International Marketing of Big W - Report Example

International Marketing of Big W Executive Summary Big W, as a division of the retail organization Woolworths, aims to generate quality merchandises to customers at an affordable price range. It also aims in enhancing the competencies of the retail staffs through empowering and training them to take key business decisions. Other than generating a healthy work environment, the organization also aims at generating greater profitability to shareholders. In its bid to enhance its retail presence in the Indonesian market, the paper conducts a macro level analysis of Indonesia to help generate effective recommendations to Big W’s management. The paper tends to generate conceptual discussions relating to the management of human resources and motivation of staffs in a diverse cultural setting. Based on the above study potential recommendations are generated to help enhance the HRM expertise of Big W operating in the Indonesian market. Table of Contents Table of Contents 3 Introduction 5 Objectives of the Report 5 Scope of the Report 5 Brief Background to the Company and Indonesian Region 5 Company Background 5 International Country Background 6 Economic Analysis 6 Political Analysis 7 Cultural Analysis 7 Ethics and Corporate Social Responsibility 7 Recommendations for International Strategy for Company 8 Recommendations for Entry Mode 9 HRM Resources Analysis and Recommendations 10 Methods and Strategies for Motivation and Leadership of Cross Cultural Teams 14 Conclusion 15 References 17 Introduction Objectives of the Report The objectives of the report relate to the evaluation of the international marketing potential of Big W, a discount supply chain of Australia. It would tend to evaluate the feasibility of the company in expanding its market to Indonesia. Scope of the Report The scope of the report relates to the understanding of the Indonesian market on the macro level for helping Big W gain an effective entry in the market and, thereby, to develop on its business capabilities. The report would also generate effective recommendations to Big W to help sustain its business activities in Indonesia. Brief Background to the Company and Indonesian Region Company Background Big W operates as a chain of discount departmental stores in the Australian region. The discount chain as a part of Woolworths Limited, functions on the basis of 179 stores spread along Australia. The company tends to sustain its market leadership in the Australian retail market through providing its customers quality branded products at an affordable price range. Diversity, quality and affordability, thus, act as the main pillars that guide the retail operations of Big W in Australia. Big W working based on team strength of 17,000 people aims to deliver the right quality of product and service to its customers. The company reflects a healthy and safe working environment for the employees while also generating increased returns to the shareholders and investors (Big W, 2014). International Country Background Big W endeavors to expand its market to Indonesia. The new market for Big W located in the South East Asian region emerges as one of the fastest growing economies. Indonesia spread on a total area spanning 1.9 million kilometers reflects a total population base of around 249 million people comprising mainly of people from Muslim communities. The Indonesian population also reflects considerable diversity relating to ethnic and language based parameters. The market of Indonesia tends to be the point of attraction of potential investors owing to the presence of a large and effective consumer base, abundance of natural resources and also in terms of a stable government. Despite the above potentials, the Indonesian market also reflects potential threats in terms of existence of weak economic structures, growing corruption and also the reflection of a protectionist philosophy (BBC , 2014). Economic Analysis Indonesia reflects a growing economy from the 2010 period. During the period of the global financial crisis, Indonesia is observed to have outperformed regional economies like China and India as G20 members, posing economic growth. The country also records low inflation rates with also the other problems like growing unemployment, poverty and rise in corruptive practices and complex regulations. In terms of Purchasing Power Parity (PPP) rates the GDP estimates made during 2013 amounted to $1.285 trillion, while per capita GDP at PPP rates amounted to $5,200 during the same period. The industrial sector comprised of different types of industries tends to contribute to around 46.6 percent to the country’s GDP followed by services and agriculture industries (CIA, 2014). Political Analysis Indonesia reflects the existence of transition in the political landscape owing to the change from the authoritarian government to a democratic government structure during the 1998 period. Indonesia now operates as a constitutional democracy governed by a President acting as the Head of the State. The President of Indonesia is elected on the completion of five year tenure while the legislature is constituted by two bodies like the House of Representatives and the Regional Representatives Assembly. The constitution of Indonesia reflects the country as a potentially secular and religious nation that aims to protect the nationalistic rights of its individuals (New Zealand Ministry of Foreign Affairs and Trade, 2008). Cultural Analysis The cultural analysis of the Indonesian region reflects the growth of needed dynamism. The present day culture of Indonesia is observed to be vibrant and colorful which reflects the fusion of traditional Portuguese and Dutch cultures with the culture sets of the ethnic varieties. Thus, cultural traditions relating to people hailing from different ethnicities like Chinese, Arabic, and Malay and also from other European nations tend to constitute the cultural ramifications of the region (Embassy of Indonesia, 2010). Ethics and Corporate Social Responsibility The Indonesian region reflects growth of increased corruptive practices related to money laundering, bribery and extortion of licenses and work permits. These activities are observed to potentially affect the operations of business organizations in the region. Existence of a weak legal system contributes in the growth of rampant corruptive practices in the region (Business Anti-Corruption Portal, 2014). To mitigate risks emerging from corruptive practices, the business organizations are required to generate a risk assessment plan, to understand the impacts of different risks and thereby, in drafting of plans to help mitigate the same. Generation of strong internal regulations with authentic requirements for accessing documents would contribute in countering the potential risks (Lim, 2003). Recommendations for International Strategy for Company The objective of Big W is to help consumers gain access to quality products at an affordable price range. It also focuses on generation of a safe and healthy working environment through generating greater returns to shareholders. Along with the prevalence of a trained employee base, the organization creates effective service and product offerings to customers. Big W aims to expand its market in other international areas to help in generating a larger market share and revenue growth. Big W aims to sustain its Cost Leadership position through the reduction of prices in different categories of merchandises like the food and liquor segment. Further, the company also focuses on enhancing its supply chain activities to help in reaching merchandises to the stores at reduced cost and in a timely fashion (Woolworths Limited, 2011). The company focuses on internationalizing its brand image through the development and empowerment of workforce to meet the demands of international customers. It also concentrates on the development of global supply chains and logistics, aimed at supplying of merchandises to international customers in an effective fashion (Woolworths Limited, 2011). Recommendations for Entry Mode To gain an effective entry in a foreign market, business organizations require the incorporation of effective modes of entry like Exporting, Joint Ventures, generation of Licensing agreements and/or Partnership agreements with existing companies in the related sector, development of Franchisees and generation of Greenfield Investments. Entry modes relating to exports and formation of joint venture, licensing, partnership and franchising are observed to be cost effective in nature. They also contribute in helping the entering firm to bear lesser risks while generating potential access to market, consumer and supplier networks. The employment of Greenfield Investments as an effective entry strategy requires the use of large scale investments by the international firm. Potential investments are generated by the international firm in the form of setting manufacturing, logistics, marketing and supply chain networks. The use of Greenfield investments also requires the international firm to counter potential risks in terms of setting up new business infrastructures in the new business region. Business organizations focusing to gain an effective entry in the Indonesian market are observed to potentially focus on exports of commodities in the region. The same is taken to help the international organization in gaining an effective space in the relative market. Similarly, the generation of Foreign Direct Investments in the setting up of new business infrastructures in Indonesia is also taken up to help the business organization in gaining an effective presence in Indonesia. The business company can also focus on developing relationships with local agents and distributors to help in gaining an effective access to supplier and marketing networks. Thus, it is required for the business organizations to appoint a potential representative in the Indonesian market that would contribute in the development of an effective relationship with the local distributors and agents. The business organizations are required to generate large scale investments to contribute in the development of regional business entities. Greenfield Investments in the form of development of human, technological and infrastructural resources is taken to rightly contribute in helping Big W gain an effective presence in the international market (Ibpus.com, 2009). HRM Resources Analysis and Recommendations Big W in terms of focusing on the development of business operations in the Indonesian region is required to formulate effective human resource strategies. The human resource strategies relating to manpower recruitment, training and skill development, compensation and also in managing relationship with employees and trade unions need to be developed based on the evaluation of the cultural dimensions of Indonesia. The cultural dimensions of Indonesia would be evaluated based on the use of the cultural model as put forward by Geert Hofstede. The different dimensions of the model relating to Indonesia can be explicitly understood through the use of the following diagram. The above diagram reflects the existence of large power distances in the Indonesian organizations. This reflects the growing significance of management hierarchies in the business organization with also the centralization of power in the hands of the business managers. Employees in the organization thus, reflect the need to be directed by the business managers in conducting the tasks. With a low score of individualism, the Indonesian organizations thus tend to reflect a collectivist attitude. This reflects that the employees tend to produce greater significance on complying with traditional norms and values in the course of taking task related decisions. Further, the need to work in a team framework is highly emphasized by the employees in the meeting of tasks and duties. Indonesian people tend to reflect a feminine attribute owing to generating a low score in the Masculinity dimension. This reflects that the employees are motivated in terms of gaining needed flexibility to care for their family and also in gaining needed support and management collaboration in terms of taking effective decisions (Aswathappa, 2007). Business policies aimed at enhancing the health and safety standards of the workers are thus, taken as effective motivators by the employees. A low uncertainty avoidance score relating to the Singaporean employees reflect that the people do not tend to avoid the emergence of uncertain and unforeseen contingencies. Thus, potential human resource policies designed at motivating the people in taking decisions to counter unforeseen events are generated greater significance by the employees (The Hofstede Centre , n.d. ). The management body of the business organizations in Indonesia is required to meet the basic demands of the workers relating to wage and compensation, allowances and benefits and also in generating flexibility relating to working hours. Demand for leaves is also required to be effectively met by the management body of the organizations. Existence of effective working conditions and also the generation of different insurance and health related policies stand as a prerequisite for the business organizations operating in the Indonesian region. Two types of labor unions, Enterprise and Affiliative tend to be in operation relating to the business organizations operating in the Indonesian region. The Enterprise unions are observed to be formed with distinct membership and operate based on an effective mission to help in voicing for the needs of the employees. Affiliative Unions are formed based on a political mindset (Heryanto, 2008). They require the employees to join a political party and are more akin to encourage the workers to go for strikes and conflicts. Collective participation is also observed as an effective mode in a large number of organizations to help in arriving at mutual agreements relating to health and safety issues and other matter pertaining to working conditions. Issues concerning the emergence of strikes and organizational conflicts and also other work related demands of the workers are met in Indonesia through the formation of bipartite dialogues. The management body of the organization focuses on entering into effective discussions with employees and trade unions to help in resolving potential issues relating to demands in working conditions and safety regulations. Similarly, the bipartite discussions also contribute in ceasing the emergence of strikes and conflicts (Rahayu & Sumarto, 2003). The human resource approaches to be undertaken by a business organization tend to differ along different approaches based on ethnocentric, polycentric and geocentric parameters. HRM approaches related to ethnocentric orientation are related to human resources needs of the home country. Polycentric human resource approaches relate to the development of human resource policies to meet the needs of the human resources relating to the host country. Finally, human resource approaches related to the geocentric mode focus on designing of human resources policies to meet the needs of staffs in the global landscape. Relating to the market expansion of Big W in the Indonesian region, the company is required to develop its policies based on the polycentric approach. Working based on the Polycentric approach contributes in enhancing the effectiveness of the human resources decisions. HRM decisions taken based on the Polycentric approach requires the understanding and evaluation of manpower needs based on the viewpoints of local managers (Forshee, 2006). To sustain an effective relationship with the Indonesian people, Big W’s management is required to work on the use of Polycentric approach in formulation of decisions related to human resources. It helps in meeting the regulatory and legislative standards relating to the specific region, thereby, conforming to the needs of the regional manpower (Harzing and Ruysseveldt, 2004). The development and use of performance appraisal systems in the Indonesian organizations tends to generate potential challenges to the human resources managers owing to the existence of cultural bottlenecks. Indonesian people are observed to avoid the emergence of uncertain events relating to disputes and conflicts and hence, communicate with each other in an indirect fashion. Generation of performance appraisal systems in the organization, thus, generates potential difficulty owing to its requirement of a one-to-one communication between the employer and the employee. The employees tend to behave in a defensive fashion to the negative feedbacks generated. The HR managers are hence, required to make the employees understand about the efficacy of the performance appraisal systems, and helping them to gain benefits and rewards. It also requires the performance appraisal systems to be increasingly linked with training activities to help enhance the expertise and the productivity of the staffs. Polycentric approach in formulation of decisions related to human resources helps in meeting the regulatory and legislative standards relating to the specific region (Expat Web Site Association Jakarta, 2014). Methods and Strategies for Motivation and Leadership of Cross Cultural Teams Big W is taken to face key challenges relating to incorporation of a cross cultural team consisting of Indonesian and Australian people. Communication gap counters as a major impediment that is caused owing to the inclusion of people speaking in different languages. Failing to understand the information generated through the use of electronic mails and chats conducted in the virtual medium affects the pattern of discussion conducted in a team to fulfill the objectives of departmental tasks. In addition to language differences, affecting the inter-organizational communication work groups relating to different cultures reflect difference in approaches in conducting tasks. Managing workers reflecting attitudinal and behavioral differences based on the tasks or jobs entrusted creates a problem in the cross cultural setting. People relating to a particular culture may tend to dominate the actions of other cultural groups in a team setting. These dominating class of workers endeavor to gain optimal benefits in terms of influencing the work environment through decisions taken in a concerted fashion. This happens to create a problem for the people relating to other cultures in conducting of tasks in a team setting. Workers relating to different cultures tend to reflect differences pertaining to the factors that would help in motivating their performances. Some reflect an increased interest to financial incentives while others to non-financial incentives. This requires the management in formulating different types of incentives plans suiting different cultures (Team Building Portal, 2009). Effective management of people relating to diverse work groups is possible through understanding the different value sets. It helps in guiding the performances of workers belonging to different cultures. Thus, effective rewards and benefits schemes must be designed to help in suiting the needs of people belonging to varied cultures. Similarly, differences in attitude of workers also require the management to decide on the generation of financial and non-financial incentives like increase in compensation levels and opportunities for job growth respectively. Other cultures are observed to generate significance on the enhancement of job security which acts as motivational factor (Black and Porter, 2011). Herzberg’s Two Factor Theory counts to be the right motivational theory that can be applied in motivating a diverse work group in an organization. The two factor model disintegrates the different motivational factors into two groups like Hygiene Factors and Motivators. Factors like enhancement of compensation levels and development of work conditions are eyed as Hygiene Factors. On the other hand, encouraging people to pursue greater responsibilities and recognizing their performances are taken as Motivators. The organizational manager can focus on motivating diverse employee groups through a combination of the different stated factors (Hodgetts, 2005). The Democratic or Participative Leadership Style stands to be the best that can be effectively recommended relating to the management of workforce in a diverse cultural setting. Democratic leaders are observed to encourage their subordinates in taking key organizational decisions thereby empowering them to shoulder new responsibilities (Powell, 2010). Conclusion Indonesia though appears to be a promising market for Big W in terms of an effective economic and political system tends to reflect potential challenges owing to existence of large scale corruption. Big W to gain an effective presence in the Indonesian market needs to effectively design human resource strategies and policies to help in meeting the needs of diverse cultures. It also needs to devise strategies to counter corruptive practices while designing of logistics and supply chain networks to help sustain its cost leadership in the international market. References Aswathappa, K. (2007). International Human Resource Management . New Delhi : Tata McGraw-Hill Education. BBC . (2014). Indonesia profile. Retrieved from http://www.bbc.com/news/world-asia-pacific-14921238 Big W. (2014). About Us. Retrieved October 15, 2014, from http://www.bigw.com.au/help/aboutuscontent.html Black, S., & Porter, L. (2011, June 21). Managing Motivation In A Diverse Work Sitting. Retrieved October 16, 2014, from http://gvillage.org/gv/index.php/management-tips-21/23-leadership/47-managing-motivation-in-a-diverse-work-sitting Business Anti-Corruption Portal. (2014). Buiness Corruption in Indonesia . Retrieved October 16, 2014, from http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/indonesia/business-corruption-in-indonesia.aspx CIA. (2014). Indonesia. Retrieved October 15, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/print/country/countrypdf_id.pdf Embassy of Indonesia. (2010, September 30). Indonesian Culture; Arts And Traditions. Retrieved October 15, 2014, from http://indonesia.gr/indonesian-culture-arts-and-traditions/ Expat Web Site Association Jakarta. (2014). Do as I say, not as I do: Annual Performance Appraisal and Evaluation in Indonesia . Retrieved October 16, 2014, from http://www.expat.or.id/business/annualperformanceappraisal.html Forshee, J. (2006). Culture and Customs of Indonesia. United States : Greenwood Publishing Group. Harzing, A.-W., & Ruysseveldt, J. V. (2004). International Human Resource Management. United Kingdom : SAGE. Heryanto, A. (2008). Popular Culture in Indonesia: Fluid Identities in Post-Authoritarian Politics. New York : Routledge. Hodgetts, R. M. (2005). International Management: Culture, Strategy and Behaviour . New Delhi : Tata McGraw-Hill Education. Ibpus.com. (2009). Doing Business and Investing in Indonesia Guide. Indonesia : International Business Publications . Lim, J. (2003). MITIGATING THE RISKS OF DOING BUSINESS IN INDONESIA. Retrieved October 16, 2014, from http://accelus.thomsonreuters.com/sites/default/files/W-310243.pdf New Zealand Ministry of Foreign Affairs and Trade . (2008, December 4). Indonesia Political Situation. Retrieved October 15, 2014, from http://www.asean.fta.govt.nz/indonesia-political-situation Powell, G. N. (2010). Managing a Diverse Workforce: Learning Activities. United Kingdom : SAGE. Rahayu, K., & Sumarto, S. (2003). The Practice of Industrial Relations in Indonesia. Retrieved October 16, 2014, from http://www.smeru.or.id/report/workpaper/practindustrel/practindustrel.pdf?origin=publication_detail Team Building Portal . (2009). Issues in Cross Cultural Teams . Retrieved October 16, 2014, from http://www.teambuildingportal.com/articles/team-failure/cross-cultural-team The Hofstede Centre . (n.d. ). Indonesia . Retrieved October 16, 2024, from http://geert-hofstede.com/indonesia.html Woolworths Limited . (2011). My Strategic Priorities . Retrieved October 16, 2014, from http://www.woolworthslimited.com.au/icms_docs/130560_Investor_Day_Presentation_2011.pdf Read More