BMG705 Global Business in Context Assignment Sample
BMG705 Global Business in Context Assignment Sample
Introduction
The world economy is totally dependent on the logistics services which commercialize the business transactions across the globe according to trade liberalization and growing purchasing power parity of the population. In addition to that, Foreign Direct Investment (FDI) has the possibilities to boost the economic activity of the country with growing investment in manufacturing, services and employment.
Increased employment leads to high income to the population which proportionately boost the purchasing activity and enlarges the economic progress of the nation. In this report the details of the FDI environment of France to stimulate the market expansion of Hastings Freight Ltd with the proposed mode of entry will be elaborated briefly.
Company overview
Hastings Freight Ltd was founded in 1994 in the United Kingdom (UK) and provides a wide range of palletized freight services to manufacturers, retailer’s distributors and logistics services. It is aiming to help in logistics and distribution services with exceptional quality and punctuality for successful integration of the supply chain system with the core competency of collection of delivery of small consignments of palletized goods.
The company has a brief EU network with more than 400 depots and 130 UK members to combine the resources for serving the population with delivery of smaller volumes of goods in a convenient way with quick and cost effective process to gain market confidence. It also offers both premium and economy services to the international companies with more than frequent international connections for unrivalled pallet delivery services.
The annual turnover of the company is approximately $15 million through pallet delivery services to serve the clients and satisfy the business endeavor more sophisticatedly (Hastingsfreight.co.uk. 2022). The company has earned many prestigious awards for palletized delivery services with a staggering average of 98.7% on-time in full service.
FDI issues that make or break the decisions to expand
Hastings Freight Ltd is a UK based company which provides logistics and distribution services in European countries and the company is expanding day by day with the help of innovative technology and experienced employees. The company needs to identify and understand the Foreign Direct Investment (FDI) structure of a country before taking an entry in the country.
In addition to that, in this portion, the FDI structure of France will be discussed in detail even though the management of the company requires finding out the FDI advantages in the country which help Hastings Freight Ltd to make the decision for expansion in France.
The government of France is extremely focused on simplifying the FDI structure of the country in recent years which improves the manufacturing and business sector of the country. The simple structure of FDI in France always influences the decision of Hastings Freight Ltd in order to take entry in this country as it will be beneficial for the growth and success of the company.
It has been observed that many foreign countries of the world such as China have identified many business opportunities in France and for that reason, the amount of Chinese FDI has increased in France over the years (Gao and Schaaper, 2018). Additionally, other countries of the world are motivated and influenced by the FDI structure of the country which may encourage the expansion related decision of Hastings Freight Ltd
In recent years, the logistics and distribution sector in France has experienced many advantages which may result in the growth of the logistic sector in the country. The investment scenario and political stability of the country also attract and motivates Hastings Freight Ltd to take entry in this country with the help of an effective market entry method. According to official reports, in 2019, the amount of FDI inflows in France has reached its peak and in this year the country has become the ninth largest nation in terms of FDI inflows (Trade.gov. 2022).
The data also denotes that other multinational companies of the word have invested in the country and received a huge amount of profit. The management of Hastings Freight Ltd needs to analyze this FDI data which will help the company to make a proper decision on the expansion of the company in France.
The financial sector of the country is extremely developed and for that reason, the FDI of the country created a beneficial impact in ensuring the economic growth of France. More specifically, the logistics and distribution service of Hastings Freight Ltd may formulate a high amount of revenue which influences the expansion decision of the company (Shahbaz et al., 2021).
According to the report of the World bank France is some of the most suitable countries of the world in terms of FDI as it has been observed that in 2018 FDI net inflows of the country was 2.778%, however, due to the deadliest impact of the Covid-19, it has reduced to 0.503% (Data.worldbank.org. 2022). This data also denotes that France is suitable for the business growth of Hastings Freight Ltd even though the less growth of FDI net inflow in 2020 may not massively affect the growth of the colony in France.
Figure 1: Foreign Direct Investment, net inflows (%) (Source: Data.worldbank.org. 2022)
According to a trusted report, in 2020 there were more than 28000 foreign owned companies who were able to make a huge amount of profit by FDI. This data and information surely influence and motivate the decision making process of Hastings Freight Ltd which will help the company to make the decision to expand the company in France.
The increased amount of goods and products exports is also beneficial for a logistics and distribution company and it needs to be mentioned that the numbers of good exports is increasing significantly in France. Data also shows that most of the foreign owned organizations and MNC organizations of the county export a huge amount of products in outside of the country (Oecd.org. 2022).
Figure 2: Amount of Goods exports in France (Source: Oecd.org. 2022)
It is immensely essential for logistics companies to predict the total amount of business in the upcoming years and for that reason, it is the duty of Hastings Freight Ltd to analyze the external business environment of France. The central government of the country always influences foreign investment and sets some specific rules of the foreign companies which need to be analyzed by the company before making an entry decision in the country.
The annual report of FDI in France 2020 also asserts that during the Covid-19 pandemic the country was able to attract more than 1215 new foreign business to the country which indicates the business opportunities for foreign companies in France (Businessfrance.fr. 2022).
There are many advantages for foreign companies if it takes an entry into the country and makes a huge investment then the company may get a high amount of Return on Investment (ROI) which ensures more growth of the uses in France. The FDI report of France also suggests that since 2020 the country has got around 23 investment decisions per week which denote the huge business possibilities in France for Hastings Freight Ltd.
The government of France also prefers to reduce the unemployment rate in the country as the logistics and distribution sector may be able to create more job opportunities in the country then this company may get the support from the French government.
France is one of the largest economies in the world and it needs to be mentioned that the risk of investment is extremely low in the country due to the stability of the Government. Analyzing the demographic environment of France, it may state that France is also technically developed and there is a huge requirement of technological advances in a logistic service.
Additionally, Hastings Freight Ltd may get optimum business opportunities which may help the company to fulfil the goals and objectives by generating more profit and for that reason the company needs to take expansion decisions in France. France is quite prosperous through capitalizing the FDI with positivity to boost the economic activity where the freight service remains an important part of business translation to satisfy the expectations and requirements of the population.
Political stability, wage rates, tax rates, transport and infrastructure, size of market, commodities and access to free trade areas are the main factors which are affecting FDI considerably (Rafat and Farahani, 2019).
Figure 3: Factors affecting FDI (Source: Rafat and Farahani, 2019)
The market size in France is around $2.6 trillion by 2020 which makes the country world’s fifth largest economy as well as third largest economy in EU and attracting the huge investment from foreign residents.
It positively helps in business establishments with good transport and infrastructure facilities as well as the stable political establishments to make decisions for the advancement in market expansion of Hastings Freight Ltd into France with a lot of scope and opportunities to boost the revenue generation through market competitiveness. The access to free trade in the country is also beneficial for the company to enter and flourish as it is an integral part of the EU which supports the freedom to mobilize the resources and employees across the euro zone.
Mode of entry
France is one of the most developed countries in the European Union (EU) and has a prominent position in world political order which is home to the numerous multinational companies operating in manufacturing and services to ease the living standard of the population.
Figure 3: FDI inflows in France (In billion Euros) (Source: Singh and Gal, 2020)
France receives around EURO 25 billion as FDI in the year 2019 which shows the high prospects of France’s economy which is continuously flourishing through foreign investment and reflects the strong economy in the global market (Singh and Gal, 2020). The purchasing power parity of the population is quite high which will be beneficial for the company to attract the public interest for confirming the delivery of a small amount of consignments across the EU.
The mode of entry is the joint venture with any of the logistics service providers who are busy with logistics service with transporting bulk amounts of goods and products. The joint venture will open up the scope of doing business in France not overlapping the existing companies market and revenue and gain support from the companies, distributor, retailers and manufacturers of small and medium companies (Domurath et al., 2020).
Recommendations
Recommendations are as follows:-
- The company should perform the external and internal survey of the market in France to regularize a vision and mission for the company
- The company should adopt the high end technology to enhance the traceability and track ability of goods and transportation on real time and coordinate the quick delivery and supply chain integration for improved management of product life cycle (Heinbach et al., 2021)
- It should have adopt the Artificial intelligence (AI), automation, machine learning, Big data and Internet of Things (IoT) for incorporating driverless vehicle and navigate into the operational activity for growing service activity
- It should have recruit the local employee to coordinate the foreign market (Slavković et al., 2018)
A brief survey about the external and internal factors is a necessary activity for the Hastings Freight Ltd to actualize the current market competitiveness along with organizational capability to set a vision and mission for foreign country operation.
The incorporation of technology is also needed to accommodate for real time data management about the product and transport with increased traceability and track ability for improved product lifecycle management. Other than that, the technological intervention for driverless vehicles in logistics services should be helpful for managing consumer expectations. The recruitment of employees from foreign countries should be the recruitment procedure for the company to coordinate the foreign customers which will enlarge the business proficiency of the company.
Conclusion
From the above all discussions it has been concluded that, FDI has a positive effect in the country’s economy to bolster the business activity through increased capital as well as growth in production and innovation which may hold positive prospectus in freight services of France for the Hastings Freight Ltd.
France is an economically powerful country where the FDI amount is excellent to grow the business activity in the hope of high return where it also enhances the employment and income of the population with growing purchasing power. A joint venture entry with the big logistics service provider should be perfect for the mode of entry in France to thrive with competitiveness through growing influences of FDI.
References
Businessfrance.fr. 2022. Annual Report 2020: Foreign investment in France. [online] Available at: <https://www.businessfrance.fr/discover-france-news-annual-report-2020-foreign-investment-in-france> [Accessed 24 March 2022].
Data.worldbank.org. 2022. Foreign direct investment, net inflows (% of GDP) – France | Data. [online] Available at: <https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?locations=FR> [Accessed 24 March 2022].
Domurath, A., Coviello, N., Patzelt, H. and Ganal, B., 2020. New venture adaptation in international markets: A goal orientation theory perspective. Journal of World Business, 55(1), p.101019.
Gao, N. and Schaaper, J., 2018. Chinese Foreign Direct Investment in France: Motivations and Management Style. Management international/International Management/Gestiòn Internacional, 22, pp.113-129.
Hastingsfreight.co.uk. 2022. Hastings Freight – Express palletised deliveries. [online] Available at: <http://www.hastingsfreight.co.uk/> [Accessed 24 March 2022]
Heinbach, C., Schwemmer, M. and Thomas, O., 2021, December. Logistics platform strategies for freight technology-enabled smart services. In Hamburg International Conference of Logistics (HICL) 2021 (pp. 611-636). Epubli.
Oecd.org. 2022. [online] Available at: <https://www.oecd.org/investment/France-trade-investment-statistical-country-note.pdf> [Accessed 24 March 2022].
Rafat, M. and Farahani, M., 2019. The country risks and foreign direct investment (FDI). Iranian Economic Review, 23(1), pp.235-260.
Shahbaz, M., Mateev, M., Abosedra, S., Nasir, M.A. and Jiao, Z., 2021. Determinants of FDI in France: role of transport infrastructure, education, financial development and energy consumption. International Journal of Finance & Economics, 26(1), pp.1351-1374.
Singh, D. and Gal, Z., 2020. Economic freedom and its impact on foreign direct investment: Global overview. Review of Economic Perspectives, 20(1), pp.73-90.
Slavković, M., Pavlović, G. and Simić, M., 2018. Employee recruitment and its relationship with employee satisfaction: Verifying the mediating role of the employer brand. Ekonomski horizonti, 20(2), pp.127-139.
Trade.gov. 2022. International Trade Administration | France – Market Overview. [online] Available at: <https://www.trade.gov/country-commercial-guides/france-market-overview> [Accessed 24 March 2022].
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