International Operations Management - Report Example

International Operations Management International Operations Management In reference to economics, internationalization refers to the process of expanding the involvement with different international markets. However, there is no any fixed definition of the terminology because the reach is of broad spectrum. Investors interested in this field of investment have to understand different aspect of the global market. This entails multiculturalism, which entails appreciating different cultures, and behaviors, business strategies, among others. They also have to be up to date to ensure that they are aware of the going concerns. Innovation and creativity are among other essential (Harzing, 2005). Essential strategies for future growth of Starbucks 1. Changing role of government Starbucks will need to strategize on the role of government in promoting marketing. This means making the government more supportive to the private sector growth and development. For proper functioning, the government needs to enhance efficient legislation. These steps illustrated below are necessary for the government: 1. Protecting property and facilitating contracts 2. Correcting and controlling the working of the private sector 3. Facilitating social objectives 4. Funding activities in the public finance sector 5. Productive usage of resources The government should prohibit the interference of the bureaucratic and advocate for credibility, transparency and openness in market industry. Vices such as corruption and discretionary regulations should be dealt with by the government. This will create a sound environment for entrepreneurs like the Starbucks. 2. Proper reforms in the enterprise sector The company will have to restructure the state owned, and private firms are one of the major reforms in the enterprise sector. Efficiency of activities in business depends on the operations and design put into practice by the company. Starbucks require accountable managers who can give confidence to its financers. The managers should also make decisions that deliver maximum growth for Starbucks. Coordination of its activities is also vital in the implementation of proper solutions. 3. Reforming the financial sector This is done through the improvement of net investors and net savers. It involves the efficient allocation of resources to promote economic growth. Starbucks will have to work on its financial sector making sure that it is up to standard in all countries where its branches are opened. There has to be enhanced competition, and this will be met through a well out lined plan. It is addressed in three crucial cores: improvement of a regular frame work, reinstating supervision and facilitating competition in all of its branches (Traill and Eamonn, 1998). 4. Development of the Human Resource department Starbucks will require an appropriate crew of employees fit for the market competition. Well educated personnel who work under minimal or no supervision will be remarkably effective for the growth and development of Starbucks in the future. As a result of advancement in technology, human labor is being replaced with machines. However, the functioning of this equipment requires trained personnel (Harzing, 2005). 5. Improving the physical infrastructure Majority of countries have damaged infrastructure system. There is a need to replace the previous technology with the one in order to accommodate marketable businesses. Infrastructure plays a key role in the marketing industry. A cost efficient and reliable infrastructure is necessary and to achieve it a commercial approach is significant. It includes the creation of a legal framework to accommodate private investors and lowers prices of infrastructure services (Harzing, 2005). 6. Lowering of poverty levels Starbucks needs to put forth measures that will cub poverty in its branch countries. Measures such as creating employment for that country’s citizen will be highly essential because it will promote social development. It will also improve the living conditions of people in that country creating a conducive environment for business (Sullivan and Sheffrin, 2003). Benefits, risks and challenges of globalization Internalization is underpinned by advancements in technology and economic policies liberalization thus has significant benefits. Starbucks will gain from factors such as increased competition, improved resource allocation in its diverse branches, exposure to a lot of new ideas and the tapping of international markets. As a result, internalization of Starbucks will intensify its competition strategies and economic agents will have more opportunities. However, it will need an efficient social and economic infrastructure, unrestricted access to exports, and ethical rules of operation. All of these come from the national government. Internalization is faced with many controversial issues. Arguments have been put across stating that the liberalization in internalization leads to greater efficiency. In the contrary, one country may be facing a crisis like in the case of UK for Starbucks and thus the profits drop drastically. Different currencies in various countries, if not well regulated, results to a depressed growth rate. Numerous facts prove that internalization is an uneven process. The GDP of countries differs as a result of many factors. This clearly explains the success and the failure of Starbucks in different countries where its branches are found. There is a wide gap between the poorest and richest countries. In dev eloping countries, the GDP is exceedingly low and thus appreciably influences the performance of companies established in them. There’s a significant difference in how countries manage the challenges of internalization. In developing countries, performance is measured with speed and level of their economic growth. Two factors are significant in developing countries: economic growth and the quality of policies. There are three types of policies, those that affect economic infrastructure, trade regimes and policies of macroeconomic. Managing the new international structure Starbucks corporation follows joint venture strategy to internationalize, therefore, its large portion of its labor force comes from the locals who are employees of the mother company. In order manage this new international structure; the company will have to manage the external and internal factors properly. These are the factors which will put into consideration before making the decision on which mode to enter into the international business. Some extern al factors include culture distance, market potential, market barriers, and degree of competition. The internal factors which will mostly affect the partner company that is the companies already established in Italy are resource availability, management’s attitude towards risk. In order to manage its structure, the company will have to do the following; adjust its legal and regulatory system, reform the financial sector and reform the enterprise sector. Adjustment of the legal system, it will do this by adopting laws which are fundamental for internationalization. These laws will have to be compatible with the laws regulating business in Italy. This will help the company in acquiring property, contract, security, bankruptcy, competition and company legislation. Although drafting this legislation is paramount, their full relevance will only be realized after effective implementation. For example, property legislation will make transaction involving property less dubious. Legislation bankruptcy for instance is a legal procedure that is of critical importance for effective internalization. Effective laws include procedures for both liquidation and reorganization problem. Financial reforms, there are the least three reasons why Starbucks company will require financial restructuring. First, without an active finance mechanism the company will have no alternative allocation. Starbucks Corporation will have to avoid the following in managing their international structure; do not forget what drives the internationalization: The Company will have to keep money on top and at the bottom lines of the company’s balance sheet. Here, the point is that the cost of lateness or lousiness will go beyond the benefits of cutting corners on development. Internationalization takes place because of a: new customer(s) sale, new partnership and strategic initiative which will have legal backing and marketing efforts (Krugman and Wells, 2008). The company should not change the grass root management of their subsidiaries. It is essential to let the local managers be involved in the administration of the subsidiaries branches. This is because they have the necessary knowledge of the market and the local culture. The local management should be in charge of local workforce. That is the position of the human resources manager should be left to the locals, and only the top positions should not be centralized (Krugman and Wells, 2008). International business leadership should reflect the diversity of the workforce and the customer. Top managers ought to have knowledge of the local languages and customs. Company should not be static but dynamic to culture of change, for Starbucks to be successful in international business the managers will have to be open to diversity and different approaches of solving different problems. The management of the company should empower the employees by allowing mistakes to be done, and new initiatives to be taken. Language training for the employees and managers should be offered, and the possibility to meet people from different cultural backgrounds. This will contribute to trust building, a prerequisite for success in change and innovation. From the above, it is evident that for Starbucks Company to enter the Italian it will have to do so through exporting. Here, the company will consider the following, technology and knowledge transfer; Absorptive capacity; Outsourcing; Global manufacturing networks; Global supply chains. Technology and Knowledge transfer Transfer is the movement of technology and knowledge through some channel from one organization or individual to another. This is a difficult form of communication since the company will require moving knowledge and technology to Italy, which is at a different structural, cultural and organizational position from United States. Here, the company will have to choose which model of technology transfer to apply from the three technology transfer models (Harzing, 2005). The appropriability model, this emphasizes the importance of quality competitive market pressures in achieving technology transfer. The second one is the dissemination model which concentrates on the diffusion of innovation. The objective here is to disseminate innovations to individual users. Knowledge utilization model, this emphasizes the importance of; interpersonal communication from researchers and users, and organizational barriers and facilitators of transfer (Ingham, 2004). Model three will be the most appropriate for the company to employ since it will only have to transfer the top officers only to Italy. Absorptive capacity This is the companys ability to recognize the importance of new information, internalize it and apply it to commercial ends. Its absorptive capacity will depend on the absorptive capacities of the individual members. These will be influenced by the local workforce in Italy and the capacity of the new, top officials. For the full realization of this, communication systems of the company will have to depend on specialized players, to move information from the environment or may involve less structured patterns. Outsourcing In Italy, Starbucks Company will contract the existing businesses function. It will do this by transferring some employees involved in this process. This will help the company to save money since they will get the services at a lower cost. Furthermore, this will allow the corporation to focus on other issues (Ingham, 2004). Global manufacturing networks The company will benefit a lot from its manufacturing networks since it has the necessary logistics, sourcing for products. These manufacturing networks will feed the global supply chains. This is the system which the company will use to move its product or services from its factories to customers. The supply chain will transform components and raw materials to finished products that are for sale to the end customer. References Harzing, A. 2005. International human resource management: an integrated approach. Michigan: Sage Publications. Verdin, P. 2001. A Strategic Perspective on Managing Internationalization. London: Palgrave Macmillan. Zan, L. (2006). Perspectives on Strategic Change. Venice: Springer. Sullivan, A. and Sheffrin, S. M. 2003. Economics: Principles in action. New Jersey, Upper Saddle River. Rogers, E. M. 2003.Diffusion of Innovations, 5th ed. New York, NY: Free Press. Krugman, P. and Wells, R. 2008. Economics. New York: Worth Publishers. Traill, B. and Eamonn, P. 1998. Competitiveness in the Food Industry. New York: Springer. Pitelis, C. and Roger S. 2000. The nature of the transnational firm. Routledge. Ingham, B. 2004. International economics: a European focus. Pearson Education. Read More