Expansion of an Irish College IBAT into Mexico - Essay Example

? Expansion of an Irish College "IBAT" into Mexico Contents Expansion of an Irish College "IBAT" into Mexico Contents 2 Introduction 3 Macro Environment 3 Analysis of the education sector 6 Issues 7 Strategic options 8 Human Resource 10 Conclusion and Recommendation 11 Reference 12 Bibliography 13 Introduction Strategic planning is the backbone of strategic management. Strategic and operational management are linked with each other. Strategic management aims to provide direction, guidance and boundaries of operational management (Steiner, 1997, p.4). Therefore Strategic planning is the process of developing and maintaining a strategic fit in between the organizations capabilities and goals along with the changing marketing opportunities (Kotler, 2008, p.34). The project report is about the expansion of an Irish Collage ‘IBAT’ in Mexico. Thus for this reason PESTEL analysis is carried out to understand the macro environment of Mexico, along with an analysis is conducted upon the education sector of Mexico. When a brand move into a new place it has to face cultural difference which needs to be tackle properly and for which human resource team needs to work effectively so that the business and the employees can adapt to the new culture and environment. Thus IBAT can take the opportunity of the growing education sector of Mexico and add to its advantage. Macro Environment The Macro environment consists of framework, PESTEL. The PESTEL framework aims to categories the environmental influences into six main types which include political, economical factors, social, technological factors, environmental and legal factors. It is essential for mangers to understand the key drivers of change and also the impact of these factors on market, industries and also on individual organization (Johnson, 2008, p.65). Political factors: The basis of Mexican politics lies in the context of modernizing the elements. With the above context certain ongoing trends have appeared in the recent years such as modernization of politics and anchoring of democracy. Regional politics is widely dominated by the local entrenched strongmen who often tend to represent families who have been powerful during the colonial times (Klepak, 2008, p.3). But the country faces some political risk which is based on many possibilities. The first and foremost risk arises from terrorism and drug violence, corruption, congressional Stalemate and Guerrilla activity and sabotage. Therefore, the above factors may put an immense risk on the political condition of Mexico (Schtulmann, 2010). Economical factors: Mexico is ranked as an upper middle income country by the World Bank. In Mexico poverty is widespread, about 44% of the Mexican population lives below the poverty line. The economy of Mexico grew by 5% in 2010 after a recession experienced by the Mexican in 2009 during the phase of global economic crisis. The country’s tax revenue as a percentage of GDP was about 17.5% during the recession which was recorded the lowest among the OECD members. Mexico is among the popular tourist destinations across the globe. It has attracted about 21.3 million tourists in 2010 and has become the tenth most popular tourist destination. Thus tourism has contributed to the economy of the country and has recorded about $11.8billion (US State Department, 2011). Social Factors: Mexico is one of the most populous Spanish countries in the world. About 76% of the Mexican people live in the urban area. The population of Mexico City is about 22million making it one of the largest concentration of population in Western Hemisphere. Mexico has been able to made significant changes in education sector and the literacy rates over the past few decade have decreased drastically. According to a report of World Bank, enrollment at the primary level is universal and more amounts of children are completing their primary education. Technological Factors: The future of Mexican population depends largely on the utilization of knowledge so that the country is able to meet the economic, social and environmental challenges. For the above reason the role of scientific and technological communities is essential in supplying knowledge and in emphasizing innovation. The Mexican government had decided to implement a strategy of internationalization of the country’s knowledge and learning system and this can be done by reducing the dependence on the United States of America (Viegas, n.d, p. 1). Thus it can be said that Mexico is getting ready for some new technology which would help the country in its overall development. In terms of infrastructure the world economic forum has ranked Mexico 79th globally. The country is planning to invest $233 billion which is designed to raise the quality, coverage and competitiveness of the country’s infrastructure (US State Department, 2011). Environmental Factors: The Government of Mexico has been undergoing plans to improve the environmental condition of the country. With a rapid growth of population in the urban areas, had lead to an increase in demand for land but with a poorly planned development. This resulted in environmental health problem for which Mexico along with US have agreed to act jointly. Some of the issues faced by the country include clean water supply, air pollution, environmental health, contamination of land and industrial environmental stewardship (EPA, 2011). Legal Factors: Mexico has introduced a substantial deregulation and improvement in the enforcement of the law. Its legal environment has also improved tremendously with its membership with international organization such as NAFTA, the economic corporation and development and with the world trade center (Mexico Data Online, 2007). Analysis of the education sector The Mexican education sector is divided into four levels which include preschool like K1-K3, secondly compulsory basic education which involves from grade 1 to 9, thirdly, the upper secondary education ranges from grade 10 to 12 and lastly higher education. The government of Mexico is only responsible for providing compulsory education and not involved in other three forms of education. Public schools have recorded about 87% of its services all over the country. A governing body Secretaria de Education, sets the curriculum, selects the respective text books and also hires and fires school personnel and also sets the salary for the employees. The public spends on education which amounts to about 5.9% of the nations GDP. The Government has recently started to spend about $28billion yearly for the education sector which is almost a quarter of its proposed budget. On an average the county spends almost 85% in education through federal transfer. The two main bodies in the education sector are the Ministry of Education and the teachers union. International bodies such as The World Bank and also the Inter American Development Bank also plays a major role in the education system of Mexico. But despite o these bodies involved with the education sector it contributes only about 1 to 5% to the education sector. Key issues surrounding the education sector of Mexico is insufficient enrollment and a high dropout rates in the primary level, insufficient supply to the higher secondary schools and the most important issue low achievement level of the students. In order to tackle the issue the Government has introduced four major programs. they include, Opotunidades which aims to provide cash grants to the low income families so that they can educate their children; Next is Enciclomedia, which allows the school curriculum to be recorded in a ROM so that students can learn with the help of computer. Programa Escuelas de Calidad also known as quality school programs which takes into consideration the low performing school. The government provides then with grants up to $10000 which is to be used for infrastructure purpose. The enrollment of students has grown from 9.7million students in 1970 to about 21.6million in 2000 (Santibanez, Vernez & Razquin, 2005, p. vii). Currently the education and training of the people of Mexico is the high priority for the Mexican government. The Government currently spends about 7.3% of the GDP on the education sector. Mexico is now concentrating on the five pillars of education which includes, upgrading of the education infrastructure, vocational training, incorporate ICT in classrooms, educational reforms and permanent evaluation. The Ministry of Education has approved US $40 million which would be utilized to equip 350,000 classrooms and 700 ICT programs for teachers by 2012 (UK Trade and Investment, 2009, p.13). Issues The part would deal with the issues and challenges that the Irish collage IBAT would face in terms of culture difference, business practices and management styles. IBAT base is of Irish thus the difference in culture would provide a huge challenge for the management. One of the key factors for organization competing on global basis is to understand the diverse culture. Therefore understanding of the cultural difference becomes extremely essential and important for organization which has planned for global expansion (Nelson, 2011, p.18). Mexico is a country which is known for providing opportunities and presently the country has been experiencing a growth not only in the education sector but overall thus making Mexico a favorable place to do business. But in terms of cultural the Mexican population and Ireland population does not share a common culture. Thus when a college is set up might not be interested to enroll in the Irish collage because they might not feel suitable getting into an Irish collage leaving its own country’s collage. Thus the human resource team must pay particular attention to the feelings f the students of Mexico and try to adapt their culture which would prove profitable for the Irish collage in the future. Education is considered as a social term in the society’s way to transmit the knowledge to the younger generation. International education operates in an environment in which a child tends to move through an enormous variety of education system. Therefore it is necessary to inherit the culture of one county before the start up of its business. The business practice adopted by the Mexican government is quite different from the rest of the country this the most suitable business form is through joint venture structure as a Mexican company would be involved in the business making it much easy for a particular company to succeed (Gordon & Williams, 2002, p.47). Mexico has been regarded as one of the most hostile business climate across the globe especially for foreigners (Reed & Gray, 1997, p. xv). In the field of education, constant education and training are essential towards achieving a more effective educational system, but unfortunately Mexico has recorded the lowest rates of participants in training and education sector (OECD, 2005, p. 156). Therefore it is necessary for the management of the Irish collage to take into consideration the factors that might create an issue for the development of the institution. As stated above the country is investing highly on education system thus it would provide an opportunity for IBAT to set up one of its branch in Mexico as its one of the most favorable county to do business. Strategic options There are three strategic options open to a marketer. Strategic options are the creative alternative option available to an organization. Strategic options take the advantage of trends, opportunities and also threats. The strategic option as a tool helps the organization to understand, identify and make preliminary screening before choosing the best alternative available to the organization (MFD, 2005, p. 1). Concentrated Marketing: This type of marketing is also known as niche marketing. The marketer who adopts this strategic option aims to the best within its segment (Blythe, 2008, p.383). Therefore for Irish collage IBAT this strategic option would not be appropriate as it is not targeting any niche segment. It is an educational sector which aims to provide education to the young population of Mexico. Therefore the strategic option would not be suitable in the case of IBAT collage. Differentiated Marketing: This means to concentrate on two or more segments and offering a differentiated segment for each of the segment (Blythe, 2008, p.383). The IBAT collage can use this type of strategic option. If the collage can provide differentiate strategy, it is surely to succeed. Being an Irish collage it can very well mix and match the education culture of Mexico and Ireland and create and differentiate itself from the rest of the collages in Mexico. It can provide courses which are not available in any of the collages in Mexico. This way the collage would be able to attract more students and earn profitable revenue. Undifferentiated marketing: this option is considered as using a scattergun approach. Without one logo and one advertisement the companies tends to rule the market. One such example is of Coca cola. Initially it is not suggested for IBAT to follow this strategic option but gradually when the institution has created a presence in the international market it can definitely use this strategic option. Apart from the above strategic option, international expansion is also a strategic option available to the Irish collage IBAT. International expansion is chosen because it allows organization to flourish and establish them in the international market. Thus the best strategic option for IBAT is of international expansion. Human Resource When an organization expands its business internationally the most important role is played by the Human resource team. The HR team needs to generate greater cultural awareness, border the language skills and minimize the potential barriers. Thus for the organization IBAT, it is necessary for the HR department to act according to the requirements of Mexican population. The HR team should provide a strong leadership and take stands on advocating the required needs and take the advantage of the diverse workforce. Since the education sector of Mexico is at a growing stage thus it would benefit the education institute if they are able to take advantage out of this prevailing opportunity. By doing this the HR managers can assess the situation, the current state of affairs of the country and adapt to it simultaneously. It is very necessary for the new members to adapt to the new environment for which a proper training and education about the culture of the society is required. This task is performed by the HR managers, such as having a discussion with the employees about the values and cultural diversity prevailing in the country. In order to reinforce the training, the management also needs to reinforce the training with deeds. This training aims at changing the organizations culture, value and the style of management. Most importantly the management must give high importance to the work culture of the Mexican population along with their beliefs and values (Dessler & Varkkey, 2009, p.63). Conclusion and Recommendation Mexico has been working on improving equity and access while increasing the quality of the education system in order to remain competitive in the global environment. In order to stay ahead in the competitive world the Mexican education sector has partnered with the IBRD, OECD and also Inter American Development Bank. All of the three institutions are working closely with the activities of the education sector. Therefore it can be concluded that the education sector of Mexico has reached a stage where it can compete globally across the nation and also provides opportunity for other educational institution to expand their business and explore Mexico. IBAT should adapt to the Mexican culture and apply their value and beliefs. When the collage sets up in Mexico, the institution should hire Mexican people and would provides an advantage for the collage as the teachers would well know the taste and teaching preference of the younger generation. Since it has been reported that the Ministry of Education has approved a $40million budget for the development of classrooms and overall to bring in an effective changes in the education sector, thus it is recommended for IBAT to expand its business in this current scenario as it would allow the organization to get accepted by the Mexican population and also attract the students by introducing some special course which are of interest to the population. Reference Blythe, J. (2008). Consumer behavior. Cengage Learning EMEA. Dessler, G. & Varkkey, B. (2009). Human Resource Management, 11/e. Pearson Education India. EPA. (2011). Environmental Issues. [Online]. Available at: http://www.epa.gov/Border2012/issues.html. [Accessed on January 6, 2012]. Gordon, G. & Williams, T. (2002). Doing business in Mexico: a practical guide. Routledge. Johnson, G. (2008). Exploring Corporate Strategy: Text & Cases, 7/E. Pearson Education India. Klepak, H. (2008). Mexico: Current and Future Political, Economic and Security Trends. [Pdf]. Available at: http://www.cdfai.org/PDF/Mexico%20Current%20and%20Future%20Political,%20Economic%20and%20Security%20Trends.pdf. [Accessed on January 6, 2012]. Kotler, P. (2008). Principles of Marketing, 12/e. Pearson Education India. Mexico Data Online. (2007). Doing business in Mexico: general legal, business & entry issues. [Online]. Available at: http://www.mexconnect.com/articles/13-doing-business-in-mexico-general-legal-business-entry-issues. [Accessed on January 6, 2012]. MFD. (2005). MDF Tool: Strategic Options. [Pdf]. Available at: http://www.toolkitsportdevelopment.org/html/resources/9E/9EB316CD-083E-4C09-B7A5-E22DEA312F05/06%20Strategic%20Options.pdf. [Accessed on January 6, 2012]. Nelson, D. L. (2011). ORGB. Cengage Learning. OECD. (2005). Mexico. OECD Publishing. Reed, G. & Gray, R. (1997). How to do business in Mexico: your essential and up-to-date guide for success. University of Texas Press. Santibanez, L. Vernez, G. & Razquin, P. (2005). Education in Mexico Challenges and Opportunities. [Pdf]. Available at: http://www.worldfund.org/assets/files/RAND_Education%20in%20Mexico.pdf. [Accessed on January 6, 2012]. Schtulmann, A. (2010). Mexico: Five Key Political Risks in 2010. [Online]. Available at: http://www.economonitor.com/blog/2010/01/mexico-five-key-political-risks-in-2010/. [Accessed on January 6, 2012]. Steiner, G. A. (1997). Strategic Planning. Simon and Schuster. UK Trade and Investment. (2009). Business opportunities in Mexico for UK Companies. [Pdf]. Available at: www.ukti.gov.uk/.../UKTI%20Mexico%20Sector%20Guide.html. [Accessed on January 6, 2012]. US State Department. (2011). Background Note: Mexico. [Online]. Available at: http://www.state.gov/r/pa/ei/bgn/35749.htm#gov. 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