Internationalisation Strategies in the Company - Essay Example

British Airways; Internationalisation strategies Table of contents Page Number Abstract--------------------------------------------------------------------------------------------------------2 Introduction----------------------------------------------------------------------------------------------------3 Internationalisation Strategies which are feasible to the British Airways-----------------------------3 Differentiation Strategy--------------------------------------------------------------------------------------4 The entry modes-----------------------------------------------------------------------------------------------5 Waterfall Strategy---------------------------------------------------------------------------------------------6 Advantages--------------------------------------------------------------------------------------------6 Disadvantages-----------------------------------------------------------------------------------------6 Sprinkler Strategy---------------------------------------------------------------------------------------------6 Advantages--------------------------------------------------------------------------------------------7 Disadvantages-----------------------------------------------------------------------------------------7 Advantages of BA expansion and how it can benefit the host country--------------------------------7 Proposed model of internationalisation--------------------------------------------------------------------8 Conclusion-----------------------------------------------------------------------------------------------------9 Recommendations--------------------------------------------------------------------------------------------9 References----------------------------------------------------------------------------------------------------10 British Airways; Internationalisation strategies Abstract By venturing into the international market, companies are able to access a wide range of opportunities which significantly helps in improving their performance. However, these companies are faced by many challenges in an attempt to introduce their services in the new market. One of the major challenges is the competitive pressures from competitors. In order to have a successful expansion in India, British Airways needs to have adequate understanding of the Indian and Far East markets. This understanding will be of great significance to the company since it will enable it in coming up with effective internationalisation strategies based on its internationalisation competencies. The main aim of this study is to analyze the feasible internationalisation strategies which are feasible for the British Airways in its attempt to extend its services in India and Far East. The study has given an analysis of these strategies which the company can successfully apply to succeed in internationalisation process. Finally, the study has given some recommendations on the best method through which the British Airways company can carry out its internationalisation efforts. The results have indicated that it will be better for the company to apply the proposed four step model to in its effort to enter international markets. It is also recommended that the company use the differentiation strategy by improving and modification of the services provided. This will significantly help in differentiating the company’s products from those provided by their competitors in the international market. Introduction In every business, the main aim is to maximize profits. One of the main ways through which an organization can increase its profits is by maintaining a high level of sales. In the contemporary world, internationalisation has become one of the major ways through which many organizations are increasing their sales. In an effort to maximize its profits, British Airways has been seeking to expand its operations world wide with respect to the traffic intensity. Soon after finalizing the merger with the Iberia, the company is determined to expand its operations in India as well as Far East as there is emergence of new market in these areas. For instance, the traffic in the area has been increasing steadily. However, the modern market is characterized by a very high level of competition. Therefore, the company has to apply necessary measures in order to succeed in its internationalisation process. In order to achieve this goal, British Airways can apply various internationalisation strategies which will facilitate the process of internationalisation. However, the choice of these strategies will be determined by various factors. Internationalisation Strategies which are feasible to the British Airways In many cases, many organizations do not take time to reflect on the strategies which they can best employ in order to increase involvement of its enterprises in the international market. This is despite the fact that internationalisation has become very important in the modern business world, which has become very competitive. According to Ngoc (2008), internationalisation competencies and strategies play a significant role in determining the internationalisation performance of an organization. In connection to this, it would be vital for the British Airways to enhance its competencies and global market knowledge in order to succeed in the international market. The process of globalization has increased the rate of interaction between different people from various parts of the world. This implies that the air travel demand is increasing due to intensification of the traffic (Czipura and Jolly, 2007). To the airline companies like British Airways, internationalisation becomes very crucial in an effort to maximize its profit by venturing into new markets. According to Buckley (2009), every organization should put under consideration the legal and political system, language and culture and have adequate knowledge about the resources and markets which distinguish the country from the home country. Therefore, it is advisable for the British Airways to make an effort of understanding the Indian market before making the final decisions. Although it’s clear that there is a high traffic in the country, it is necessary for the company to consider other factors like cultural differences other important aspects which can significantly affect its operation. Differentiation Strategy In most cases, many enterprises are faced by the problem of competition in their attempt to extend their services in the global market (Delfmann, 2005). This threatens the performance of these companies in the new markets. Similar problem faces the British Airways in its effort to expand its services to India and Far East. One of the most important strategies through which the company can facilitate its internationalisation process is through differentiation. As already noted, the current business world is characterized by a very high level of competition. In India for instance, there are several international airlines which has been operating India for several years. These include Swiss Air, Air Canada, Biman Bangladesh, Aeroflot, Royal Air, Turkish, Kenya Airways, Air Mauritius, Royal Jordan among others. Majority of these companies have developed a strong market base in the country. It will therefore be a big challenge for British Airways to compete with such companies. However, the company can facilitate their success in the international market by applying feasible internationalisation strategies (Casson, 2000). Therefore, differentiation remains one of the main strategies through which British Airways can succeed in its operations in the global market. According to Ngoc (2008), quality based differentiation strategy is the best method in internationalisation process. One of the best through which the company can improve the quality of its services is by interrogating both its potential and existing customers on the preferred ways of offering air services. This will also include communication with experts on the best way forward. These efforts will enable the British Airways to provide highest quality transport services in the international market. Consequently, this will attract more customers from the region as most customers are attracted by quality (Flores, 1998). This will also contribute in development of the company’s competitive Advantage. Another method through which the British Airways can improve on the quality of its services is though integrated global quality management. According to Ngoc (2008), enterprises can increase their effectiveness in the international markets through application of integrated global quality management systems to meet the quality requirements of the global market. This aspect is of great significance to British Airways especially in its effort to venture in Indian and Far East markets where the level of competition is high. The entry modes The entry mode or the method through which a company enters a new market is also significant in the internationalisation process. In this case, we will consider two possible methods through which the British Airways can enter into its new market. These includes waterfall strategy and sprinkler strategies. Waterfall Strategy In this method, the company enters into the international market step by step. In this case, an organisation approaches the international market in a sequential manner rather than at once (Ramamurti and Sarathy, 1997). In this case, British Airways is supposed to enter in each country at a time. This may take duration of one year or so and then move to the next best market in then subsequent period. Advantages One advantage of this method is that it has lower cost of resources. In this case, the company does not need huge starting capital. Therefore, the company can save the money which could have been used in internationalisation for other purposes. This method is also associated with lower risks as well as coordination of interdependencies between country markets (Ramamurti and Sarathy, 1997). Disadvantages This method suffers from the fact that it is prone to imitation. This is because an enterprise takes time before exhausting its potential markets. Their competitors can therefore imitate its strategies in their next potential markets before its entry. Sprinkler Strategy In this case, the company enters into its suitable markets at once. Rather than approaching the market in a sequential manner like in the case of the waterfall strategy, the company enters in the potential markets simultaneously (Mahajan et al, 1995). In this case, British Airways is supposed to expand its operations in all its potential markets at once. For instance, the company is supposed to enter the Indian and Far East markets at once. Mahajan et al (1995) discussed that the sprinkler method is the most suitable in the current business world because of the high level of competition. Currently, the level of competition is very high as many organizations have entered into the global market. It will therefore be advisable for British Airways to apply the sprinkler method of entry in extending its services to India and Far East. Advantages One advantage of this method is that it is very easy for the company to form barriers for its competitors through creation of a good image. This venture is also associated with economies of scale which reduces operational expenses of the company. Disadvantages One major shortcoming of this method is that it is associated with high use of resources and high level of risks. This can significantly affect the company incase the strategy fails. Advantages of British Airways expansion and how it can benefit the host country The British Airway’s step of extending its operations to India is of great significance to the company as well as the Indian population. According to Buckley (2009), multinational companies play a significant role in helping the developing countries to access the international markets. In this case, the British Airways will play an important role in helping the people in India to access effective airline services. Since transportation plays a significant role in economic development. For instance, provision of effective air travel will facilitate economic interaction between India and other countries. It will contribute in economic growth. The British Airways expansion will be of great significance to the population of the countries in which the company will extend its services. For instance, the company will offer competition to the domestic companies which will force these companies to improve their services. Rialp (2006) noted that foreign investment is vital to domestic enterprises since it offers competition to domestic enterprises. While venturing into the international market, it is also important to consider some ethical measures in order to build good relationship with the host countries. Good relationship is of great significance as it provides a favourable environment for business operations. The British Airways can significantly create a good image of its brand in India by reinvesting its profits in the country in order to benefit itself as well as the Indian population. One of the major ways through which the company can benefit the local community is through job creation. This can be done through philanthropic activities like helping the orphans in the community. This will significantly help in developing its brand’s image in India. Consequently, this may help in attracting more customers. The local community can also to benefit from the British Airways entry in India by creating employment to the citizens. This will help in reduction in the level of unemployment rate in India which has currently increased from 6.8 per cent from 2009 to 10.8 per cent in 2011 (Index Mundi, 2011). Proposed model of internationalisation The figure below summarizes the above discussion on the preferred method through which the British Airways can effectively enter the international market. Internationalisation Model Year Steps Method of Entry 2011 1 Potential market analyzing 2011 2 Prioritizing foreign countries 2011 3 Section of the method of entry 2012 4 Analyzing the consumer groups 2012 5 Implementation Conclusion In conclusion, this discussion has clearly shown that internationalisation strategies play a significant role in determining the success of companies in the international market. The study has also indicated that a comprehensive understanding of the international market is important as it helps an organization in understanding the nature of a particular market. This understanding is very important in determining in making critical decisions in an organization. Recommendations From the discussion above, it is advisable for the British Airways to apply the differentiation strategy in its internationalisation process. This will enable the company to win customers in the international market which is characterized by a high level of competition. It is advisable for the company to use the proposed there step model in its internationalisation process. This will be of great significance to the company in the international market. References Buckley, P. 2009. Business History and International Business. Business History Vol. 51, No. 3, 307–333. Casson, M. 2000. Economics of International Business: A New Research Agenda. UK, Edward Elgar Publishing, Czipura, C. and Jolly, D. 2007. Global airline alliances: sparking Profitability for a troubled industry. Emerald Group Publishing Limited, ISSN 0275-6668 j Journal of Business Strategy Vol. 28 NO. 2, pp. 57-64, Delfmann, W. 2005. Strategic Management In The Aviation Industry. Burlington, Ashgate Publishing. Flores, R. 1998. Competition and Trade in Services: The Airlines’ Global Alliances. UK, Blackwell Publishers. Index Mundi, 2011. India Unemployment rate. [Online] Available at: http://www.indexmundi.com/india/unemployment_rate.html [Accessed 12 May 2011]. Mahajan et al.1995. Marketing: International aspects. International Journal of Research in Marketing. ISSN: 0167-8116. Ngoc, T. 2008. Strategies for Internationalisation: A Comparative Study of Thai and Vietnamese Companies in Two Industries. Faculty of Economics and Social Sciences; University of Fribourg. Ramamurti, R. and Sarathy, R. 1997. DEREGULATION AND GLOBALIZATION OF AIRLINES. ISSN: 0885-3908. THE INTERNATIONAL TRADE JOURNAL. Votume Xi. No. X Palt. pp 389-432 Rialp, A. 2006. International Marketing Research: Opportunities and Challenges In The 21st Century. UK, Emerald Group Publishing. Read More