International Business Policy - Assignment Example

1 Boston Consulting Group (BCG) model of growth share matrix may be regarded as a simplistic tool of market analysis, which utilizes a scatter graph that shows the ranks of products or business units according to their growth rates and market shares (Haberberg and Rieple, 2008). Based on these indices, Dogs are referred to as the business units or products with low market shares in a mature, slow-growing industry. The characteristics of Dogs include but are not limited to: (i) inability to actualise the organisation’s profitability expectation; (ii) maintaining the status quo of “breaking even”, which only helps the organisation to keep its profile of employees and assets; (iii) causing poor or no return on assets ratio for the organisation (Johnson et al., 2006). Dogs often put business strategists to their wits’ end as they worry what to do with them. Unprofitable business units, as a matter of fact, consume similar financial resources as their profitable counterparts. Hence, business strategists often undergo a serious decision-making to handle Dogs among the portfolios of companies they manage. Some of the ways to deal with unprofitable business units or product lines include: (i) establishing a partnership with a brand company that sells similar products; (ii) undergoing merger with another company; (iii) or selling the under-performing business units and invest the proceeds in other businesses that may yield some profits in the near future (Dalton et al., 2007). Selling of unprofitable companies have become the most popular option companies’ managers use to discard off low-yield business units in recent years. 2 2. Estonia, Latvia and Lithuania are examples of Baltic States. The prospect of finding new positions in their markets may be remote due to the poor economic activities in these countries. For a new company entering the countries must resort to a policy of market development before it could assume the market leadership in these countries. The process of market development is a quite risky adventure because there is no 100% guarantee that it is going to be successful. The process involves using the company’s limited resources (both physical and human) to research the Baltic markets, analyse the available opportunities, undertake products’ publicity, and organise distribution channels that may be different from the ones available in the countries (Stonehouse et al., 2004). There are some common risks associated with market development. Some of these problems are cultural risk, financial risk, market risk and resource risk (Haberberg and Rieple, 2008). Some of the questions to be asked about this process are (i) what of if the cultures in the Baltic States are not receptive to foreign participation in a particular industry in the country, say, hospitality industry? (ii) how could the company entering into the Baltic markets scrupulously manage its resources? (iii) And what are the possible market risks associated with this kind of business adventure? Once these burning issues can be successfully resolved, it will possible to for the new company to control the market it targets, and also reap the complete benefits this adventure will bring (Haberberg and Rieple, 2008). 3 3. In an economically viable country like Austria, competition among the business operators in the country is inevitable (De Wit et al., 2004). Engaging in “price wars” is one of the characteristic features of competition in the markets. Price wars force every player in the market to offer competitive prices that would draw consumers away from their rivals and promote continued patronage of what goods or services they offer (Winninger, 1994). To win these wars, some companies may offer discounts on each of their products; they may also provide subsidies to state or non-private organisations to purchase large quantities of their products (Winninger, 1994). Other incentives for consumers include reduced Value Added Tax (VAT), free delivery mechanism and post-delivery services that many other companies don’t offer (Winninger, 1994). If won, a company can gain a lot from the stiff competition in a market. Some of the benefits of these include having the lion share of the market, increasing awareness for brand recognition and increasing profitability (Johnson et al., 2006). On the other hand, if a company loses a “price war”, such a company would witness unprecedented fall in demand for it products and services. This means that there would be drastic reduction in the revenues of the defeated company, which could translate into having low operating capital or such a company could even be forced to seek financial assistance in order to maintain the continuous production (Winninger, 1994). 4 4. Everywhere in the world desperate companies are setting aside the ethical issues while advertising some products that are not popular in some countries because of their health-related problems. Some of these products include cigarettes, tobacco, alcohol, energy drinks, etc. Research results in this area of marketing point out clearly that tobacco companies use variety of ploys to seduce smokers into buying their products (Petrone, 1996). A typical example of these ploys or deceptive methods is to briefly show a famous artist or musician smoking on TV and follow the advert with a warming against smoking. Like “smokers are liable to die young!” However, the message about smoking has already been sent to those that needed something to fill a vacuum in their lives (Petrone, 1996). But using a famous outlet like Formula 1 Motorcar Racing would require some measure of carefulness, because if consumers are pissed off as a result of the advertisement, it is going to affect Formula 1 badly. Here are some of the deceptive ways to advertise tobacco using Formula 1 Motorcar Racing: one of the drivers of a famous car may be shown smoking after a winning streak; the other driver may quickly warn him against smoking; and the smoker would smile and say he is fine! In this way, three important aspects of advertising have been covered: picture, words and actions (Petrone, 1996). In this way, consumers would not confidently state that Formula 1 Motorcar Racing has approved of the advertisement of tobacco. 5 5. The public sector managers have series of challenges that often threaten their jobs in public sector management. Some of these problems include but are not restricted to: (i) being part of the networks that are parts of the public sector; (ii) being hindered by political bottlenecks and unethical limitations through the actions of the politicians; (iii) being obstructed through uncooperative hierarchies present at the public sector (McKevitt et al., 1994). As a part of the network that is either a branch of the public sector or a think-tank affiliated with the public sector, public sector managers have limited liberty to engineer dramatic reforms in their respective places of works. Instigating any reforms would amount to undermining the dignity of the offices they are working for (McKevitt et al., 1994). Another option they have got is to push their reforms, ideas and actions through the hierarchies in the public sector which, on most occasions, do not necessary work in support of their management strategies (McKevitt et al., 1994). This kind of organisational logjam often hinders smooth implementation of the new strategies provided by the public sector managers. Similarly, politicians are another set of enemies that public sector managers have to contend with: the politicians work mainly to satisfy the requirements of their manifestoes to the subjects, hence opposing any reforms or new concepts that could hinder their plans. As a result of this, policies that are meant to bring financial, social and organisational transformations to the public service would not receive the approval of the political class that controls the administrative part of the public sector (McKevitt et al., 1994). 6 6. It was stated that outside market opportunities determine a company’s strategy, which in turn determines the company’s organisation structure (Chandler, 2003). However, this assumption is not always true: there are other models that describe how a company’s organisational structure and strategies are formed. One of these models claim that when the demographics of the consumers change, a company must restructure immediately in order to cope with the demands of the new group of consumers (Hill and Jones, 2009). By doing this, the internal structure of the company would undergo some re-engineering to accommodate new demands from the growing consumers. For example, if some streets in London now have a sizeable number of immigrants. For the providers of services in such areas to maximise their businesses, they need to change their marketing system and the customer services policy to deal with the new customers. Another model that seems explain why a company’s structure and strategy could be changed is that they say that stiff competition or rivalry among businesses can set off the need for rapid restructuring to deal with powerful competitors (Hill and Jones, 2009). For example, a company that provides some services for women would be careful not to lose its customers to a rival who gives free stuffs like panty-hose, body cream and shampoo to the customers after buying some of its products (Hill and Jones, 2009). Here, efforts have to be made to establish a new way of relating to the customers in order to find what satisfies them as far as the company’s products are concerned (Hill and Jones, 2009). 7 7. The term “a learning organisation” can be adjudged to be appropriate for any organisation that learns new strategies, concepts and policies over a certain period of time and apply these new things in fashioning an effective organisational structure in its fold. Such an organisation has also taken a serious step to be regarded as one that has “adoptive capacity”. But, unfortunately, not many organisations are qualified to be classified under the category of “a well-learned organisation”. This is because a lot of organisations learned new things, but they refuse to adopt the latest strategies or ideas in their day-to-day operations (De wit et al., 2004). Typical examples of organisations that do not learn anything from their present or past policies are multinational companies. The reasons for this are because most multinationals operate outside their home countries where strict adherence to the rules of laws or good business practices cannot be guaranteed. More so, their local hosts are mainly interested in the financial gains they could get from the multinationals, hence overlooking the grave danger such practices could cause to the environment, people and human health (De wit et al., 2004). 8. A high-profit industry is better than a low-industry because companies can soon recover their investment from such a venture before it becomes overcrowded with other competitors who have discovered the same business through the process of open information system (Hill and Jones, 2009). Since there is no certainty that a low-profit industry will become profitable in the nearest future, an organisation may 8 experience financial strain spending its limited resources to continue to operate in that particular low-profit industry (Stonehouse et al., 2004). However, it is also possible that the low-profit industry may be crowded with other businesses that are interested in the industry, hence complicating the situation for the first company that chose the industry because of its former uncompetitive nature. Whether high or low profit, every organisation has the opportunity to be profitable in any industry if it (i) has the best marketing strategy in place; (ii) satisfies the demands of its numerous customers; (iii) and has efficient organisational structure that would be able to handle all its operations (Stonehouse et al., 2004). In this light, the choice of industry should not be based on its profitability capacity, but its level of patronage by consumers living in that particular demographics. 9 References Chandler, A.D., 2003. Strategy and structure: chapters in the history of the American industrial enterprise. Washington, D.C.: Beard Books. Dalton, D.R., Hitt, M.A., Certo, S.T., and Dalton, C.M., 2007. The fundamental agency problem and its mitigation: Independence, equity, and the market for corporate control. The Academy of Management Annal, 1(1), pp. 1-64. De Wit, B. and Meyer, R. eds., 2004. Strategy: process, content, context. London: Thomson International Business Press. Haberberg, A., and Rieple, A., 2008. Strategic management: theory and application. Oxford: Oxford University Press. Hill, C., and Jones., 2009. Strategic management theory: an integrated approach. Florence (KY): Cengage. Johnson, G., Scholes, K., and Whittington, R., 2006. Exploring Corporate Strategy. 7th Ed., London: Prentice-Hall. McKevitt, D., Lawton, A., and Open University. 1994. Public sector management: theory, critique, and practice. Thousand Oaks (CA): SAGE. Petrone, G.S., 1996. Tobacco advertising: the great seduction. Atglen (PA): Schiffer Publishing. 10 Stonehouse, G, Campbell, D., Hamill, J., and Purdie, T., 2004. Global and transnational business: strategy and management. Chichester: John Wiley. Winninger, T.J., 1994. Price wars: how to win the battle for your customer! London: St. Thomas Press. Read More