Various factors that have influence in their business process - Essay Example

Table of Contents Table of Contents 1 Introduction 2 1a. 3 1b. 6 2a. 7 2b. 8 2c. 9 3a. 10 3b. 11 3c. 12 4a. 13 4b. 13 Reference 15 Introduction The world of the 21st century exists in a highly competitive global environment, which is powered by tremendous growth and fast development. The emergence of the internet in the last couple of years along with the fact of the rapid development of various kinds of technological gadgets has resulted in the process of faster and better connectivity in the markets around the world. The global connectivity has increasingly helped in connecting the markets around the world, and has successfully converted the globe into a single and well connected entity. It is of high importance to mention that the better levels of technology powered connectivity are resulting in the successful diffusion of various global trends, which emerges from various markets around the world. Because of faster dispersion of the globalized trends, it can be said that the consumers are getting more and more aware of their needs and wants. It also has to be said that the better connectivity is helping the rapid dispersion of global trends from the well established markets to the emerging markets, thereby creating the opportunity for development of consumer demands. This entire cycle of having an increase in consumer demand is having a direct impact on the part of the consumers in a circular manner. Faced by growing domestic demands in the marketplace, multiple companies located in various markets around the world are increasingly trying their level best to enter the new markets as they promote significant amount of business opportunity. As a result, a major shift of power balances is happening in the markets from the sellers to the buyers. Hence, it can be said that various kinds of business organizations are emerging in the connected global marketplace which are vulnerable to be influenced by the diverse range of market based challenges. The project in this case provides a competitive view of ASDA and TESCO and aims to highlight the various factors that have a significant influence in the business process of both the organization. 1a. The factor of globalization has brought a significant change in regards to the methods of doing business. The evolution and advancements in the field of communication technology has already played a major role in regards to the diffusion of various kinds of global trends to various developing and newly emerging markets. Because of this spill over effect of the trends of globalization, it can be said that the consumers of both the developed and developing regions and markets have started to become more and more demanding in nature. The emergence of new consumer demands is resulting in the process of evolution of new kinds of business opportunities. Discussing in connection to this, it can be said that various business organizations and entities are evolving from various corners of the world for the purpose of emergence of new market based opportunities. This is paving the way for the thriving and survival of a widely diversified nature of business organizations. Talking on these lines, it can be said that various kinds of business organizations exists in today’s business environment of highly competitive and dynamic nature. The organizations may be multinational, international, transnational or global in nature. Talking in more elaborate manner, about the various kinds of organizations, it can be said that multinational business organizations are organizations, whose various divisions and business processes are spread across multiple countries around the world. Experts of the business domain reveal that a key factor of conducting a multinational business is the fact that organization works along with its various subsidiaries on the basis of certain degrees of decentralization. Talking in specific terms, it can be said that the decision making power of the subsidiaries located in various nations and countries around the world are comparatively high. In other words, various business experts also represent the multinational organization as entities, which have their bases in a particular country and operate in a different country (Pagell and Halperin, 1999, p. 64). The international business organizations are those organizations which conducts its business operations in more than one country. In case of international business organizations, the multiple processes that are extremely vital for the smooth running and functioning of the business organizations are spread and scattered over multiple nations. It is of significant importance to mention that the organizations focus on doing business in an international manner for the main purpose of attaining various business related benefits provided by the countries and nations. A transnational business organization always focuses on conducting its business processes that are spread over multiple geographies. However the factor of criticality lies in the case that the business organizations share varying levels of coordination and integration of the multiple business subsidiaries. Also, the transnational business organization tries its best to adopt a business strategy which responds on the basis of individual demands and needs of the local market. Finally talking on the lines of a global organization, it has to be said that the global organization run on the basis of a single strategy that is applicable on the multiple cross border subsidiaries of the company. It is also of high relevance to mention that the company shares a high level of coordination and integration with all its subsidiaries located in multiple corners of the world (Stonehouse and et.al, 2007, p. 4). Talking in regards to the chosen organizations, it can be said that Asda, which is acquired by the US based global retailer Wal-Mart is an example of multinational business organization. On the hand, the organization Tesco is an example of a multinational company, which has its bases in the United Kingdom. The multinational organization is spread over 14 countries around the world (Tesco, 2013). It is also important to mention that Tesco is a public limited company, whereas Asda is a private subsidiary of the US based retail giant Wal-Mart. Talking on the issues of mission, goals and objectives of the multinational company Tesco, it can be said that the company focuses on enlarging the scope of business through the process of building successful relationships. The strategic focus of the company is highly diversified in nature. It comprises of growing the core business of UK region as well as becoming a highly acclaimed retailers on the offline as well as the online mediums. The strategic objectives of the company also highlight the issues of growing the retail services in all the currently serviced markets and creating brands of high value. Finally, the strategic viewpoint of the company also highlights the business organization’s focus to serve the communities in the selected markets (Tesco, 2013). Talking in regards to the missions, goals and objectives of Asda, it can be said since the UK based organization is currently a subsidiary of Wal- Mart, it can be said that the long term focus of the organization will be similar to that of the US based retail giant Wal-Mart. Talking about the mission of Wal-Mart, it can be said that the retailer focuses on helping people to save money so as to enable them to leave a more happy and comfortable life (Walmart AR, 2012, p. 14). The various goals which comprise of the mission objectives of Walmart talks about the factors of delivering values to the end consumers and customers and thereby increasing long term shareholder value. Talking about the strategy that is used by Wal Mart, it can be said that the focus is on providing the customers of Walmart with a better and broader product assortment at highly competitive prices (Walmart AR, 2012, p. 4 - 6). 1b. Talking in regards to the stakeholders influence on the organization’s short and long term focuses, it is of high importance to mention that the stakeholders’ points and views hold a significant value for the organization, since it plays a major role in regards to sustaining and competing in the marketplace. Stakeholders are defined as individual or group of individuals with similar level of interest as claims in regards to the performance of a business organization. It is of utmost relevance to mention the fact that the stakeholders of an organization can be both internal and external in nature. The list of internal stakeholders comprises of employees, managers of all level as well as the shareholders and stockholders of the organization. The external stakeholders comprises of suppliers, customers, governments, locally associated communities as well as the public at large (Hill and Jones, 2009, p. 347). While analyzing the level of impact, the stakeholders will have on the organizational performance of Asda, it is of high importance to mention that the UK based Wal-Mart which has acquired the UK based retail chain provides significant amount of the issues and concerns of the stakeholders. Also, the company is highly committed towards strong governance through the process of increasing the value of related stakeholders of the company (Walmart Ar, 2012, p. 14). While talking about the level of impact, the stakeholders provide on Tesco, it is important to mention that the company provides considerable amount of interest to the stakeholders. Talking in more specific manner, it can be highlighted that the company’s chief executive Philip Clarke strongly ensures that the brand does the right things for the stakeholders. Tesco as a brand is strongly focused on developing customer loyalty as well as protecting the reputation of the brand. In regards to its core activities, Tesco is strongly committed to listening to the stakeholders and hence keeps on promoting and designing strategies that addresses the concern of the stakeholders (Tesco CR Review, 2012, p. 3, 5). 2a. It has to be said that both the organizations, Asda and Tesco, that have been shortlisted for the assignment, operate in the markets of UK. As a result, it can be said that the economic overview of UK provides a significant understanding of the macro factors that are influencing the business scenario of the economy. It is of high importance to mention that since the UK is a very important member of the Euro zone, it has faced significant amount of challenges in the recent times in regards to the difficulties faced by the Euro zone. In the previous couple of months of the last business year, the nation has witnessed events of slowdown in sales, and industrial production. The nation has also faced significant challenges in regards to various macroeconomic issues. However, in the recent times, it can be said that the region is witnessing signs of economic recovery. Talking in more specific manner, as per the estimate of NIESR, the economy of UK grew by around .1% in the first three months of 2013 because of strong manufacturing output. However, it also has to be said that the export of the UK region fell by around 7.5% since the beginning of 2013 (Aldrick, 2013). The OECD has also estimated that the region is expected to grow at the rate of 1.4% over the upcoming three months period (Rowley, 2013). It also has to be said that the high activity on the part of manufacturing as well as positive growth prospects for the economy has highlighted that the region will be able to steer clear from the grip of a possible triple dip recession. However, it is also important to mention that the economy is witnessing fall in exports to non EU nations by around 4.7%. Also, the number of shipments to the US has attained a significant drop. (Rankin, 2013). Talking in regards to the economic impact on the businesses of Asda and Tesco, it can be said that this will surely impact the consumer sentiments in the markets of the UK. Also, the fact that the weakening job prospects in the region will play a significant role in the business prospects. 2b. The UK being a very important member of the Euro zone is facing a very challenging scenario in regards to the business and economic prospects of the country. Talking in an overall manner, the entire Western market along with the Euro zone is facing the brunt of an economic slowdown as well as low industrial output. Talking in regards to the fiscal and monetary policy of UK as well as the entire Euro zone, it can be said that the focus is largely on the lines of issues of the number of crisis related blows that the entire Euro zone can endure. While with a strong manufacturing output and restoring of consumer sentiments looked promising for the markets of UK, the crisis of Cyprus has again brought back a gloomy outcast. It has to be said that a scenario of reverse Spartacus has emerged from the euro zone countries, where the members need to provide logic in support of the fact that their nations do not require financial support for bailout (Elliott, 2013). Talking in regards to the fiscal and monetary policy, it is of extreme importance to present the views of George Osborne of the International Monetary Fund (IMF). It has been realized that a significant relation exists between the monetary and the fiscal policy. It has been realized that a loosened fiscal policy will promote a strong and stiff monetary policy from the financial markets in regards to high interest rate in the long term. It has been analyzed that the fiscal multipliers will are far weaker in the open economy of Britain as compared to that of the Germany or the US, which have closed economies. This might result in a potential credit downgrade for UK from the AAA status to a lower one (Elliott, 2013). It is utterly important to mention and highlight that both the UK based organizations Asda and Tesco, will face significant threats in regards to business prospects, because of dampening of consumer sentiment, in the event of a rating downgrade for the UK region. 2c. Talking in regards to competition policy as well as regulatory mechanism for the UK markets, a variety of factors has to be taken into account. Talking in more specific terms, it can be said that relatively high levels of inflation exists in the UK region. Because of the high inflation levels, the consumers are bound to get impacted in the long run. The Institute for Public Policy Research has highlighted that a tough year may exist in the region in regards to competition for the year of 2013. Signs of weakness of competition exist as only 2.6% of the total number of surveyed consumers reveal that they are looking forward to increase their shopping spends. Also, while equating the level of inflation with regards to the process of increase in wages, it can be seen that the inflation is bound to linger between 2.5 to 3% as compared to that of the 1.8% increase in wages. Also, it has been projected that the levels of unemployment is expected to rise from the current 7.5% to over 8% (Aldrick, 2013). Needless to say, the hostile factors surrounding the consumer confidence will lead to challenging scenarios for both Tesco and Asda. 3a. It is of considerable importance to mention the fact that both Asda and Tesco are highly dependent on the consumers for attaining growth in regards to sales and production volume. Talking on these lines, it has to be said that the economic factors of micro level like income stability, job prospects, inflation and economic growth have significant influence in regards to the pricing and production decision of the two companies. Talking in regards to market news, it can be said that a high level of inflation exists in the market of UK. Also, with the forecasted rise in unemployment along with the low possibility of increase in wages of the masses, the UK region might probably suffer from hostile consumer sentiments. It also needs to be highlighted that the Bank Of England will be forecasting a significantly lower economic growth for the year of 2013 because of high inflation as well as a series of other difficult economic indicators (Press Association, 2013). This will also significantly have a lasting impact in regards to the process of influencing the consumer sentiments in a negative way. With grim consumer sentiments, prices of products will have a tendency to come down. The reason behind it is associated with economics because sellers will have a tendency to attract and win back consumers through effective discounts. However, talking on the lines of production, a dip in production is bound to happen as a result of negative consumer sentiments for the UK market. 3b. While analyzing the influence of market forces on the organization, the Porter’s five forces strategy can be highlighted. It takes into account the influence of the buyers, suppliers, alternatives, competitions as well as rivalry factors. Talking in regards to the influence of buyers impacting Tesco and Asda’s business prospects, it has to be said that because of high availability of information, the buyers have the upper hand in today’s market. Hence, both the organizations need to constantly engage in providing better value proposition for the customers. From the sellers’ point of view, it has to be said that both the organizations have high level of popularity among the masses. However, the point of suppliers providing the required inventories to the retail chains also has to be considered. Because of the high level of negotiation power enjoyed by both the organizations, the selling power is relatively low for the suppliers. Talking about the power of substitutes, it needs to be focused that both the organizations of UK compete more on the same lines. Both Asda and Tesco has homogeneous set of value based offerings in terms of products and services, and acts as an alternative to the same set of consumers. However, a certain amount of threat emerges in regards to the power of substitutes from other organizations providing similar line of product or service offerings. Talking in regards to competition, it has to be said that with the rising acceptability of online shopping, a tussle exists in regards to sales from online and offline shopping for both Tesco and Asda. While discussing on the issues of inter firm rivalry, it can be said that both Tesco and Asda competes with each other in regards to targeting for the same set of customers for the purpose of value communication for their homogeneous kinds of product and service offerings. 3c. While discussing the business and cultural environment for both Tesco and Asda, an analysis of UK on those lines is necessary. While analyzing the business environment, the various economic indicators of the region like high inflation, increase in pay freezes as well as high and probably growing rate of unemployment needs to be factored. Also, with the possibility of inflation rising to around 3.2% by the end of 2013, the region might embrace a state of low growth of GDP for around 2 years (Inman, 2013). Hence, it can be inferred that the business environment for both Tesco and Asda looks challenging in the upcoming future. From the socio-cultural point of view, a variety of facts needs to be considered while analyzing the UK environment for both Asda and Tesco. It has to be said that the wealth distribution is highly skewed to the baby boomers as around 80% of the national wealth is under their holding. Also, the baby boomers are aging in the UK region as like the rest of the world (Worrell, 2013). In regards to other facts, it needs to be highlighted that there is supposed to be a dip in the number of married households with kids, thereby signalling the rise of individual parents with kids. A very important social factor that needs to be highlighted is that there is an increase in the number of young people without an income for over a year (Worrell, 2013). Hence, for both Tesco and Asda, it is imperative that they try to communicate value based offerings to the social diversion as well as the business scenarios that is happening as well as emerging in UK. 4a. It is of considerable importance to mention that UK, which is an important member of the Euro zone, is under the grip of economic slowdown and low productivity for the last couple of months. While the slowdown is largely triggered by the spill over effects of the crisis of the euro zone, it is of high importance to mention that there are significant amount of external influence as well. Many businesses of UK have been looking forward to the growth of the developing countries for the purpose of sustaining the challenging times. However, the slowing of the economies of the developed world because of various macro and micro economic challenges of those regions has resulted in the process of compounding the business and economic crisis of UK. Though the economy of UK has attained a growth of .1% in the recent times, yet it has faced a decline in exports. Both Tesco and Asda is witnessing a cap in regards to its business prospects because of the challenges of cross border growth. 4b. It has to be mentioned that the entire European Union is facing a prolonged period of crisis because of the problems brought forward by the difficulties of the sovereign debt problems of the European nations. The significant crisis of various European economies like Ireland, Portugal, Spain, Greece and Cyprus has resulted in the process of the slowdown of the entire region. Talking in regards to the policy impacts of the European Union on the businesses of UK, certain factors need to be highlighted. It has to be mentioned that the unemployment rate of around 12% in the European nation has resulted in the fall of output for the manufacturing sector of UK. It is important to mention that the fall in the manufacturing output has led the country to join a series of EU nations that has achieved a strong growth in regards to the unemployment rate (Inman, 2013). Also, the EU nations combined focus to limit the bonus for the British financial sector (Traynor, 2013). Needless to say, this is also going to take a toll in regards to the bankers’ confidence on UK. Hence, it can be said that the combination of these factors result in a negative impact in regards to the business prospects of UK. Reference Pagell, R.A., and Halperin, M., 1999. International Business Information: How to Find It, How to Use It 2nd ed. Chicago: The Oryx Press. Stonehouse, G. and et.al, 2007. Global and Transnational Business: Strategy and Management. UK: John Wiley and Sons. Hill, C., and Jones, G.R., 2009. Strategic Management: An Integrated Approach : Theory. USA: Cengage Learning. Tesco, 2013. Our strategy. 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