Halfords Ltd in International Business - Case Study Example

Halfords Ltd in International Business

A company’s success in the industry primarily stems from its ability to deal with its competing teams and responding effectively to the changes that can occur in the economic, political and social disciplines. For many years since its foundation, Halfords Ltd remains a great performer in the automotive industry, but the recent shifts in world economies, as well as increasing change in consumer preferences in Europe, have necessitated an increasing change to redefine the automobile business strategies; to cope effectively with the upcoming changes. Support is essential in this case. Change and adaptation are highly required as well.

1. (a). Assessment: UK Market and Further Growth

Despite the many challenges just as in other industries, the automobile industry is one of the high-growing sectors of the world. A challenge that is still prevalent is the user experience that needs to be advanced; automation of effects is thus vital. For instance, in the present day, it is evident that most of the vehicles interfaces in the United Kingdom fail to support personalization and interactivity. The same problem is also prevalent in cycling products; therefore, the need to have a new supplier of customized appliances to meet these demands is expanding, and Halfords Ltd can exploit the niche. As a result, it clearly indicates an opportunity yet to have an appropriate response, therefore, a significant opportunity for industrial growth regarding automobiles.

However, it is quite unfortunate that many systems are not compatible with the different developments found on the web and in fact some car and motorcycles/bicycle radios have features of the ones in use half a century ago (Acker, 2011). There is a need for re-invention hence a great opportunity for Halfords Ltd and other automobile manufacturers to explore this market. As such, the potential growth that the UK’s market provides is not necessarily in production numbers but on products that will improve users’ experience.

In connection, another great growth opportunity evident in the same industry in the United Kingdom is design evolutions. For quite a considerable time, safety issues and fragmentation of user applications remain a challenge for many users. For instance, it is impossible to improve road safety in the United Kingdom by merely using lock-outs or putting strict rules to drivers when they are driving. As a response, the best way is to design alternatives that can curb driver distraction as well as others that ensure that passengers’ concentration is not on the road (Hoffman, 2012). On the same case, the issue with user applications is still confusing. The automobile developers usually customize their apps according to their interests which make it harder for them to function in the marketplace as expected (Acker, 2011).

Another growth opportunity for the automobile industry is future proofing the industry’s infotainment systems. Borrowing a note from Acker (2011), there is a problem with the systems since they do not keep pace with the latest developments in the web. As a result, the clients prefer more use of their mobile phones on the road which is a further risk to safety. On the same case, other automobile applications are becoming outdated too fast after launch. For instance, the case with APIs frequent changes is problematic hence the need to come up with advanced solutions to address the problems that are coming up with technological drivers. In regard, it all but means that there are unexplored areas of technology in the United Kingdom as far as automotive industry is concerned hence the need for responses in a similar manner. By doing so, it is evident that it will prove an attractive venture that can help any company to expand.

Systems Solutions: Underdeveloped Technologies in the Automobile Industry

Several technologies can serve as options for dealing with the many problems in the automotive industry in the United Kingdom. Firstly, it is evident that the audio systems isn’t still different from the past and regularly incorporates the standard CD, MP3 or simple systems for entertainment. As a result, it is essential to explore more options in the setups and include more features like navigating or multichannel audio devices in the vehicle systems.

The second solution to the current systems is using online data for onboard technology, which is a great evolutionary approach if it succeeds. Thirdly, there is a promise of doing well if vehicles come with less movable parts or incorporate aspects like auto airbags. The incorporation of these underdeveloped technologies will not only make it easier for clients to adapt, but it is a way to help them to get content mostly from the web without relying too much on their mobile phones. Consequently, there will be less distraction, improved user experience, and driver-centric in-car experience.

1. (b). European Expansion and Potential Benefits

As the situation stands, Halfords Ltd main business is in the United Kingdom. As such, the company enjoys a minimal rivalry and can reach many corners of the region conveniently and make sales. In fact, it is a dominant force in the United Kingdom, and such a concentration bars the company from adverse effects of currency changes in the international scene, inflation problems, as well as legal and exploitation problems. With no doubt, Halfords Ltd enjoys recognition and can propel its business with a lot of ease. However, there are several additional benefits that the company can enjoy if it seeks entry into the larger European market.

Through expansion, however, Halfords Ltd can open up its reach out and enjoy several benefits that come along with being international. A very justified case involves encouraging industrialization through the exchange of technological know-how, which ensures that a company improves the features of its products. As a result, it will help Halfords Ltd to make better vehicles and cycling products. Another benefit of European expansion includes stabilized products since there is more control to wide fluctuations in prices in international business (Rasel, 2014). There is also an extensive market for products and an increase in the scale of operation, which as well comes along with the economies of large-scale production. In regard, there is more demand for a company’s products; therefore, improving its local and international business prospect. Above all, Europe has a high population of many rich people who can afford vehicles and cycling products of all types. As such, it provides a reliable market which as long as the company will provide quality, it will do well.

STEEPLE ANALYSIS

Political factors

• Prevailing trade policies
• Pressures from other countries
• Government opinion and political changes
• Leaders and shareholders influence

Economic factors

• Uneven taxation rates
• Income level clusters
• Current trends and dollar/pound performance
• Inflation and interest rates

Social factors

• Consumer preferences and attitudes
• Cultural split
• Buying patterns and ethics
• Lifestyles and media influence

Technological factors

• Changes and demand from IT
• Current global technology levels
• Most applicable advances
• Threats and opportunities with associated technologies

Environmental factors

• CSR needs
• Ecological laws
• Employees/staff response
• Value addition
• Local and foreign environmental considerations

Legal factors

• Regulations in competition
• Industry and employment laws
• Legislation and consumer protection measures
• Ethical considerations

Halfords Ltd: Keeping the Balance

As a defining factor, Halfords Ltd develops automobile and cycling products that customers want, and the commitment in several key areas—Quality, Durable, Efficient, Safe, Adaptive, and Smart technology should remain consistent all through. Also, it has continued to build upon its technology leadership by launching new features that make customers’ lives easier and their driving and cycling experiences safer and more enjoyable. As a note, Halfords Ltd has made significant strides toward improving quality since 2008. However, to maintain such a competitive edge, the company needs to perform exceptionally both locally and internationally while providing a stable link between its stakeholders and other key players.

However, due to stiff competition, it would be substantial for Halfords Ltd to initiate and establish a disciplined business plan process to regularly review its competitive business environment. It can as well help on checking on risks and opportunities, strategy, and plan, and to identify areas of the company’s operation cycle that may require particular attention while pursuing opportunities to improve its business program. Again, every stakeholder should be included and allowed to contribute, and openness should be encouraged. Besides, the company should continue partnering with and enlisting all of its stakeholders as this can help an organization to efficiently execute its plan to deal with the business realities and create an exciting and viable business going forward (Teece, 2010).

The company’s commitment and approach to sustainability are unique in the industry. As the same strategy with other established forces in the market such as Ford, Halfords Ltd prefers providing its customers the power of choice, with a full technology range of gasoline, diesel, hybrid, plug-in hybrid, and electric propulsion systems. It is also electrifying its most popular global platforms instead of one-off specialty models so that there is manufacturing flexibility to balance its production strategies as it strives to meet the existing customer demands. As an advantage as well, green purchasing can improve a firm's economic position, by reducing disposal and liability costs, conserving resources, and improving an organization's public image (Terpstra, Foley & Sarathy, 2012). It is thus vital for Halfords Ltd to keep on strengthening the areas that can give it an edge both locally and internationally.

In like manner, large customers in Europe have exerted pressure on their suppliers for better environmental performance, which results in greater motivation for manufacturers to cooperate with their clients for environmental objectives (Information Resources, 2015). For example, multinational companies like Bristol- Myers Squibb, IBM and Xerox have encouraged their Chinese suppliers to develop environmental management systems in compliance with ISO 14001, while Ford, GM, and Toyota have required their Chinese suppliers to be certified to ISO 14001 (Hirsh et al., 2015). Regarding that, the company should review its programs regularly to ensure it is in line with the rising regulations.

PORTER’S FORCES

Demand Conditions

• Extensive home markets
• Increased demand for luxury/prestige products

Factor Conditions

• Favourable business environment Experienced workforce
• Encouraging trends in production and consumption
• Knowledge resources and infrastructure

Related and Supporting Industries

• Assembling industries
• Service industries
• Entertainment industry

Firm strategy, structure and rivalry

• Specialization
• Presence of cartels
• Monopoly
• Partnership

2: Feasibility and Entry Strategies for Entering a European Country

Country of Choice and Justification: France

It is quite encouraging that there are many openings for Halfords Ltd in the international market. However, despite the opportunities in many areas, there are several considerations that it must factor before investing in these markets. The main reasons for choosing France among the other options emanate from the fact that there is a bigger market both for automotive and cycling products; therefore, giving a greater balance to Halfords Ltd investment prospects. As such, instead of centralizing its expansiveness overseas on the automobiles to a greater extent, the company can significantly flourish on both products. Other considerations include solid strategy and structures, government and chance, and management issues.

Business Environment in France

The existing conditions in France do not hamper the entrance of new firms though there is an essential need to focus intensely if a company’s primary interest is to trade within the country and successfully compete with the rest. France has a favourable and existing local market for automotive products since it is a leading export market for many automotive and cycling products.

Nevertheless, the competitive feature and controlled business rivalry indicate a kind of converged market regulation, which if not subdued in the least time possible can lead to monopolization or the emergence of cartels and become a barrier for other related businesses thriving in France. Moreover, the existence of such a rivalry and trade structure will certainly call for a change in systems requiring the new entity to focus intensely on the approaches to use if success in the motor industry is part of its core critical factor. Strategy, stable structure, and existence, and understanding of rivalry are all but important markers of success. Despite that consideration, the significant factor that makes a huge difference remains in understanding how the rivals are faring at all times.

Government and Chance

The government of any nation plays a very crucial role in the determination of economic performance. The French government has at times faced criticism from different areas for the current situation in the country that resulted from the country’s economic downturn due to poor decision making by the government. However, it occurred, and it can happen in any nation hence the need for companies to have alternative measures when the conditions can place business functions at a loss. Conversely and as automobile industry in France is concerned, every company whether local or foreign stand an excellent chance to thrive (Smith, 2006). The most encouraging factor is that despite the French economy experiencing numerous problems, there is less of such hiccups that are evident in the automobile industry. As such, there are no significant limitations for the business to succeed.

Another main advantage is the exclusion of excise tax on cycling products (Smith, 2006), which means starting a business in the same area doesn’t require a massive capital expenditure as compared to automobile products. In regard, there is a chance and government interventions seem favourable.

Contemporary Management

With no doubt, it is vital for any business to be aware of the determinant areas of its success factors at all times. With this in mind, it remains a responsibility of the management to take some factors into account before any business engagement commences for the same business enterprise. As Teece (2010) puts through, such consciousness proves elemental at the end since there is an adequate analysis of the checks and balances hence mitigating potential business risks and possible drawbacks (2008). The situation is the same for companies exploring automobile industry in France since it is imperative to take into consideration certain management issues. In this context, compliance and risk avoidance in international trade are the two management issues that are most relevant for Halfords Ltd to consider.

Regarding compliance, the most crucial part is conformity to the various legal matters that exist and that surface in the process of doing business. Most importantly, every company must remain sufficiently aware and understand its obligations since if it engages in legal problems in France; it can even result in business closure (Altenburg, Bhasin & Fischer, 2012). Also, the government can tie the company’s resources for a considerable amount of time which can be a great setback in trying to achieve its objectives at the required time. Regarding that, it is evident that the French government supports legal and open business dealings hence a reduced chance for illegal setups which can risk the success of competitors.

However, just as in other countries, the French Law highly recommends the managements of different companies to ensure that their businesses are legally registered, and it is engaging in permissible business dealings at all times (Altenburg, Bhasin & Fischer, 2012). Perfect examples of such compliance involve paying all taxes on time to avoid unnecessary penalties, ensuring that the working conditions are safe and favourable for all workers while complying with all relevant employment necessities during employees’ hiring and in their engagement tenure (Rothaermel, 2013). Above all, it is highly recommended to fully comply with privacy legislation that includes Acts such as Privacy Act as well as the Spam Act. This consideration compliments the other above on the government’s commitment to encouraging fair marketing dealings. In such a case, there is a higher chance for successful investment.

STEEPLE ANALYSIS: FRANCE SITUATION

Political factors

• Government support to local industries
• Politics in business
• Permissiveness in foreign entrants

Economic factors

• Uneven taxation rates
• Changing currency performance
• Inflation and interest rates

Social factors

• French preference
• Cultural gaps
• Buying patterns and ethics
• Lifestyles and media influence

Technological factors

• Rising technological levels
• Unexplored technologies in automobile industry

Environmental factors

• Ecological laws
• Local and foreign environmental considerations
• CSR demands

Legal factors

• Tax adherence
• Ethical considerations
• Registration and compliance

Source: (Osterwalder & Pigneur, 2010: Altenburg, Bhasin & Fischer, 2012)

Halfords Ltd’s success in the French will rely on its ability to respond to the threats in the environment as well as its capacity to maximize on the current opportunities. As an economic advantage, the company takes pride in a strong position in the UK market enjoying a significant share of sales which is coupled by a profound sense in its production as an opportunity. The situation may change as it seeks European exploration. As such, the threats that mostly come from competitors remain the greatest challenge as the company tries to explore European market as well as endeavouring to retain its current position. As the situation reflects, the prevalent themes are continuity and product which in turn calls for acceleration in such a time when economic projections and the set targets are materializing. Also, the backbone of operations should remain on the company’s strengths and existing opportunities at all times.

France: Optimal rate of expansion

As a note of value, a significant operational issue that is unavoidable in France automobile and cycling business involves risk taking. The motor industry appears a very promising field for any company, but there are numerous risks in France due to high competition, government support to the local firms as well as the control of a significant share of the principal export market by only 0.45%of all businesses (Altenburg, Bhasin & Fischer, 2012). As such, there is the effect of monopoly. The motor industry is a sensitive market that proves a significant risk for new entrants at times but as Smith notes good management together with contingency planning can to a great extent help in reducing the effects of such risks in France (2006). All in all, it is crucial to take risks to succeed in business, but it is highly recommended to avoid the random ones if it is possible to identify them early since they all come at a cost.

In regard, it is quite advisable for a company to first of all adventure the market via small-scale techniques before taking significant strides. Although it doesn’t interpret to selling in reduced volumes amid the real chances, it is a sure way of taking caution and analysing the market before making massive investments. Moreover, it is a bold step as part of Foreign Direct Investment (FDI) in ensuring the company does not experience irresistible shake-ups in the operationalization process. Furthermore, it enhances phase development which as well can improve Halfords Ltd steady growth. Although large-scale investment is at times a great opening, the current situation in France as far as automobile and cycling market is concerned seems ideal for small scale expansion.

France: Market entry strategy

In modern business, there are different ways in which a company can enter a foreign market and at the same time, none of the method stands out as the universally useful for all international markets. However, in France, Foreign Direct Investment (FDI) is one of the most practical approaches and makes it a requirement for a foreign company to own a substantial share of the parent company’s capital. It is a very appropriate market entry strategy since the foreign investor assumes a significant influence in the business’s management, decision making, and other crucial operational processes. Besides, foreign investors from the developed countries help the smaller firms in the countries they are venturing in with expertise and funds which are essential for them to expand and increase their international sales (Smith, 2006).

In France, a joint venture is highly encouraged hence the recommendation Halfords Ltd to explore French market through FDI. Also, FDI ensures that the foreign company enjoys local business operations terms whether it is functioning through building its plant, acquiring others or through a strategic alliance with an international company in its domestic market (Rothaermel, 2013). With its advantages, it is a definite way of getting provisions such as new technologies, capital, and organizational elements, and most importantly, management skills. Furthermore, FDI also offers an opportunity to the foreigners to acquire immediate rights in the market, and they continue enjoying the benefits that were attached to the mother company in case of an alliance which is the case in France. As a result, it enjoys more rights to operate hence a greater opportunity to excel.

In connection and conclusion, FDI is a very appropriate way with numerous advantages. However, it has also some notable disadvantages. For instance, due to the locals’ attachment with the home automobiles, there is little chance for the entrants to outdo others instantly irrespective of the price. In regard, despite Halfords Ltd assumption of a French image and enjoying the benefits of other local firms, it will be in a way be limited in dealing with a greater part of the French elements; it must integrate them into its products. Secondly, the local business may lose its customers in case there are too many different attributes in Halfords Ltd products, which in turn will also be damaging to the new business.

Appendix

SWOT Analysis: Halfords Ltd

Strengths

• Strong position in the UK market
• Sound finance performance

Weaknesses

1.High cost structure

2. Unprofitable European Operations

Opportunities

• Positive attitudes in the production of motor vehicles
• Acquisitions that will lead to growth
• Unexplored technologies

Threats

• Increasing raw material prices
• Stiff competition