International Business and Strategy of Robert Walters - Case Study Example

International Business and Strategy of Robert Walters Introduction Robert Walters being a company that deals in special recruitment consultancy in many nations the world over that approximately number about 24 nations helps in giving directions to careers of professionals the world over. The main functions include the recruitment of human resources in the fields of accounting, banking, engineering, human resources, information and communication technology, legal, sales and marketing, supply chain and other fields that support it. In addition, the company endeavours to create long-term relationships between its clients and the candidates that it intends to recruit for its clients. Robert Walters as per the comparative analysis in the appendix India is the best target market alternative due to the prevailing macroeconomic environment in the nation. Macro-environmental factors in India For a company that focuses on the recruitment of human resources for organizations, India is an important frontier due to the political, economic, social, technological, technological, legal and competitive factors that an investor is likely to derive from the nation. The external environment also affects Robert Walters and there is need to analyse the organization’s relationship with the environment as well as its business strategy. This can be analysed through the PESTLE analysis, which looks at the political, economic, social, technology, legal and environmental factors and how they affect the enterprise (Dransfield 2001, p.20). As a company that operates in an international market where there are several competitors, it is important to understand the macroeconomic environment that one intends to operate in and this determines the policies that the company decides to adopt in order to remain successful and profitable in a foreign market. Therefore, any company that intends to operate and maintain a competitive advantage over the others must consider the macroeconomic factors that prevail in that particular market. The political factors include the stability of the government, the taxation policies, foreign trade regulation as well as the social welfare policies, which greatly affects the operations of the business enterprise (Partridge 1999, p.76). Under the political factors, India is often referred to as the largest democracy in the world only followed by the United States and this has a profound effect on the success of any business that may be started or carried out in the nation. The political situation in India underscores the fact that all businesses within a nation must always operate within the confines of the political conditions of the resident nation. India has reasonable and business-friendly laws with regard to the requirements for wages, immigration, trade agreements and taxes amongst other political macro-economic requirements (Narayana 2010, p.34). Accordingly, Ernest & Young state that India is the fourth best destination for foreign direct investment (FDI) in the world and the political structure and policies of the nation greatly favour a recruitment agency such as Robert Walters. Economic factors include factors such as unemployment, interest rates, money supply and inflation (Cadle, Paul and Yeates 2010, p.42). Economically, India has been one of the best performing economic powers even in the midst of economic recession in the world. After the world recession experienced in the year 2008 and the period after that, India has grown at a slow pace but has recently reduced to reach growth rates of 7% as compared to the 8.5-9% experienced in the preceding years. However, this still shows that the economic growth of the nation is still stable and the economic market is open showing some form of liberty and open market economics (Rastodhi and Pradhan 2011, p.47). In addition to this, there is minimal control of foreign trade and investment as well as regulation of the businesses and industries that operate in India. The implication of this is that many international and foreign companies can operate in India with minimal interference by the government through its fiscal and economic policies. As a recruiting agency of international repute, Robert Walters can set its operations in India as it offers a very conducive and open but less regulated economy that ensures the economic well-being and growth of a company. For a recruitment agency such as Robert Walters, the social factors play an important role and are a determinant of whether the company will be successful in a particular market. In the case of India, the social environment of every business is dependent on the class or caste system as well as mobility within the structure or out of it, the roles attached to any person within the society and the social organization of institutions (Fernando 2011, p.187). This is dependent on the roles that the people play within the society and the levels of income of the particular members of the society. For a recruitment agency like Robert Walters that relies on human resources and institutions in order to satisfy the wants of the customers, the social norms and attitudes of the people play an important role in determining the type of human resources that will be employed. Robert Walters must therefore consider the social factors that hold the Indian society together before carrying out any form of recruitment in the nation. Technologically, India is one of the most innovative and technologically well-informed nations that an investor can put an investment in (Yesudian -Storfjell 2011, p.22). The nation has robust information; communication and technology (ICT) sector that can be sued adequately as a recruitment and marketing tool for a recruitment agency that has a global imprint like Robert Walters. The legal environment as a macroeconomic factor is an important factor that an international business such as Robert Walters must consider before venturing into a particular market. It is easier to carry out business in India due to the few legal obligations required in order to start a business venture as well as the protection offered by international conventions on starting up a business in a foreign nation. The international legal laws that determine proceedings and disputes that may arise in the course of conducting a business govern India being a member of the Geneva Convention. SWOT Analysis of the Indian Market for Robert Walters Robert Walters as a recruitment agency must assess the opportunities and threats or risks that are likely to affect its entry into the Indian recruitment market. This may also be affected by the strengths and the weaknesses within the firm that may affect its capacity to expand within the Indian market. Strengths India has a developed and diverse market base as well as a sophisticated financial sector, which offers a large domestic market owing to its large population size (Morrison 2009, p. 151). In addition, a majority of the Indian population is well educated and therefore provides a good pool of employees that can be recruited by the employment agency Robert Walters for its clients. In addition to this advantage to the company, it also has a predictable political system that guarantees that it organizes free and fair regular elections that ensure that the company has some level of stability. In the Indian market therefore, Robert Walters has the advantage of incurring lower costs to carry out its activities, which leads to increased profit margins. Further, a better supply chain within the country can help it to obtain and recruit the best human resources that are available within the market. Its strengths also come from the unique products that it is likely to offer, which can enhance the loyalty of the customers hence improving the brand of the company. Weaknesses India suffers from endemic corruption, this may lead to social instability, and the failures increasingly disappoint political problems as the citizens by the government (Basu 2008, p.78). This may be translated to the organization that intends to recruit, while a higher level of political expediency may affect the labour laws in the country. Therefore, the recruitment agency Robert Walters must ensure that it surmounts these external weaknesses presented by the Indian economy before they start their business. In addition, the regulatory challenges that India as well as the bureaucracy associated with the political system has led to the restrictions and slowing down of the functions of any start up business in India. These weaknesses within the system and the Indian market can also impede the setting up of businesses within the nation and Robert Walters must keenly consider them successful in its entry into the Indian market. Further, if there is a chance that Robert Walters has a weak management style, then it would be difficult for it to penetrate the Indian market and this can greatly affect the profits that it is likely to make. In addition, the highly sensitive Indian market requires good customer service that if Robert Walters does not possess then it is likely to suffer from the competition offered by alternative recruitment agencies. Opportunities India is a fast growing economy that offers several investment opportunities for any investor (Cherunilam 2010, p. 745). It has robust and fully functioning sectors in the fields of manufacturing, telecommunications, aviations, transport and distribution amongst other sectors and therefore offers a competitive market to recruit by the company Robert Walters. In addition, India has one of the best technological capacities in the world and Robert Walters can take advantage of these cross-border activities that enable the company to reach its wide clientele the world over. Further, online marketing of the products that are offered by the Robert Walters is a perfect opportunity for it to serve the large Indian market. In addition, through the offering of new services, the company can expand its operations leading to increased customer base hence enhanced profits. Threats India has weak infrastructure systems in some of its operations such as transport and communication and this can affect the activities of the recruitment agency Robert Walters. The nation has one of the weakest policy coordination mechanisms and this affects the development of most of the business start-ups and organizations that operate within the nation (Lomash and Mishra 2003, p. 97). As a new investor that intends to make a foray into the nation, there is the imminent threat of regulatory and legal challenges such as the changes in the tax regimes of the nation and this is likely to slow down the set up of the business. In addition, there is the risk of increased time required to obtain approval to conduct a business in India, as many government organizations are involved in the regulation and licensing of businesses. The effect of these threats to Robert Walters in India is that it can lead to increased costs of starting up the business as opposed to originally thought or budgeted or anticipated costs. Therefore, the threats that can affect the entry of Robert Walters in India can be attributed to the volatility costs that can arise out of the changes in the costs of operating the businesses. Closely related to this is the fact that volatility in the revenue obtained by the firm may affect the general planning of the company hence affecting its investment plans. In addition, the investment plans and entry of Robert Walters may be affected by the existence of substitute products within the Indian market, which may add unnecessary competition hence reducing the uptake of its products by the population. This can affect its entry in the market as well as minimize its revenues and competitive advantage over its rivals. Market entry of Robert Walters into India VRIO Framework Valuable? Rare? Costly to imitate? Exploited by organization? Competitive Implication No Competitive disadvantage Yes No Competitive parity Yes Yes No Temporary competitive advantage Yes Yes Yes No Unexploited competitive advantage Yes Yes Yes Yes Sustained competitive advantage Resources and capabilities that will facilitate entry into India Availability of a big budget for expansion and establishment of business premises. The company has a unique and broad service offering that distinguishes it from competitors The company’s has advanced technology incorporation into its services The company has a stable management structure that enhances business operations The company commands strong customer loyalty Huge financial resources can help the company grow through acquisitions The company has a leadership position among recruitment firms An established recruitment practice that drives growth Resources and capabilities the company lacks and needs to improve before entry into India A poorly developed brand name within Asia. The company needs to establish its brand recognition in Asia. Small number of employees in the customer service department. The company needs to increase the number of employees in this department in order to offer faster customer assistance. Robert Walters needs to increase its presence in the outsourcing market. There are several modes through which the company can enter into the Indian market depending on the type of investment it wants to make and the risks involved. In order to get into India, it is important to choose the best possible means that considers the capacity of the entity as well as the business format that it intends to adopt. Robert Walters may enter the Indian market as a joint venture company through finding a partner that it can carry out the same business with. The advantage of such a market entry strategy is that it would be a separate legal entity from the partnering company, but benefits from the presence of the partner (Hill and Jones 2012, p.164). However, this may be time consuming as due diligence has to be carried out for a long period. The company may also enter into the Indian market as a subsidiary by being incorporated by a mother Indian company, whereby it will have the advantage of controlling its directions. Its liabilities will also be limited and it may raise finances through issuance of shares and securities (Gitman, Juchau and Flanagan 2010, p. 29). The disadvantage of this is that it takes time to set up and this may negatively affect the ability to take advantage of the available opportunities as well as the costs associated with publicity. The company may also get into the Indian market through the acquisition of shares into an Indian incorporated company, whereby it will have a controlling stake within the company. This has the advantage of the fact that it will have all the goodwill, licenses and reputation of the company to its advantage and has efficiency in terms of corporate or tax efficiencies. The disadvantage of this is that it may still have the liabilities of the company that it has acquired and the fact that it may be difficult to acquire other businesses after the process. Despite this, it is recommended that Robert Walters enter the Indian market through the acquisition method, as it will have a total control over its own activities. References Basu, K., 2008. The Oxford companion to economics in India. New Delhi: Oxford University Press. Cadle, J., Paul, D., & Yeates, D., 2010. Business analysis. Swindon: British Informatics Society Cherunilam, F., 2010. International business: Text and cases. New Delhi: PHI Learning Private Limited. Dransfield, R., 2001. Corporate strategy. Oxford [u.a.], Heinemann. (2001). Fernando, A. C., 2011. Business environment. New Delhi: Pearson. Gitman, L. J., Juchau, R. H., & Flanagan, J., 2010. Principles of managerial finance. Frenchs Forest, N.S.W: Pearson Australia. Hill, C. W. L., & Jones, G. R., 2012. Essentials of strategic management. Australia: South- Western/Cengage Learning. Lomash, S., & Mishra, P. K., 2003. Business policy and strategic management. New Delhi: Vikas Pub. House. Morrison, J., 2009. International business: Challenges in a changing world. Basingstoke: [England: Palgrave Macmillan. Narayana, M. N. R., 2010. A better India, a better world. New Delhi, India: Penguin Books India. Partridge, L., 1999. Strategic management. London: Financial Times Management. Rastogi, G., & Pradhan, B., 2011. Offshore: How India got back on the global business map. New Dehli: Portfolio Penguin. Yesudian-Storfjell, S., 2011. Innovation in India: The future of offshoring. Basingstoke: Palgrave Macmillan. APPENDIX PESTLE Criteria Evaluation Country Political Stability Impact on Business India Democratic country Reasonable and business friendly laws for taxation, immigration & labour Stable political structure Easy to set up a business Flexible taxation plan Low political interference Kenya Democratic country Political instability Low political interference Volatile business environment Portugal Democratic country Unfavourable taxation and immigration laws Favourable business environment High taxes Challenges in deploying foreign labor Mexico Political instability Unfavourable labor laws Unfavourable business environment Sweden Democratic country Unfavourable taxation and immigration laws Favourable business environment Employment challenges Table 1: Political Stability Country Economic Stability & Growth Impact on Business India One of the fastest growing countries Progressive economic policies Large consumer market Attractive market for foreign investment Large market for company services Kenya Slow economic growth Unsustainable economic policies Poor company growth Harsh business environment Portugal Constructive economic policies Slow rate of development Business stability Slow business expansion Mexico High population High rate of development Large consumer market Favourable business environment Encourages foreign investment Sweden High economic growth Depopulation Attractive business environment Small market Table 2: Economic Stability and Growth Country Socio-Cultural Factors Impact on Business India Class or caste system High literacy rates High population High demand for firm’s services Large market for services Kenya Low literacy rates Medium population Dynamic religious setting Poor business setting Moderate sized market Unpredictable business market Portugal High literacy rates Medium population Favourable business environment Adequate market Mexico High population Stable religious setting Large market Smooth business operations Sweden Medium population High literacy rates Favourable business environment Table 3: Socio-Cultural Factors Country Technological Factors Impact on Business India Well-developed ICT sector High rates of innovativeness High IT integration Ease of provision of services Capacity to improve IT systems Digital opportunities Kenya Averagely developed ICT sector Low IT integration Impended provision of IT intensive services Portugal Well-developed ICT sector Ease of provision of services Mexico Averagely developed ICT sector Medium levels of IT integration Inhibited provision of services Sweden Well-developed ICT sector High IT integration Easy provision of services Capacity for IT growth Table 4: Technological Factors Country Legal Factors Impact on Business India Few legal obligations when establishing foreign business Protection from international conventions Ease of starting business Reduced legal burden of operating a business Kenya Legal barriers to establishing foreign business Challenges to starting a business Portugal Favourable business establishment laws Hostile employment laws Ease of starting business Hampered employment decisions Mexico Legal barriers to establishing and running foreign business Challenges to starting and operating the business Sweden Legal barriers to establishing business Challenges in establishing a business Table 5: Legal Environment Country Environmental Factors Impact on Business India Stable climate Low levels of pollution Few interruptions to business operations Conducive business environment Kenya High levels of pollution Stable climate Poor business environment Portugal Low levels of pollution Harsh environmental policies Favourable business environment Economic toll on company Mexico Unstable climate High levels of pollution Unsuitable business environment Sweden Stable climate Harsh environmental policies Favourable business environment Strenuous policy requirements Table 6: Environmental Factors Based on the PESTLE criterion, the most favourable country for Robert Walters to set up operations is India. 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