Management of Information Business - Essay Example

?Executive Summary Globalization and technological revolution encouraged leading multinational organizations to adopt unique and competitive businessoperation strategies. Global business expansion of MNEs is considered as one of the most familiar effect of globalization. Several leading organizations are adopting global business expansion strategy in order to increase profitability. The report is all about the business expansion of a multinational organization in an international market place. Tata Motors has been selected as the MNE for the purpose of this essay. France has been selected for the operating country. France is one of the important members of European Union. This European country is considered as one of the developed economies. France is considered as the fifth largest developed economy in the world. Recently, the global economic recession and European financial crisis affected the economic environment of the European countries. Therefore, the automobile manufacturing organizations are trying to develop customer centric approaches in the business operation strategies. Tata Motors is the most leading automobile manufacturing and distributing organizations in India. The organizations try to ensure high quality of vehicles in competitive economic price. An industry and country analysis has been conducted in this essay in order to realize and determine the possible impacts of external environmental factors on the business performance of Tata Motors in near future. The social and economic demand of people is changing regarding consumption of vehicles. Each and every aspect regarding global expansion strategy has been incorporated in this essay to recommend effective business operation strategy to Tata Motors in France automobile market. In terms of international market entry mode, different types of market entry mode have been discusses, but joint venture market entry mode has been recommended to Tata Motors due to the scenario of business market environment in France. The essay provided several reasons on how the Tata Motors can maintain its competitive position through the adoption and implementation of joint venture market entry mode. It is important for the organization to understand the business culture of France that can be enhanced by the help of a co-venture. Introduction Global business environment is becoming highly competitive as several leading organizations are trying to expand their business operations and business practices on several emerging and developed economies. It is important for the organizations to develop and implement unique business operation strategies in business process in order to achieve significantly competitive advantages. Leading multinational organizations are trying to expand their business process in global market place in order to capitalize on the potential advantages that have been developed due to globalization. Market demand for differentiated and diverged products and services is significantly growing among the global consumers due to globalization and several significant changes in external environmental factors. The report will try to recommend an international business expansion plan for Tata Motors in France automobile market. France is the member of European Union. On the other hand, Tata Motors is the leading automobile manufacturers in India. The organization is planning to enter in the potential French Automobile market in order to increase market share and develop potential global client base. The report will conduct company, industry, country and regional organization’s (EU) analysis in order to recommend Tata Motors an effective market entry strategy. Porter’s five force analysis has been conducted in order to determine the competition within the industry. PESTLE analysis has been adopted in this study in order to determine the external environmental impact on Tata Motors in France. At last the report will provide conclusion by summing up several key points. MNE Analysis (Tata Motors) Tata Motors Limited is an India based Multinational Automobile Manufacturing and Distributing Organization headquartered in Mumbai. The organization is the subsidiary of Tata Group. This particular MNE has been selected for the assignment. This organization is trying to enter in competitive and potential French automobile market in order to meet the business objectives and corporate goals. Following strength and weakness analytical tool will help to analyze the strengths and weaknesses of Tata Motors. Tata Motors is one of the leading car manufacturers in India and its unique business strategy is increasing the demand for the vehicles in several international markets. The organization is considered as one of the most profitable and largest automobile manufacturers and distributors in terms of revenue. Several differentiated product lines have increased the brand image of the organization (Peng 288). The organization always develops demand driven and customer-oriented business plans. Major objective of the organization is to increase the profit margin by taking care of customers’ needs, taste and preference. Long list product portfolio includes public and commercial vehicles. Slowly and gradually, the organization is entering in several international markets through the implementation of effective entry mode strategy. Significant distributor networks, dealership chain and effective service access has increased its customer loyalty. The organization always focuses on quality of the vehicles. Tata Motors invests a significant part of business profit in the research and development centre in order to ensure the quality of cars. There are several limitations of the organization that can affect the brand image of Tata Motors. The vehicles of Tata Motors cannot be considered as the luxurious vehicles. The organization always tries to manufacture fuel efficient economic cars that can support the economic status of people of middle class income level. Poor maintenance of safety standards is major concern for the organization. Recently, it has been identified that several new cars got crashed right after consumption period. Lack of customer awareness in French Market can create difficulty for the organization to maximize sales growth at initial point of time (Kotler 235). Industry Analysis This part of the essay will determine the competitive aspects of French Automobile Industry. An industry analysis will be conducted to determine the competitive forces within this particular industry. Porter’s five force analysis will help to determine the degree of competitive factors. Buyer’s Power Recent financial crisis and economic downturn has affected the purchasing power of people. Now-a-days, people are trying to consume quality products in competitive price. People can switch to another brand in case of dissatisfied service and product quality. Looking into these aspects, it can be stated that the bargaining power of consumers or buyers in France is quite high for Tata Motors. Supplier’s Power Threat of supplier’s bargaining power is quite low for Tata Motors due to sufficient availability of suppliers. The suppliers of resources and raw materials in France try to make effective relationship with the automobile manufacturing organizations due to high competition among the suppliers. Tata Motors can choose cost effective supply chain network to reduce business operation cost. Threat of Substitutes Euro Rail transport services facility can be considered as major threat of substitute for the French Automobile industry. It is important for the organization to develop effective marketing strategy in order to develop potential customer base. Threat of New Entrants French automobile industry is highly competitive as several leading organizations within this industry are competing with each other to increase market share and improve business performance. In this challenging situation, it is quite difficult for the new players to achieve significant initial growth rate. High legal entry barrier and huge capital requirement can make it difficult for the new organizations to develop potential client base. Industry Rivalry The industry is highly competitive. Presence of leading players and continuous development and implementation of customer centric business strategy can make it difficult for Tata Motors to grab the market share of leading organizations. Country Analysis PESTLE Analysis Model has been implemented in this part of essay to determine the Automobile business environment of France. Political France is politically stable country. Lack of political crisis and significant social growth motivates the government of country to develop effective plans in order to enhance the growth of industries. The government always supports the automobile manufacturing organization as the organizations effectively contribute to country’s growth. It is important for Tata Motors to make strong relationship with government in order to get significant political support. Economic France s considered as one of the leading and developed economies in the world. However, recent financial crisis affected the economic situation of the country. People are trying to save more rather than consuming due to affected purchasing power. It is important for Tata Motors to implement competitive pricing strategy based on product segment. Social Demand for fuel efficient and green cars is increasing among the target customers. Several automobile manufacturing organizations are trying to implement green strategy in business process to introduce environment friendly and less fuel consumed vehicles to meet market demand. Therefore, it is important for Tata Motors to follow the social trend (Gillispie 416). Technological France is technologically developed country. Availability of modern engineering tools and advanced technological software can ease the business operation of Tata Motors. Environmental Government is developing several environmental policies for the business organization in order to reduce the consumption level of fossil fuel and emission level 0of carbon. Tata Motors need to implement substitute energy resources in business operation in order to maintain environmental sustainability. Legal Government developed several employment, business operation and environmental and labor policies for the business organizations. An organization cannot simply terminate employees according to personal intension. In case of unethical business practices, the organizations have to face several legal challenges. Therefore, it is important for Tata Motors to follow each and every developed policy by government and authorized bodies. Analysis of Regional Organization (EU) France is considered as important member of European Union. European Union always tries to ensure the industrial and business growth of the countries within it. It is important that infrastructure of a nation needs to be improved in order to achieve significant industrial and business growth. In addition to this, according to the European Union’s view point, foreign investors can easily take interest in the business expansion to these countries with advanced and modern infrastructure facilities. European Union was formed be several leading and developed European countries to ensure significant economic and social growth of the Union. Therefore collaborative strategy development and implementation process helped the nations within the union to achieve significant economic growth. France is known for its economic and industrial development. Significant industrial growth and favorable business environment of France motivates several leading foreign investors and multinational organizations to enter in this potential market (Geckeler 5). The country always prefers for employees of significant education and qualification background. In addition to these, employers always provide effective training and development programs for the employees to increase their skills, competency and level of knowledge. The nations in European Union collaboratively try to develop significant business and trade policy to foster economic growth. Moreover, implementation of advanced technology in business process helped several organizations within the country to meet business objectives and corporate goals. Mode of Entry Analysis and Recommendation It is clear from above discussion that the French automobile market is highly competitive. Toyota, Mercedes Benz, BMW, Honda Motors, Audi, Nissan and Hyundai Motors are the potential organizations within French automobile industry. Each and every company is trying to adopt customer centric approach in the business strategy to meet with market demand. It is important for Tata Motors to determine the market demand and social needs of people before choosing an international mode of entry option. Several risk factors are associated with the foreign entry strategy. Therefore, it is essential to choose an effective foreign entry mode option. There are two major types of foreign entry modes, such as equity entry modes and non-equity entry modes. Contractual agreements and export are considered as non-equity entry modes. On the other hand, wholly owned subsidiaries and joint venture is considered as major equity entry modes. Apart from these, licensing, turnkey projects and franchising are considered as other popular and effective foreign market entry modes (Hill and Jones 166). It is difficult for Tata Motors to follow wholly owned subsidiary model as the organization is going to start its business operation in France for the France. Therefore, it would be difficult for the organization to achieve significant initial growth rate. Joint venture with a renowned France based automobile manufacturing and distributing company will help the organization to successfully enter in the French Automobile market. There are five common and key objectives of joint venture entry mode, such as market entry, joint product development, technology sharing, meeting the requirements of government regulations or policies and reward or risk sharing. Strong political connection and significant access to the existing distribution channel arte the major advantages of this joint venture entry mode. Joint venture entry mode is considered as cost consuming international Tata Motors can capitalize on the potential opportunities of Joint venture entry mode. The reasons behind the consideration of joint venture entry mode have been described below. This recommended foreign market entry mode will help Tata Motors to access the additional financial resources of the co-venture company. This entry mode will ensure asset sharing aspect which is one of the major advantages of joint venture. It is important for an organization to arrange large business operation capital before starting international business operation. This process will help the organization to gain required business operation capital (Ireland, Hoskisson and Hitt 159). In other word, joint venture entry mode will ensure high profit margin and significant revenue generation. It is very much difficult for an organization to find cost effective and reliable supply chain and distribution channel in foreign market. Tata Motors needs to have a strong supply chain and distribution channel in order to reach to each and every potential target customers. In addition to this, the efficiency of the supply chain network also needs to be considered by the organization. Joint venture with an existing firm will help Tata Motors to use the supply chain network of the partnering firm. It can save significant business operation time and cost (Hollenson 345). It is identified from the above discussions and analysis that the recent financial and global economic recession affected the economic environment of the country. Though the country is considered as one of the developed and strongest economies in this world, but effect of economic slowdown reduced the purchasing power of people. Therefore, the economic risk factors associated with the business environment need to be considered by Tata Motors. This joint venture entry mode will help Tata Motors to share the economic risk factors with the co-venture. The risk of facing business loss can be divided between two parties due to the undertaken asset sharing process. It is true that people in France are trying to purchase fuel efficient cars. Looking into this market demand and customer preference, organizations like Ford Motors and Toyota are trying to introduce electric cars. It can help the organizations to reduce the emission level of carbon. Tata Motors generally try to introduce fuel efficient commercial and public vehicles to meet the market demand in affordable economic price. The organization can experiment new things, such as introduction of green cars. This business concept can provide effective competitive advantage to Tata Motors. I addition to this, this strategy can be supported by the co-venture (Partasarthy 159). The joint venture entry mode can help the organization to introduce products according to the customer preference. Tata Motors can use the human resources, financial resources of the co-ventures. In addition to this, knowledge about the business culture of co-venture can help Tata Motors to make significant social and political relations. This joint venture entry mode can motivate Tata Motors to widen the economic scopes in French Automobile Market. Developing strong brand reputation and positive brand image is quite difficult at the initial point of time. Support of financial resource and human resource can help Tata Motors to widen its economic scope in limited time and cost. Automobile industry is one of the growing industries around the globe. Organizations within the French automobile industry are implementing advanced technology in order to introduce highly automotive cars. Change in market demand and social needs are forcing the organizations to use advanced techno logical resources in business operation. Tapping new methods, adoption of advanced technology and modern business operation approaches are high cost associated functions. Tata Motors needs huge business capital to introduce technologically advanced cars with low business operation cost. If the organization tries to do so, then the quality of the products and services may go down. It can more hamper the brand image of the organization. Therefore, it would be effective if Tata Motors choose joint venture foreign market entry mode as it will help the organization to access the technological resources of co-venture and introduce vehicles according to the needs of target market in low business operation cost. Apart from economic and social territory, joint venture entry mode can provide other significant competitive advantages to Tata Motors. It provides the ability to make strong relationship with vital business and political contacts. This specific international market entry mode has several conflicting pressures to compete and cooperate. Joint venture is significantly controlled through the coordination and negotiation process, while each and every firm like to have positive hierarchical control. Business cultures used to differ from a country to another country. Each and every multinational organization tries to expand its business operations and practices in international market place in order to increase market share and develop a potential global client base. Major objective of global expansion strategy is profit maximization and high sales growth. But, it is important for the organizations to understand and adopt the business tradition and business culture of international operating countries. An organization simply cannot take interest and start business practices in international market due to different cultural background of employees, customers and other stakeholders. Joint venture entry mode can help the organizations to overcome these social and cultural barriers in the foreign markets. Tata Motors can overcome these issues and future cultural barriers through the help of co-venture. This entry mode can provide Tata Motors the potential opportunity to gain new expertise, capacity and knowledge about business culture. In addition to this, Tata Motors can get the access to new geographic market or can gain knowledge about advanced technology from the co-ventures which are required for operating in the French automobile market. Joint venture market entry mode is quite flexible comparing to other options. Generally the joint venture businesses have limited life span as organizations try to start individual business operation after operating with the co-ventures for some times (Larimo 21). It is important for Tata Motors to know and understand the work place culture in France. An international cannot become successful without the significant performances of each and every organizational function. Human resource is considered as one of the major business growth drivers of the successful companies. It is important for Tata Motors to develop organizational culture or workplace culture considering the cultural background of French people and corporate cultures in France. Initially, the organization can get familiar to these aspects through the help of co-venture organization. Lack of effective workplace culture and business tradition can affect the entire business process. Therefore, it would be important for Tata Motors to depend on the co-venture regarding policy development, workplace culture development and strategy development process. These factors will ensure the employee motivation aspects. Employees need good workplace environment, effective communication process, and significant performance management process along with the appropriate compensation to perform effectively. These aspects can be ensured only through joint venture international market entry mode. This strategy will help Tata Motors to meet business objectives and corporate goals in France. In Near future the organization may try to follow wholly owned subsidiary model, but initially these knowledge and realization about cultural or social aspects will help Tata Motors to perform individually in the France Automobile market. Tata Motors should to introduce fuel efficient cars and green cars that are run by the substitute energy sources. Government of France is motivating each and every business organization to implement sustainable business strategies in the business process. Recently, business diversification has become one of the major beneficial business strategies that are adopted by several leading multinational organizations. Joint venture market entry mode offers an innovative and creative way to the multinational organizations in order to exit from the non-core business performances. It is important for Tata Motors develop several unique diversifies business strategies in French automobile market to overcome the threat of intense market competition. Business diversification requires huge start up operating capital and significant support from various business clients, such as external stakeholders, suppliers and business organizations (Henisz 112). Joint venture can allow Tata Motors to get required initial resources. Support of co-venture can enhance the business diversification strategy of the Tata Motors. Although there are several limitations of this joint venture market entry mode, but effective strategy development and implement process will ensure Tata Motors to overcome the challenges. Major disadvantage of this, joint venture market entry mode is that the organization cannot enjoy 100 business profits as the organization has to share some percentages to the co-venture. In several times, it has been identifies that the objective and goals are not 100 percent clear and cannot be communicated to involved partners and individuals. This can create several critical conflicts within the business communication process. In some cases, it has been determined that conflicts used to develop in the decision making and strategy development process as each partner try to take individual decisions and implement those decisions or strategies in the business operations. It is true that success of a joint venture highly depends upon the review, research and analysis of the developed goals, objectives and strategies. Effective mutual understanding is required for the organizations in a joint venture to achieve business and corporate goals or objectives. This part of the essay will provide recommendations for Tata Motors in order to overcome the challenges that can be developed due to this adoption of joint venture market entry mode. It is true that each and every developed strategy is highly risk associated. In this present era of globalization and advanced technology, each and every organization is trying to expand their business operations in international market place. The organizations adopt different entry modes based on the characteristics of business structure and business environment of international market. First of all, Tata Motors needs to communicate with the government of France and should make clear that they will enter in market through joint venture mode. In addition to this, a clear proposal and communication is required for Tata Motors with the interested ventures. Tata Motors needs to make a clear but short term joint venture agreement. This strategy will help Tata Motors to make effective exit plan if they wish to leave the joint venture after the completion of contract time. Last but not the lest; it is essential for Tata Motors to follow each and every business regulation that has been developed by the government and authorized body in order to overcome future legal and political challenges. Conclusion Tata Motors is one of the profitable India based multinational organization trying to expand business performance in France. It is clear from above discussion that French automobile industry is highly competitive as several leading organizations are operating within the industry to grab each other’s market share and client base. In addition to this, economic downturn and change in social demand is motivating the automobile manufacturers to implement unique customer centric approaches in business operation. France is one of the important members of European Union. The nations within this European Union try to develop significant business and industrial strategies to improve the condition of business environment. European Union tries to focus on infrastructure development in order to motivate leading multinational organizations to enter in the market. Looking into these social advantages, Tata Motors is trying to enter in the developed French market to maximize market share and profit margin. It is difficult for an organization to enter in an international market and start making profit initially due to several external environmental barriers. Therefore, it would be effective for Tata Motors if they choose joint venture as the market entry mode. It will help the MNE to get effective financial and HRM support from the co-venture initially. Significant access to supply chain of co-venture can help Tata Motors to reduce business operation cost and time. Most importantly it will help the organization to meet market demand. Works Cited Geckeler, Jan. Corporate Environment Analysis. Munich: GRIN Verlag, 2010. Print. Gillispie, Charles. Science and Politics in France. London: Princeton University Press, 2009. Print. Henisz, Witold. Politics and International Investment. New York: Edward Elgar, 2002. Print. Hill, Charles, and Gareth Jones. Essentials of Strategic Management. Stamford: Cengage Learning, 2011. Print. Hollensen, Svend. Global Marketing. New Jersey: Pearson, 2009. Print. Ireland, Duane, Robert, Hoskisson, and Michael Hitt. Understanding Business Strategy. Stamford: Cengage Learning, 2008. Print. Kotler, Philip. Principles of Marketing. New Jersey: Pearson, 2010. Print. Larimo, Jorma. Market Entry and Operational Decision making. London: Routledge, 2013. Print. Parthasarthy, raghavan. Fundamentals of strategic marketing. London: Dreamtech Press, 2008. Print. Peng, Mike. Global strategy. Stamford: Cengage Learning, 2012. Print. Read More