International Bussiness Expansion Consulting Project - Case Study Example

Running head: International Business Expansion Consulting Project Name Course name Professors’ name Date 1.0 INTRODUCTION Brazil is a developing country located in the South American continent. It has a population of approximately 178,470,000 people according to 2003 statistics revealed by United Nations. Its economy is growing and in the year 2006, revenue generated by Multi National Enterprises (MNEs) within the country was $115 billion a period during which it had 4 MNEs. Brazil is a tropical paradise marked by rain forest, islands with tropical paradise, and endless rivers. A research study covering on international tourist demand in revealed that 96% of those who visited Brazil in 2002 had an intention to return. More than half of these visitors were in their second visit, consequently revealing that Brazil is the right place to carry out an expansion. This project does a case study of a tourism consultancy firm, BAKSO, based in the United States that is planning expansion into Brazil. BAKSO will engage in increasing the number of tourists who visit Brazil by aggressively marketing it as a tourist destination. 2.0 ANALYSIS OF OPPORTUNITIES AND ISSUES Brazil is a populous country with most people practicing farming as an income generating activity. Tourism also contributes a lot to Brazil’s economy. Statistics from the Brazilian Ministry of Tourism show that last year, 2009, alone tourism contributed more US$5.3 billion to the nations Gross Domestic Product (GDP). Opportunities abound for any multi national enterprise that seeks to venture into the tourism sector especially in this digital age which has been fuelled by rapid expansion of information and communication technologies. The digital age has changed approaches in doing business such that speed is of essence.   The new tourism consultancy company has the unique opportunity of conducting its affairs via the internet, a trend which would otherwise have been unheard of a century ago. What is even more encouraging is the fact that the number of internet users worldwide is on the rise with e-commerce assuming daily business activities. By the year 2000, for example, the number of internet users in USA was more than 50% of the total population. Assessment of the competitive environment in Brazil In doing the above assessment, Yips framework and Porters 5 forces shall be applied (Beaverstock, 160). There will be big investments in technology as it would be a key driver towards the growth of the enterprise. To jumpstart the process, an evaluation of the existing technological systems and their consequent adaptability for use by the organization will be done. Political considerations will also be put to focus since the success of tourism is highly dependant on stability of a nation. Agreement will be sought from local leaders and top government officials before the start of the project.   Strategic group and competitor analysis will also be carried out to identify organizations which pursue similar strategies, employing similar technology and in the same line of service. Such organizations may include tour firms based in Brazil, USA and other countries that operate from Brazil. It is essential to invest in areas with comparative advantages. 3.0 STRATEGIC OPTIONS AND RECOMMENDED STRATEGY The primary measure is to carry out a market survey. This research will reveal the strategic groups that will be affected directly and indirectly once the business is operational. Segmentation will also be done to identify the specific attributes of the target consumer. Through the research, growth opportunities are identified and measures put in place to tap into these new and emerging markets. An example is virtual tourism which relates directly with emergence of e-tourism.   Collaborative ventures with local firms engaged in the same line of business will be considered in attempts to reduce the cost of operations. Alternatively the company will seek out for mergers and acquisitions with other firms. This has the ability of ensuring continuity and retention of the existing customer base while at the same time expands on market share.   To cut costs and target new markets, it is imperative to outsource some activities like advertising and sales. The long term benefit of outsourcing is that the parent company will concentrate on designing effective strategies. The company further exploits knowledge from different quarters which will lead to increased productivity.   There is bound to be flexibility in terms of management especially with regard to devolution of authority. Although consensus is sought from all employees, the control function and authority would be centralized for ease of operations. This is helpful especially during the decision making process. There will however be several sub-units that would be semi-autonomous. Outsourced functions shall not be interfered with but only advised from time to time. The new business association focuses on investing more in intangible assets as opposed to tangible once. Such assets may comprise of investment in intellectual resources, for example a well trained labour force, with the requisite skills and a fast and efficient internet together with intranet. This includes brands, patents and any other intellectual resources of companies. Based on the 1995-1996 end year figures, for example, US Company Microsoft had 92% of intangible assets out of its market value of $49 billion. Creation of global brand symbols is another task to embark upon. This is predicted to be easy because most US global symbols are already in place and the company will seek the rights to use some of these global symbols. Marcel (20) provides a typology of the associative effects of global brand symbols as with regard to IBM and Apple Mac, both of which are large multi national enterprises based in the United States. 4.0 IMPLEMENTATION CONSIDERATIONS Structure of the organization The organization will assume a geographic or regional structure where the function of management is given to locals in Brazil. In this case, reporting is conveyed to the central position located in U.S.A. If the role of management is given to the locals, conflicts are minimised. Department within the consultancy firm are empowered to provide solutions to problems in real time basis consequently avoiding delays. This is one of the de-bureaucratization of formal procedures in the firm. Work, responsibility and authority are distinguished across the subsidiaries. According to Bob Buckman ‘s leadership style  ethical considerations is applicable when managing people .In this observation,  the ethical universality viewpoint theory shall apply by ensuring adherence to internationally agreed codes of conduct. Decisions taken will aim at promoting corporate social responsibility. The ultimate target will be to achieve a positive impact. Public relations professionals will be hired to promote the image of the organization. Human suffering should not be allowed to take precedence at the expense of making profits. The company will always participate in alleviating suffering through making substantial contributions when catastrophes occur. It will also help the down trodden in society by providing them with basic needs when possible. A firm operating in a receptive environment is more likely to register high turnover rates contrary to one operating in a surrounding described by violence and rebellion. A receptive environment is realised by engaging local community in constructive project like tree planting and wildlife conservation activities. There are constraints posed by national cultures on firms that seek to go global (Gerhart, 970). The strategy against effects of culture shock will be to ensure that managers who go to work in Brazil are given prior information and made knowledgeable about the Brazilian culture in general. This may be substituted by employing local professional personnel to manage the new investment. There is also the realization that management practices may work well in one cultural context and fail in another. It is therefore imperative to diversify management when doing business across cultures. On a higher note, diversified management enhances cross cultural learning (Gerhart 975).   The company will strive to come up with an organizational culture streamlined to realize organizational goals and objectives. Edgar Schein considers organizational culture to be a pattern of basic assumptions that have worked well enough to be considered valid and therefore to be taught to new members as the correct way (Grant, 70). Johnson and scholes, on their part, represented the organizational culture as a cultural web containing a variety of elements. Some of these interlocked elements comprise of myths and stories, symbolic aspects, rites and routines, structure of authority, control function and organizational structure. One way of influencing organizational culture is by having a vision for the organization. This is also achieved through building a reward systems designed to motivate employees. Behavioural theory would apply in the sense that leaders are expected to be good models with a goal of being emulated by other members of staff. 5.0 CONCLUSION Most business ventures are taking up new markets through a process of expanding business operations. Expansion can take the form of acquisition, mergers, or integration of firms. Given the environmental description of Brazil, there exist prospective business opportunity for a consultancy firm. Expansion and growth is an inevitable act for any company that still wants to remain relevant in the contemporary world. Even though firms faced a slump during the recent financial crisis, those which had appreciated globalization managed to register a return to blossom. The success of new consultancy firm is highly dependant on market research conducted in Brazil.       Read More