed in high quantity such as in Africa countries and in the UK. A threat on the other hand can be referred to as an environmental progress or event which will present inconveniences or challenges likely to hold back the accomplishment of organizational goals.
The company is not the only company seeking to expand and therefore it is facing intense competition from other companies who seek to expand there market share too, thus there has been a drop in the market share thus a reduction of their profits. This is a threat faced by the company which if not taken care of it may cost the company. Strengths and weaknesses Strength can be defined as a particular skill or typical proficiency that a company can do comparatively better than other companies particularly its competitors and which the companies have and contributes to the accomplishment of the stated goals or objectives.
The company has a strong brand name of its tea products which helps it to have a competitive benefit over the other tea producing companies who seek to go international. The company is also accredited with the best marketing network that have made the company to do well globally. The company has the best distribution networks in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other strength associated with the company is it has the ability to identify the market segments and hence enhances the competitive position of the company.
A weakness on the other end can be termed as any feature of the company which may deter the company from accomplishing its stated objectives. Usually, it envelops the firm’s assets, resources, and competences. The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Research shows that the employees of the organization especially the marketing department has failed in coming up with viable strategies that will enhance productivity.
The company has dropped in terms of market share and relative growth and its rivals have been regarded to be having an upper hand in exploring new markets. Generic business strategy The management of any company must identify the way in which it will cope with other companies and what perceives as a basis for competitive advantage. The business strategy adopted by a firm is essentially a method for creating and sustaining a justifiable position in a particular market. Usually a firm’s profits depend on the nature of the strategy and on the inherent profitability of the industry in which it operates.
Any company may perform poorly in a profitable industry if it employs unsuitable marketing strategies. A business competitive strategy requires the company to make a decision whether to compete across the entire market or only in certain segments of the industry and also whether to compete through low costs and prices or through offering differentiated product change. The company has chosen to adopt the strategy of competing in certain segments as they have focused in France only and not all European countries.
This may be successful since it does not require a lot of funds. Marketing strategies Market entry mode These are ways in which firms and business organizations seek to market there products globally and usually depends on the quality of the firm’s products and the nature of competition that rival firms use in trying to expand there market share as well as maintaining growth. There are various methods of entry to different markets and the firm has to select the effective ones depending on cost, risk and the degree of control.
Such modes of entry that the company can utilize include the following: Direct Exporting Direct exporting involves the producer of the products or services dealing directly with a buyer in the foreign country and often regarded as the difficult method of entry because the owner or the exporter of the product is entirely responsible for the business undertaking; for instance, researching the suitable market for the tea products and establishing the suitable distribution channels to be used.
Therefore this method requires much attention in terms of management and the resources to be used in the entire exporting process. It is also arguably the best method because the German company may benefit from reaping maximum profits and may enjoy long-term growth thus the company can maintain its base in France. Indirect Exporting Under indirect exporting an exporter can access foreign market free from risks of doing it directly. It involves the use of independent organizations within the exporter’s domestic markets.
It can be done through various ways, for example, a domestic based export merchants, who take the title of the goods and sells them in those countries abroad, domestic based export agents who sell and market the goods on behalf of the exporter and co-operative organizations who act on behalf of the producers. This approach might be cumbersome to undertake by this company because the cost of getting links with agents in France may be high thus taking long time to establish a market. Joint Ventures Joint venture partnership can be defined as a partnership created by one or more company with a view to carry out a common business together.
They contribute equally to the business and agree to share any profits in a certain percent in the course of the business. Such a business is referred to as equity joint venture and it is favorable because there is sharing of risk and loses. There is also contract joint venture which involves creation of new firms in which foreign and local investors share ownership and control. Generally joint ventures are common where government conditions demand so in order to ensure control, nationalism and reduced re-patriation of profits.
It will be an ideal situation if the company is still young and wish to exploit other markets for their products since it require fewer resources. However, it has potential problems and includes sharing of profits, employment issues, market coverage and decision making due to different long-term interest of partners. Licensing Licensing method of entry can be termed as contracts in which a foreign licensor provides a local license with access to know-how in exchange for financial compensation.
It presents an opportunity to entering markets that may have been otherwise closed to exports and also it will not require the company to have substantial capital investments in the host market horizon. Franchising Franchising involves one partner called franchisor licensing trademarks and established methods of entry to a party called a franchisee in swap for a recurring compensation. A good example that illustrates this method is that of the German company selling its tea products together with the rights to use its trademark and name to other independent tea producers in France.
It is easy to start the business abroad i. e. in France, there is room for rapid expansion, there is stable offering of the same products for a long time and therefore will attract customers. Strategic Alliance Strategic alliance method of entry can also be used by the German company when going international and it involves formal partnership between two or more parties to undertake a common business with the view of attaining same objective but the parties involved always remains independent to each other. Business resources to be shared may include common distribution channels, knowledge, products or expertise.
Therefore the company can utilize this method because of the following advantages; there are low research and development costs, easy access to partner’s capital, new markets for the tea products of the company and quick time in marketing the tea products, there is sharing of distribution channels and tapping the other partners advanced technology and intellectual property among others merits. A good example here is of the German company reaching an agreement with any producers of tea products to distribute there tea products on there behalf in France.
However, from my own personal view; after cautious deliberations of the above methods I will prefer the German company to employ strategic alliance entry method since it is cost effective and it will involve the company employing fewer financial resources in entering the market. German company will identify the companies that deal with tea products and try to enter into contract with them in marketing such tea products. Marketing mix Product The German company deals with a variety of tea products.
The tea products of the company are said to be unique as compared to of those of its competitors. The tea products are considered to be of high quality as compared to that of its competitors. Price Price is an important tool in competition and thus firms use it as a mechanism to outdo each other in the tea industry. Research reveals that the company is said to be overall low cost producer of alcohol products in Germany and therefore can become market leader too in France. The tea products of the company are cheap and affordable to its clientele.
Further research indicates that, the company is becoming a market leader because of the cheap prices associated with the tea products. Distribution It is evident that the distribution channels of any firm determines the sales of any company and the German company has the best distributional channels that have resulted to increase in profit levels of the company in the recent past. This has enabled the company to have competitive edge over its competitors and thus has led to increase in market share, profitability, and growth rate.
Promotion The company should engage itself in promotional activities of tea products in France and significant results will be witnessed because consumers will respond well in consuming the tea products. The company is engaged in vigorous advertising through media and bill boards and thus has attracted a large number of customers to drink the drinks. Recommendations The company should plan in advance for the activities to be carried out and ensure that sufficient funds and capital are provided to enhance the success of the programs.
The strategies that have been formulated should be implemented effectively in order to counter the moves of its competitors. The use of pre-testing techniques while introducing the tea products in France should be utilized in order to give the management the insight of how the products will perform in the market. The methods of entry adopted by the company should be implemented too. Constant evaluation should be carried out to ensure that the company’s marketing activities are a success.
The managers should monitor how the tea products are performing in both old and new markets of the company as compared to that of its competitors thus will be able to formulate marketing strategies that can be a success to the firm. The company should further come up with distinctive competencies i. e. things that give a firm an advantage over similar businesses in France. However, no matter how attractive an opportunity may be the business must have the competencies to capitalize on it. An opportunity without the competence to capture it is no really an opportunity to the business.
Therefore we can deduce that there is greater need for the company to understand organizational behavior in order to achieve the organizational effectiveness and much attention should be directed to people, structure, technology and the environment. Organizational effectiveness can only be achieved if the management is be able to incorporate good leadership, motivation, a well defined organizational structure, forming group dynamics and setting up good structures for communicating in the workplace.
Further, the company should also ensure flexibility in the sense that they should be ready to cope with change without affecting its productivity especially when it intends to go international. There are also some more areas that the company needs to improve on in its response to globalization. For instance the firm has responded to globalization by opening up some branches around the globe but this have not been enough as it still faces competition from other tea products producers.
The company should explore more new markets not only in France but around the globe and try to be the dominant market leader in order cope with change and competition in the industry. The company should take advantage of globalization concept and engage itself in vigorous marketing strategies like the use of technology in exploring new markets within the target market i. e. France. The use of on-line marketing will boost the chances of the company to explore more new and diverse markets within France.
Because the company plans to diversify to France, online marketing will be efficient method to use. Online marketing also referred to as E-commerce is based on the technology of internet and the usage of personal computers. In earlier days companies used power full computers to computerize millions of transactions carried out every day. Through internet branches of the company can develop networks, through which they could keep up to date with business progress and could improve service provision to its customers not only in France but in other countries.
The reason being quite obvious, the convenience and flexibility it provides cannot be ignored. Flexibility of time, place, human resources and consists involved. As internet globalizes this world and in the same rate online marketing is becoming global thus the company cannot avoid utilizing such technology. Organization structures of the firm should be clearly outlined such that the employees will know what they are expected from them in the course of their duties. This will lead to reduction of conflicts between management and the workers because there will be no vague policies.
The German company structures should be in such a way that it fits the modern world and should be adaptable by the employees. Groups’ dynamics should also be encouraged in order to enhance cooperation among the workforce. Workers should be left to join groups i. e. trade unions of their choice to avoid conflicts that may arise. Research also indicates that group decision making need to be emphasized because it yields good returns as compared to that of individual decision making. A good communication channel should be identified by the company in order to boost organizational effectiveness.
Any barriers to effective communication that may be encountered e. g. selective perception, language barrier among others should be dealt with in order to pave way for efficient passing of messages in the workplace. Further the company should uphold to the legislations of corporate social responsibility in France; corporate social responsibility is the obligation that requires a firm to consider the interests the clientele, employees and shareholders, communities and other conservation considerations that affect the business operations of the company.
Therefore such obligation will extend beyond the firm’s legal obligations to factors such as profits and dividends. However, the company should also take into consideration the short-term and long-run social, economic, cultural and environmental consequences as a result of the firm’s operations. Today’s heightened role of businesses in the society has been enhanced by increased sensitivity and awareness of urgent ethical and environmental issues.
Therefore the firm should crucially examine some issues that include; environmental damage, pollutions, improper treatment of workers, faulty production that inconveniences or endangers customers among other considerations. As part of international commitment to conduct business with integrity and comply with all applicable laws, the company should aim to maintain a strict code of conduct that will see its social responsibility in France increase through either of the following; fund raising, community assistance, project funding among other.
In order to improve the organization effectiveness in the company, the management concerned should in the process embrace good leadership practices for instance doing away with authoritarian style of leading and instead encourage democracy to prevail in decision making that is, an all inclusive decision making structure. Also motivation of employees should be encouraged and offering of fringe benefits, house, medical, hardship allowances and other social services for example swimming pools, televisions sets will make the employees feel respected and recognized in the work place. Reference
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