Evaluating Strategy in the International Context - Assignment Example

? Strategy in the International Context. First part: This study is to focus on the appropriate evaluation of the domestic market “support” for the furniture business which is Home base in host country United Kingdom. Here host country is United Kingdom and the overseas country is China, the product is furniture. The culture aspects of the both countries are different. As china is not a developed country they were not able to withstand among the policies and standards of other developed countries like U K. This led to reduce the exporting and importing of the products. “The Chinese culture has no resemblance than the Western Culture. Chinese will make dealings with people whom they think are trustworthy. If the Western countries want to do business then they have to prove them trustworthy” (China business culture, 2009). This will be the one of the main differences between the Chinas and UK business culture. So that it necessary to assess culture other factor conditions prevailing the both country. Home base is branch of the Home Retail faction and United Kingdom’s second leading home development trader with over 300 openings. “The strategic management process is made up of four elements: situation analysis, strategy formulation, strategy implementation, and strategy evaluation. These elements are steps that are performed, in order, when developing a new strategic management plan. Existing businesses that have already developed a strategic management plan will revisit these steps as the need arises, in order to make necessary changes and improvements” (Bushman, 2007). Even though the companies do not have any plan to sell abroad or import directly organization has to seem at an worldwide business surroundings in which actions of challengers, consumers, vendors, new contestants of suppliers of substitutes may influence the household marketplace. One of the models that will helps to analyze home base Furniture Company in host country United Kingdom is the Porter diagram model. It recommends that the nationwide home base of a business establishment plays a significant position in determining the extent to which it is likely to accomplish benefit on a worldwide scale. This model helps to identify why certain kinds of firms turn out to be aggressive in certain locations. Various basic characteristic features offered by the Porter diagram model provide various advantages to the company in this competitive environment. Porter diamond differentiates four determinants to evaluate the domestic market support for the Home base furniture company. This model appears at bunch of companies where competitiveness of one organization is associated to the performances of the other firms and various other features coupled jointly in the value- added series, in client-consumer relation in local or local circumstances “Michael Porter introduced a model that allows analyzing why some nations are more competitive than others are, and why some industries within nations are more competitive than others are, in his book The Competitive Advantage of Nations.  The Porter Diamond Model is shown below. It shows below the different aspects that impact industry. Porter’s Diamond Model Factor circumstances: Coming next to the factor conditions deals with the condition in a country with regard to the production features like employees; infrastructure facilities etc which are significant for competition in any of the particular furniture businesses establishment. All these factors provide various advantages. And also these conditions are ultimately upends upon the home country. But in the case of export or importing the items the culture variations may affect the overall performances. All these factor conditions of the domestic country affect the overall profitability of the furniture business. China is not a developed country so it is necessary to adopt a global strategy overcome these problems faced by the china’s market. The low wage rates paid to laborers allows China to share a profitable labor market. China uses its high pool of labor to develop its textile sector which is labor intensive. Chinese manufacturers are using new computer assisted designs and manufacturing process in order to develop its business. The adoption of new technologies will allow Chinese textile industry to develop new innovations. But in the case of UK it is highly developed country and uses most modern technology and infrastructure facility to home base business. Home Demand circumstances: Next, it is necessary to consider how home demand circumstances influences the determining of particular aspect of circumstances. They have impact on the speed and way of modernization and product enlargement. “Porter states that a country can achieve national advantages in an industry or market segment, if home demand provides clearer and earlier signals of demand trends to domestic suppliers than to foreign competitors. Normally, home markets have a much higher influence on an organization's ability to recognize customers’ needs than foreign markets do” (Recklies, 2001). That being said, the demand of the furniture in UK is very high. Particularly home base business provides furniture at a bulk rate. Financial crisis is adversely affecting the furniture industry in China. As by way of other manufacturing divisions, furniture manufacturers in China primarily relied on earth- thrashing labor and land expenses to contend, proficient to dominate worldwide marketplaces by way of lower-priced goods, to the level of frequently being charged of dumping. “For most organizations the corporate identify comes from such things as branding and logos. In addition to logos, the identity can be seeing though the organization as the corporate culture. How the customer feels about a company when they see the logo or brand name. This identity can be influenced by advertising and customer satisfaction” (Elements of the Strategic Management Process, 2008). Correlated and supporting business establishments: Next, one globally successful business may guide to benefits in any of the other correlated or supporting business establishments. Besides dealers, associated manufacturing’s are of importance in supporting the business establishment to further development. The Home base businesses can make use of and organize particular actions in the value chain jointly, or that are concerned by way of complementary goods. FIRA, APPFG are the two major supporting furniture industries in UK. In china various exhibitions are conducting to attract new customers. And also various supporting industries are prevailing in the country. Firm policy, Configuration, and Competition. Further, the circumstances in a condition that decide how business is launched are prepared and are administered, and that decide the distinctiveness of domestic rivalry. They are heavily influenced by structures of ownership and control. Family-business based industries that are dominated by owner or managers will behave differently than publicly quoted companies. “The national conditions that determine how companies are created organized and managed, as well as the nature and extent of domestic rivalry. For example, the predominance of engineers on the top-management teams of German and Japanese firms results in emphasizing the improvement of the manufacturing processes and product design. Furthermore, domestic rivalry creates pressure to launch new products, to improve quality, to reduce costs and to invest in new, more advanced technologies” (Porter, 1980). Second part: Date-10/3/2010 Time-9.00pm The culture prevailing in the China and UK is different. Chinese culture and civilization is one of the particularly elder culture followed in the earth. At the same time, Chinese civilization and customs expresses a challenge amid at a multiplicity of towns and regions. Also cultures are one of the most powerful aspects of the business that are regularly unconscious. But UK is the highly developed country requirement of the furniture in the UK is different from China. Cultures are well-established in all conflict for the reason that conflicts occur in human relations. The vital aspect is the best in a culture, can be diverse and awful in other culture. At certain instances the behavior are similar in the different cultures, with various meaning and interpretations. The cross cultural management is in the scene when the people with the various cultures, tradition and the background come together in the group interact, communicate and interchange the ideas to the fellow beings. Due to the increased cost of the resources they were not capable to buy more resources for the textile production. Chinese business enterprises have a great ability to mould its marketing decisions according to the recent changes in the market and can very swiftly incorporate the new changes both in domestic as well as international markets. The low wage rates paid to laborers allows China to share a profitable labor market. China uses its high pool of labor to develop its furniture sector which is labor intensive. IKEA is the one of the leading furniture company in UK. The particular model helps to identify the various cultural impact of IKEA in UK. Finally, for this part, the cultural integration or differentiation of the both host and overseas countries leads to conflict in sometimes .So that it is necessary to assess cultural variation and various other aspects of both countries. China is not developed but the same time UK is the one of the developed countries. Next, an international strategy is a plan through which the firm trades its services or goods outside its home marketplace. One of the main reasons for executing a global strategy is that global markets yield possible new opportunities. Strategic planning is an industrial procedure of defining its direction or strategy, and creating decisions on assigning its resources to follow this plan, including its capital. It is very much necessary to adopt a global strategy before export or import any product. China is not a developed country and also financial crisis also adversely affect the country. So that international strategy must be essential to cope up with the environmental changes. Different business analysis systems can be managed in strategic planning, including SWOT analysis, STEER analysis, PEST analysis, and EPISTEL. “When an organization has made a decision to enter an overseas market, there are a variety of options open to it. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or counter trade” (Cunningham, 1986). International growth is skilled by exporting goods, participating in licensing arrangements, making acquisitions, forming strategic grouping and starting new wholly owned subsidiaries. Further, the main types of entering international markets in home base Furniture Company in host country United Kingdom are exporting, licensing, strategic alliance, acquisition and new wholly owned subsidiary. Therefore, deciding the appropriate path to enter global markets affects the organization’s presentation in host and domestic markets. Host countries differ on account of changing political, legal, economical, and socio cultural and other natural characteristics. Strategic choices are the important part of market entry. Strategic choice is the way of action that occurs likely to take and its simplest form is taking a selection. It is the major benefit of achievement of the home base Furniture Company in host country United Kingdom. The main factor of strategic choice contains the direction of the development, the broad competitive strategy and method of development. These three factors affect the assessment of the domestic market “support” for the furniture business. The direction of the development comprises a variety of helpful effects and return for the organization such as increase in profit, sales, improvement and performance. Competitive strategy refers to the different methods of organizations to stay competitive and high-quality performing in their business, with reference to the presentation of their contestants in the market. The next element of strategic choice is the method of development. If Home base use this approach, the company will achieve safety improvement and zero defects in the products and ultimately cost is reduced .The wear and tear in the machines is the common problem faced in the operational process. Maintenance is the only method by which various problems relating to the operational efficiency can be sorted out. Various efforts are taken by the machine domain team. “Existing businesses that have already developed a strategic management plan will revisit these steps as the need arises, in order to make necessary changes and improvements” (Bushman, 2007). Organizations make use of the value proposition statement to target consumers who will advantage most from utilizing the organizations goods, and this assists safeguard a financial moat. The perfect value proposition is concise and appeals to the consumer’s strongest judgment creating drivers. “Michael E Porter’s Diamond Theory: Advocates the following: A nation could create new advanced factor endowments like skilled labor, strong technology and knowledge base, government support and culture. He used a diamond shaped diagram as the basis of framework to illustrate the determinants of national advantage consisting of Factor conditions, Demand conditions, Related and Supporting industries, and Firm strategy. Using the four conditions and interact them will assure success in international trade” (Porter, 2008). Financial aspects does not affect in the case of Home base business. So that it is very powerful type of business establishment to earn more. So that shareholders interest for the Home base business is very high. Strategies subsist at various levels in every firm they are business unit strategy, operational strategy and corporate strategy. It involves meeting needs of customers, strategic decisions about choice of products, gaining benefit over competitors, exploiting or making new chances etc. Operational strategy is concerned with how each part of the business is planned to distribute the business and corporate unit level strategic way. It concentrates on issues of resources, people, processes etc. "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations" (Strategy - what is strategy, 2011). This is a crucial stage since it is greatly influenced by depositors in the business and acts to direct strategic decision-making all over the business. Strategic management procedure has generally three components, following are the figure; Next, the cultural dissimilarities between china and UK are sometimes leads to conflicting interest of its consumer. International strategy helps to reduce this problem some extent. A strategic choice contains accepting the character of stakeholder’s expectations, recognizing strategic selections, and then assessing and choosing strategic options. Strategic study involves the power of the business situation and understanding the essential external factors. The method of strategic analysis can be helped by a number of tools, including PEST analysis, Scenario planning, market segmentation, competitors analysis and SWOT analysis. So that it will helps to identify the strength, weakness, opportunities threats as well as political, economical, social and technological skill of the China and UK. “Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance” (Strategy Implementation –Meaning and Steps in Implementing a Strategy, 2011). Stakeholders are those individuals, groups and parties that are straightly influenced by the practices of a firm and therefore have a stake in the industries performance. Some of the general stakeholders in a firm are consumers, workers, suppliers, local communities, investors etc. Different stake holders have different type of interest. Following some general interests in stakeholders; “Examples of common interest Shareholders and employees have a common interest in the success of the organization. High profits which not only lead to high dividends but also job security. Suppliers have an interest in the growth and prosperity of the firm” (Stakeholders - interests and power, 2011).The stakeholder investigation is necessary in order to recognize all the parties that are directly or indirectly influenced by the organization process. It sets out the concerns, issues and information requirements of the stakeholders with respect to the firm’s sustainable growth activities. “The stakeholder analysis begins by identifying the various groups affected by the business’s activities. These include shareholders, creditors, regulators, employees, customers, suppliers, and the community in which the enterprise operates” (Business strategies for sustainable development, 1992). Reference List Business strategies for sustainable development, 1992. [Online] International Institute for Sustainable Development. Available at: http://www.iisd.org/business/pdf/business_strategy.pdf [Accessed 30 March 2011]. Bushman, M., 2007. The Major Elements of the Strategic Management Process. [Online] associated content. Available at: http://www.associatedcontent.com/article/196677/the_major_elements_of_the_strategic.html?cat=3 [Accessed 30 March 2011]. China business culture, 2009. [Online] Maps of World http://www.mapsofworld.com/china/china-culture/china-business-culture.html[Accessed 2 April 2011]. Cunningham., 1986. Market Entry Strategies. [Online] FAO. Available at: http://www.fao.org/docrep/w5973e/w5973e0b.htm [Accessed 30 March 2011]. 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