Strategic Global Business Solution - Dissertation Example

?. Strategic Global Business Solution Project Report Order 523105 By Index Summary………………………………………………………..Page 3 2. Situation Analysis………………………………………………Page 3 2.1 The Countries- India & Australia …………………………….. Page 4 2.2 The reasons for positioning the brand in Australia…………….Page 4 2.3 The Quantification of Market ………………………………….Page 5 2.4 The Purchasing Mechanism ……………………………………Page 5 3.1 The SWOT Analysis……………………………………………Page 6 3.2 TOWS Matrix………………………………………………… Page 8 4. The Market Trend………………………………………………...Page 9 4.1 PEST Analysis……………………………………………………Page 9 4.2 Ansoff Matrix……………………………………………………..page 9 4.3 Porter’s Five Point Forces………………………………………...Page 10 4.4 BCG Matrix……………………………………………………….Page 12 5. The Corporate Vision……………………………………………….Page 13 6. The Corporate Focus………………………………………………..Page 14 7. Feasibilities………………………………………………………….Page 15 7.1 Define fewer goals…………………………………………………Page 15 7.2 Goals to be transformed to Revenue……………………………….Page 15 7.3 The Employee Management………………………………………..Page 15 7.4 Control the cost……………………………………………………..Page 16 8. Financial Management & Controlling ………………………………Page 16 9. Conclusion……………………………………………………………Page 17 References………………………………………………………………Page 18 1 Summary Since time immortal, when all our known source of medicaments were virtually non existent, when the concept of antibiotics not even conceived in the wildest imagination, when the average life span of human being was abysmally low, some basic system had kept them going. If we try to understand this system, if our relentless quest to know the origin and wellbeing compel us to fathom into much more deeper into the subject itself, we will get the answer –it is the word of wisdom that churns out in those ancient gray years of civilization when the basic postulates of science often were being masked with so many unscientific irrationalities. Some stand alone subjects hold the supreme truth at the zenith and Ayurveda is one of them. Our basic discussion will revolve around a particular brand of ayurvedic range of products which is being conceptualized and marketed successfully by the largest FMCG Company of the world- Unilever. The brand in question is AYUSH, a bouquet of purest forms of nature, to address the basic questions of regular beauty care in a gentler and natural way. 2 Situation Analysis The prelude of the situation analysis that leads to the grater understanding of the situation are to be discussed here. The aim of this dissertation is to get the resultant outcome of the planning over which the foundation of transnational business is lying upon. In this case we will discuss the product that is manufactured in 100% Export Oriented Unit in India and which is to be marketed in Australia. The marketing planning, coupled with the analysis of the socio economical milieu in between both the country are to be emphasized in this case. 2.1 The Countries—India and Australia. It is very hard to comprehend both this two countries except the basic two similarities—both this countries are inhabited by homo sapience species and they live and die for cricket. Basically India is a developing country, like China, with a sheer burden of overpopulation and poverty while the position of Australia is in the bracket of most prosperous country. In India, the diversity is amazing, from food habit to festivals, to religion to cultural sector, it is a different country, truly incredible in its own way. While Australia, with its mammoth size and abandon resources holds the key of development. The multicultural existence of the society, rich natural resources, vast hinterland that makes Australia an unique place to live in. No wander, both this two countries are in the tourist map, though for different reason. The globalization has ironed out the differences in an incredible manner. If we look into further details of the basics of both these countries, it will be like this— Australia has a population of 21 millions and a surface area of 7.7 Million Sq Km. The GDP is 821 Billions on 2007 and GNI per capita is $ 37,000 that safely puts them in the bracket of High Income country. On the other hand, India has a population of whooping 1.1 Billion and the surface area is 3.3 Million Sq Km, the GDP is $ 1176.9 Billions and the GNI is $ 950 per capita. (1)Unquestionably, the difference is yawning. Yet, to boost the export and to get more foreign currencies, like China, Indian government has set up some SEZ ( Special Economic Zone) where the companies are encouraged to set up their factories and enjoy the tax benefit. Being in the helm of the affair in the outsourcing business, India wants to raise the level of their international business and they have acted accordingly. The FMCG giant Unilever has a formidable presence across the globe and the apex management has taken the decision of manufacturing the product in the SEZ at Baddi, Himachal Pradesh, India which is to be sent to Australia. The complex chemistry, much subtler then the shop making process will take the front seat. 2.2 The reasons of Positioning the Brand in Australia Here the brand in question is AYUSH and the promoters are the Indian franchise of Unilever- Hindustan Unilever. While launching in mid nineties, this brand had rocked the market as well as the competitors in the niche herbal segment like Dabur, Himani etc in the Indian market. Afterwards, due to some strategic reason, this brand was withdrawn from regular marketing and was put in net work marketing. The company had opened an wing in MLM segment and the entire range of the products including creams, lotions, soap cake & shampoos were introduced in this segment. Afterwards, with the success of the brand in this segment too, the apex body has taken the decision of positioning the brand in the alien market. Accordingly they have ventured into Australia to test the water. 2.3The quantification of Market: The quantification comes from facts and figures. In the year of 2008 the bilateral trade is A$ 15.35 Bn and the Australian imports is 1.83 A$ and Exports 13.52 A$ Billion. It indicates that the gap of trade is really great and if the export from the Indian part is escalated it will be better for Indian economy(2) At the same time, the GDP appears to be 55600$ (Appx) in the year 2010 which puts the country the 6th richest in the world simply makes the differences. Now, it is estimated that the market of Ayurveda, alternative medicines, Chinese herbal products etc in Australia is 1 Billion USD and the same is growing at a pace of 30 %. (3) As a result, when the discussion is there with a herbal brand from a far off place we should consider Market Development mode. The already existent market of herbal products and drugs are to be molded as per the requirement of the company. 2.4 The purchasing mechanisms: The purchasing mechanism is a complex process by its own accord and seldom follows any statutory guideline. But the system itself is a vast subject to be explored in a specific manner. The factors that can influence the consumer purchase include the unemployment rate. As per the recent survey, the unemployment is the lowest in the last three decades. The other factors are the test and awareness of the end users. For AYUSH brand of products in Australia, the recent fad that has created uproar is Yoga and meditation can be taken into confidence. The consumer will be drawn to its oriental appeal. On the other hand, the increasing level of internet usage can be taken into active consideration. The population of Australia that has grown in last 200 years are the population of England, trying their luck in this alien land of southern hemisphere. They have developed a different dialect, the amalgamation of different dialects of England. By nature, the Australians keep the persons guessing, whether the next bout of exchange will be in amicable mode or slip into further hostility. Basically, Australians are voyager by nature, arrogant as well as erudite. They have their own frame work of communication and they have their own code of conduct (4). To get a toehold in this market, it is important to understand the basic psyche of the common people and their purchasing capacity. The piggyback ride of yoga and other allied ventures may not be that easy in this country. 3.SWOT & TOWS 3 1SWOT Analyses The SWOT Analysis in respect to the outside environment is considered to be the must for every organization as well as individual who wish to make their presence felt in the market. SWOT stands for Strengths- Weaknesses-Threats– Opportunities. (5) In respect of this analysis, these riddles will be solved out- Who are the existing players, What games they are playing and how to beat them in their own game. 3.1.1Strengths: The strength of AYUSH is as follows; 1 Strong Brand uniqueness. The brand AYUSH“is a unique combination of the Truth of Ayurveda with the Proof of Science”. (6) 2 The Brand in India has a different channel of marketing, it is in MLM level. The product has the tie up with some oriental spa etc that has made it so unique. 3.1.2Weaknesses : These weaknesses that has to be reckoned with AYUSH Brand- 1 The market penetration is not there. The already clattering market with Chinese herbal, Indian players as well indigenous manufacturers like Tinderbox, Botanical Blessings, Australian by Nature to name a few. 2 The market awareness is also nil. It is a launching product and the concept is relatively new—the augmentation in between herbal spa therapy with the niche segment of products. 3.1.3 Opportunities: The opportunities can be multilayered and the optimistic view can see opportunities in each and every paradigm. Here the positive notes are as follows 1 The market demand itself churns out so many opportunities. A Billion Dollar market in a country which is growing at a formidable pace itself creates environment. Furthermore, with the quality control assurance from none but the formidable FMCG giant Unilever is bound to attract much more customer then most other in the niche segment. 2 The robust dealer network of Unilever in Australia, like elsewhere in the globe will surely be an added advantage and the nascent brand like AYUSH can be benefited from it immensely. 3 Being manufactured in 100% tax free SEZ of India, under the stewardship of Unilever group, the brand will be absolutely price competitive in respect to all other available brands in Australia. 3.1.4Threats: The threat factors can not be marginalized either. After the hype, here comes the whimper and this factors should be taken into consideration. 1 The choice of the local population matters a lot. Australians are by nature proud of their own resources and they have every reason for that. Again here comes the understanding of their psyche and the brands to be positioned in that manner. The Brand AYUSH can be rechristened in a local flavor. For suggestion, MURRAY can be an apt alternative as it represents both the freshness of water as well as the insignia of a mighty river of Australia 2 There is a campaign, backed by scientific fact that the Ayurveda medicaments contain heavy metals etc in the west as well as in Australia. American apex body of drug formulations and US FDA has issued warning about the restrictions in this aspect. There may be debates and arguments on this topic but the campaigning, negative or positive, has some impact over the customers and a portion of the mass may consciously avoid any herbal product for that matter including AYUSH. Keeping these in mind, the AYUSH brand may not get a good response. (7) 3.2 TOWS Matrix Threat – Opportunity- Weakness – Strength; the reverse model of the SWOT Matrix has the appeal of its own in management studies. Not for strategic management but for marketing, HR and other business areas the TOWS analysis is very much useful. TOWS analysis helps us in all possible manners to develop a set of strategies to stay afloat in the market. (8) The swot analysis, upside down gives us the edge and the power of prediction. Here we will discuss the points: 3.2.1 Threats To understand the market one should take a note of the latent threats so that the problems can be overcome. Here the same points to be highlighted- The heavy metal related issue and an absolutely new brand, notwithstanding the backing of Unilever Group, can cut how much ice, which is the question that needs to be tackled. 3.2.2Opportunities Again the same points that have been discussed are to be visited. We shall have to understand the basic strengths of the brand, the dealer net work strength and so on. 3.2.3 Weakness Wickless begets threat. The threat analysis warns us to get rid of our weakness. Here the points that has already been discussed in SWOT analysis are to be taken care off. The threat part are to be eliminated and the opportunities are to be potentiated. 3.2.4 Strengths The MLM marketing channel can be explored along with the conventional marketing in case of AYUSH. The special Aroma and the refreshing get up definitely adds to the strengths of the product. In a sum total, the analysis, both SWOT and TOWS covers the same gamut, the identical functional area. All that we have to understand is the implementation part of the same. 4. The Market Trend Analysis It is a vast subject and the entire discussion revolves around the same. Here different tools are to be used is the PEST Analysis , Ansoff Matrix purchasing mechanism , Porter 5 point Model, restrictions, legal provisions etc. Each and every thing to be used in step by step manner. 4.1 PEST factor: “A PEST analysis, examining political, economic, social and technological factors, is a useful guideline for examining a potential new market and planning how to undertake the marketing effort. The PEST analysis in itself is just a guideline for the direction of research and analysis, and the business should be aware that the quality of the results obtained will always depend on the quality of the research and analysis performed. Set out below is a guide to the types of factor to consider in the analysis”.(9) . Here the factors are self explanatory; the business can not thrive until or unless we came to know the soil beneath. The total contour of the system is to be taken care off and that is the PEST analysis. 4.2 Ansoff Matrix: (10) The matrix has four components market penetration, Product development, market development and Product and market penetration. The matrix is amazingly simple and it says that in a specified market, the emphasis is to be taken over existing products. The existing brands are to be used for much more revenue generation. In this case, the brand that Unilever group has proposed is the AYUSH brand of products. 4.3 Porters Five Point Forces (11) Management Guru Michel F Porter had formulated this five forces analysis which turns out to be the pillars of analyzing the new product behavior and the survival technique. There are five components in this analysis so is the name. These are as follows- Threat of New Entrants Threat of substitute Brands Bargaining Power of the suppliers Bargaining power of the buyers/Customers The Competitive rivalry Knowingly or unknowingly, we are the part or parcel into these five forces. Either as a customer we have the bargaining power, or we choose in between competitors or as a sales person we bargain in the supply lines. Now, let us discuss this analysis in respect to the brand in question- AYUSH. 4.3.1Threat of New Entrants The threat for any new product is eminent in any market. In this big marketplace, premature death is quite common. At the same time, too many players create a clattering market where the profit margin as a whole is bound to dip. The segment in question has this type of anomalies are quite common. Here the Brand equity of AYUSH is a big question mark as the brand is a new one in niche market. But the access to distribution channel, courtesy the distribution net work of Unilever Australia is a positive point to be reckoned with. Capital investment in this case is relatively low as the product does not have any manufacturing facility here. 4.3.2 Threat of Substitute Brand There is no dearth in it as the competition is omnipresent. No organization can enjoy the monopoly as the competition is inevitable in each and every sector. In basic language of Economics the switching cost of the buyers matters a lot. Apart from that, the competitive price, the better quality, the unique brand equity hold sways in the market. The other factors are the no of brands available and the quality assurance. In respect of AYUSH, the competitors are already there as there is numerous organizations that are marketing herbal products. The advantage isd the price competitiveness as the product is being manufactured in the duty free zone in India where the cost of labor is already low. 4.3.3 The bargaining power of the buyers Again there are a plethora of points are there which are as follows— A. Buyers acceptance of the existing distribution net work. In this question, the Unilever channel of product, already enjoys a high degree of trust and the induction of AYUSH range will not be a great problem. B. The other factors including the amount or volume that the buyer makes a purchase, the substitute brand and so on. 4.3.4 The bargaining power of suppliers At this point of time, out of all practical reasons, this point is not to be taken into purview as the brand should capture the minimum market share to be in drivers seat so that they may bargain with the supply channel operators. 4.3.5 The Competitive Rivalry In fact the quality, the supply chain management, the after sales service – all these are in competitive edge is because of this inter corporation rivalry. The outcome of this intra company struggle offers goodies to all the customers because of these reasons— A. The ad campaign to be increased. The Coca Cola Pepsi rivalry, the squabbling in between Proctor & gamble and Unilever churns up new and innovative ad campaign. B. Innovative style is the buzzword. AYUSH was in MLM segment. Here Unilever can give Amway, the MLM major a run for their money with AYUSH range. Of course, this is an opportunity that the brand can enjoy along with the regular channel marketing. There are so many other factors are there and this five point analysis has given a new dimension in order to formulate strategy to market a product in its entry level, namely, AYUSH. 4.4 BCG Matrix The Boston Consultancy Group had done the wonderful job with the correct interpretation of explaining the life cycle of a product. The acceptance is obvious. Almost the entire corporation as on date uses this model to fix the strategy and get the desired profit. Here we shall discuss the theory first then co relate the same with the ongoing study. (12) 4.4.1The Theory – The simplified approach of this matrix has made it so popular across the world. This market basically explains these two factors—Market growth and the relative market share. If the market share is low and the market growth rate is high then the product is in cross roads and it poses a question mark. Ayush brand has virtually no market share in a market which is booming at a speed of 30 %. We can bracket the same in Question Mark or Problem Child category—in which direction it may veer is very hard to comprehend. At the same time, the brand has a tremendous possibility to grow. Apart from products, it promotes special spa therapy; special Ayurveda consultancy is also associated with AYUSH brand. The marketing needs to be taken care and the strategy has to be chalked out. Afterwards, the brand has a potentiality to be either a Star Brand or can be whimpered to Dog category. This has to be taken care off. 5. Corporation Vision Here at first we shall discuss the corporate view of Unilever and then we shall go through the visions of AYUSH. The Unilever group, with a staggering 40 Billion Euro turnover and operative profit caps more then 5 Billion Euro adheres to a specific vision which, in their own words, is as follows— “We work to create a better future every day. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small, everyday actions that can add up to a big difference for the world. We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.” (13) The statement over vision of a company reflects the depth of the foresight of the board members. Being the vanguard organization, this vision statement comes naturally to them. 6. Corporate Focus If we consider the corporate focus of a good corporate citizen, Unilever will be the ideal example. Definitely the corporate focus will be profit like all business but the way to garner the same matters a lot. Here the value based focus of the entire organization comes into picture. Unilever cares for the mother—Mother earth. The focus is basically about environmental issues and the sincerity of the organization in environmental control comes into picture. The corporate focus of Unilever is as follows— Ambitious mission to double the business while reduce the environmental impacts in their overall business 15 % of Palm oil used carries ‘Green Palm ‘ Certification The Environmental measures has reduced 41% in Co2 emission, 65% waste water is recycled and overall waste reduction has set a new standard by reducing the same at the tune of 73% The last 15 year invested in improving eco efficiency level across 264 Unilever manufacturing unit macros the globe. (14) The total profit margin romped to € 40 Billion and the operative profit is € 5020 Million simply speaks for itself. In a nut shell , if we go by the introduction by Paul Polman the CEO the reflection is eminent. Here the CEO has discussed about the new vision of the organization— A. Working across the Value Chain : The sourcing of raw materials, running the production units across the world with same quality control measure and other peripheral conditions. B. The Social as well as Environmental issues has been taken care off and that is the top most priority of the management. C. Shared value, the way of working is the top most priority in the CEOs agenda (15) At this back drop, the AYUSH brand positioning comes to boost the environment friendly approach of the company. The natural herbs are less harmful then the chemicals as per our popular belief. To capitalize this trend, the product launching and positioning came into the picture. 7. Feasibilities: Each and every action begets some reaction, no matter it is mandatory or not but it happens. When the positioning of the brands are concerned, this important facts we ought to take care. . The special issue of AYUSH should be handled with proper delicacy and care. For the basics, we can put it in this fashion as mentioned below– 7.1 Define Fewer Goals: The high quality goal in a smaller number will definitely culminate and yield result. 7.2 Goals to be transformed into revenue: The yearly target in terms of sales & marketing, HR management, production etc to be harnessed in such a manner that it yields. The web utilization plays a vital role in this case. A good portal can provide good number of business and the search engine optimization plays a vital role. Thus, a good revenue as well as awareness can be generated in order to run the show. 7.3 The employee Management: The employees are to be involved in this outline chalk out. Many a time, there is a clash in between production line and marketing team. Similarly, the accounting personals argue over different issues with planning and purchase persons. The basic problem is many a time they tend to forget that they are working for an organization to generate more revenue which in turn help them out. 7.4 Control the cost: It is obvious. The costing issue has already been discussed and the cost is to be harnessed in order to maximize the profitability The discussion culminates to this point, what will be the implication of this strategy and planning in the course of international business where an organization is going to set up a business in a land where the culture and the sociopolitical milieu he was unaware off. (16) 8 Financial Management : The financial issues act as the fulcrum in any organization. Here the financial management and control acts differently, far away from the basics of text book postulates. For this purpose, the proper frame work and the system management are to be taken into priority. In financial control, for a nascent company like that of ours in question, one must regulate the controlling powers . There are a good no of accounting software are available in the market and to keep close tab over the financial controlling issue, we must take the usage of this software in topmost priority. Apart from that, a good financial policy that is needed to provide the proper framework. The policy is some set of financial agreement which is agreed upon by the management and the organization goes as per the conduct of the same policies. The policies should be fair and logical in explaining the ongoing process. A good financial policy should be fare, should follow the basic laws of the state, comprehensive and affordable (17). The developing policy is a complex process and it should follow some basic postulates for better fiscal result. Apart from the basics like ledger book maintaining etc, a system frame work has to be evolved out. That is the financial policy. A financial policy carries these components— A. The policy helps in decision making and controlling. The money management and fiscal health of a firm can be gauged from the policy implementation. B. The decision making would be much more easier if the policy is framed in between strong Yes and No. C. Policy helps the organization to be transparent and consistent on its way of operations. D. The organizational standard can be earmarked with the practicing financial policy of the said organization (18) All these financial policy restriction is especially important in respect of our brand AYUSH. The independent financial policy should be formulated by the management and that should be followed stringently to nourish the new born baby which is yet to toddle. 9. Conclusion: In this lengthy dissertation, we came across with so many factors, assimilate them and reach to a conclusion that the world is our marketplace. For any corporate manager, it is a mandatory task to know the country where he is going to market his wares like his own country. It will be a faux pas if the gesture is not being reciprocated in proper manner, the business deal, almost fixed by that time will turn sour in a fraction of a second. The basics of this understanding is to know and to respect the world around. The theories may exist in papers and fat management books, but the implementation is tougher simply because we are humble human being. To get success, we must reach beyond our ego and myopic vision and try to learn something from every where and from every one. The business will thrive, our understandings will grow and we can live under the Sun in a better and peaceful manner. **************************************************** --Reference-- Ref 1 The Little data Book,2009. The World Bank, Page No 103 & 28 DOI: 10.1596/978-0-8213-7847-2 Ref 2 India Australia Bilateral Merchandise and Service Trade Relations – Calendar Year 2009, Retrieved May 16th, 2011 from http://www.indianconsulatesydney.org/india_aust_bilateral_Trade.pdf Ref 3 Alternative and Complementary Medicine in Australia Retrieved May 16th, 2011 from http://www.intstudy.com/articles/twealtmd.htm Ref 4 D. Lewis. Richard (2006) “When Cultures Collide’, 3rd Edition, 2006, Chapter 15, Australia, New Zealand and South Africa, Page No 205 Publisher : Nicholas Brealey Publishing USA (www.nicholasbrealey.com) Ref 5 How to do a personal SWOT analysis to Enhance Learning Goals and Objectives Retrieved on 16th May,2011, from http://www.learning3pointzero.com/2011/01/17 Ref 6 Lever Ayush Therapy, retrieved on 16th May, 2011 from -- http://www.hul.co.in/brands/personalcarebrands/LEVERAyushTherapy.aspx Ref 7 PUBLIC HEALTH: HEAVY METALS IN AYURVEDIC HERBAL MEDICINES , Retrieved on 16th May, 2011 from -- http://scienceweek.com/2005/sc050204-6.htm Ref 8 TOWS Analysis, Retrieved on 16th May, 2011 from-- http://mfiles.pl/en/index.php/TOWS_Analysis Ref 9 How to conduct a PEST Analysis in foreign Market, Retrieved on 16th May, 2011 from http://www.helium.com/items/1936919-pest-analysis Ref 10 What is Ansoff Matrix , Retrieved on 16th May, 2011 from http://www.ansoffmatrix.com/ Ref 11 The Mathematics of War: Attrition and the Lanchester Combat Model, Retrieved on 16th May, 2011 from bastiatblogger.blogspot.com Ref 12 The BCG Matrix retrieved on May,16 from http://www.quickmba.com Ref 13 Unilever Sustainable Development Overview 2009, Page-8 retrieved on 16th May, 2011 from--http://www.unilever.com/images/sd_UnileverSDReport170310_amended_tcm13-212972.pdf Ref 14 Unilever Sustainable Development Overview 2009, Page-6 retrieved on 16th May, 2011 from--http://www.unilever.com/images/sd_UnileverSDReport170310_amended_tcm13-212972.pdf Ref 15 Unilever Sustainable Development Overview 2009, Page-3 retrieved on 16th May, 2011 from--http://www.unilever.com/images/sd_UnileverSDReport170310_amended_tcm13-212972.pdf Ref 16 – Building marketing Strategy Outline, retrieved on May, 16,2011 from http://www.small-biz-marketing-tips.com/marketing-strategy-outline.html. Ref 17 – Saprio Janet , Financial Control and Accountability toolkit, retrieved on May 16,11 from http://www.civicus.org/new/media/Financial%20Control%20and%20Accountability.pdf Ref 18- Saprio Janet , Financial Control and Accountability toolkit, Page 6-7 retrieved on May,16,2011 from http://www.civicus.org/new/media/Financial%20Control%20and%20Accountability.pdf Read More