Assignment Sample on BMG872 Global Strategy Development and Implementation
Company name – TESCO Plc
Introduction
TESCO Plc is the most popular British multinational retailer organization headquartered in Welwyn Garden City in the United Kingdom in the year 1919 (Awadari, & Kanwal, 2019). The founder of this organization is Jack Cohen. Subsidiaries are Tesco Bank, Tesco Ireland, Tesco Mobile and many more. The current turnover of this organization is 6,476 crores GBP. This organization is operating its business in 12 countries along with 2,318 stores and 326000 employees. The CEO of this organization is Ken Murphy. Now the organization is trying to start its business in the country China for internationalisation. China is the leading country that helps to increase any business proficiency. China has a wide range of industries, growth opportunities, stable government policies, entrepreneurial environment, skilled and knowledgeable people (Nambisan, Siegel, & Kenney, 2018). In that case, Tesco Plc has to expand its business in this country and open the door to enter the international business market.
1. Porter’s Diamond theory
Porter’s Diamond theory refers to the national advantages of the organization to enhance the internationalisation process and bring effectiveness in the business process (Afzal, Lawrey, & Gope, 2019). This model is designed to understand the competitive advantage that countries or groups react to for the certain factors that are available around them. The model also includes explanations of how the governments might act as the catalyst to enhance the country’s position in the global competitive economic environment. Tesco Plc is trying to spread its business in the country China. In that case, the organization needs Porter’s Diamond framework to analyse the country’s situation and also to know firm strategies, structures, rivalry, demand conditions, related and supporting industries, and factor conditions. This framework will help this organization to know the government’s decisions and competitive advantages to spread internationalisation. This framework also helps to understand the competitive advantages of the selected nation and design strategies to approach investing and operating in the national markets.
Firm strategy, structure, and rivalry
The retailing demands in China are high and build the competitive rivalry for the Tesco Plc company. The competitive rivalry helps to increase organizational productivity and profitability to enhance their organizational strategies, rivalry, and structure (Zhao, 2018,). The organisational strategy and structure to enhance business strategies and build the desired goal of the company. This aspect of the Diamond model helps Tesco Plc to expand its business in China easily.
Demand conditions
The demand for groceries and general products retailer shops in China is high. In that case, the Tesco company is trying to expand its business in this country. This aspect of this model is to understand the demand of the market and develop proper innovative products and services to grow business in the Chinese business market. The organization has to set its service in the online platforms and websites to attract more consumers.
Related and supporting industries
Tesco Plc has to require detailed market research and better planning to develop a successful retail business in China. The local markets of China include various competition levels, consumer behaviour, access conditions, and market demands for the retailing business is high that this organization has to mitigate (Gunarathne, & Senaratne, 2018). Gome Retail Holdings Ltd might create competitive aspects for the Tesco Plc company. The sales revenue of this organization is 140. 75 billion yuan.
Factor conditions
This aspect of this model helps to evaluate the factors such as physical, capital, human resources, the infrastructure of Tesco Plc. The organization might evaluate these factors to enhance its business in the Chinese business market. The human resource of the organization is better to expand business in the selected Chinese business market. The organization is trying to build a supermarket in China to enhance its customer experiences in a better way.
Government and Chance
Government plays an important role in developing business in the selected countries. Taxes, legislation, technology, chances, government laws, and luck are the important factors for this organization. These factors help to enhance internationalisation in the business market.
2. Internationalise strategies
Internationalisation defines the designing of a product in a proper way to provide them among targeted consumers across various countries. This process is used by the Tesco Plc company to expand its business in the global or international business market along with its own domestic market (Sort, Taran, & Turcan, 2021). The organization has to understand their customers’ demands in the selected country such as China. This strategy includes four aspects such as transnational, multi-domestic, global, and international to expand business in the Chinese business market.
Transnational
Transnational strategy is the middle ground between global strategy and multi-domestic strategy. This strategy helps to build balance along with desired costs and efficiency to mitigate the local preferences in the selected country. This strategy helps to understand the consumer demand for their products in the chosen country.
Multi-Domestic
The business organization can use the multi-domestic strategy to increase the responsiveness for the local requirements among each and every market for future betterment. This strategy is not focusing on the cost and efficiency to develop their business in the selected various country’s business markets.
Global
The global strategy helps to increase the lower costs and better efficiency of the product to expand business in the business market (McQuillan, Scott, & Mangematin, 2018). This strategy is the opposite of the multi-domestic strategy. This strategy helps to modify the product and services to enhance the business market. This strategy helps to develop the proper product costs to attract the business in the international business market.
International
The business organization can use this strategy to attempt to sell products in the international business market. This strategy is not concentrating on product costs and adapting to the local cultural situations. The organization must use this strategy to develop their business in the global business context.
Justification
Tesco Plc is a multinational retailer in the UK business market. The organization is trying to expand its business into the Chinese business market. This organization is trying to develop its products and services for the betterment of the future (Hardaker, & Zhang, 2021). The organization might enhance their business through using the global strategy and developing products. The global strategy only focuses upon the lower cost of the product and service efficiency to enhance the business strategies and expand business in the selected country such as China. This strategy helps to change their product and services for the targeted consumers.
This strategy helps to understand the demand of the consumers to modify their products and services as per the consumer demands in China. The rival business organization is Gome Retail Holdings Ltd which provides groceries and other products at the most reasonable prices to the consumers of China. The organization has to modify its products and services to compete with its rival business organization and enhance competitive advantages. The organization has to evaluate this strategy for future betterment. The organization has to lower costs to attract consumers to its products and services and enhance business in the Chinese business market.
3. Country Analysis
Country’s Attractiveness- PESL Framework
| Political | China had rapid growth in the past few decades in several business markets. The country has good trade relations with the most powerful countries (Rahman, 2018). China has the proper strategies to maintain the low costs for the raw materials. Investors can also have a low labour cost that helps to make better choices for the business. The Chinese government makes plans to promote subsidies for the new business organization’s. |
| Economy | The labour cost of this country is significantly low and other business organizations are preferring to hire employees from China. The purchasing power is high for the Chinese population (Alsaffar, 2020). In that case, investors can find huge businesses in this country. The cost of the Property is also high which affects the economy of this country in future. Business organizations can set up their business in this country. |
| Social | The country has a huge population of almost 90% and they are educated and skilled. In that case, a new business organization can get expert ideas from labourers (Song, Sun, & Jin, 2017). The lifestyle of the people is changing to modify products and services for the future betterment. The social behaviour has changed for the urban lifestyle of the Chinese population. Most of people are started to use e-commerce sites to purchase products. |
| Legal | The country has banned social media such as Whatsapp, Facebook, YouTube, and Twitter to increase their revenue from this country. The country has built some restrictions on the investment factors of some foreign countries. The country is now formulating laws for e-commerce businesses.
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Country’s Environment – Porters’ 5 forces
| Competitive Rivalry | The business market is booming in this country and that is beneficial for the new business organization. The competitors are increasing in the Chinese business market (Goyal, 2020). The local business organizations are continuously increasing their revenues and building the competitive rivalry high in the business market. |
| The Threat of new entrants | The threat of new entrants is low in the Chinese business market. The Chinese government supports the local companies to enter the business market that helps to develop the proper economy of this country. In that case, the organization has a moderate threat for the organization. |
| Threat of substitute | The threat of the substitute product has been increased. Gome Retail Holdings Ltd is developing the threat for several business organizations in the Chinese business market. The organization is already providing groceries and other products at such low costs to consumers. The organization has to modify their products to achieve its desired target. |
| Bargaining power of buyers | The bargaining power of the buyers is high that might affect the business in this market. In that case, the organization has to modify their product and services to achieve its desired goals. Buyers have the strength to change business strategies for the future betterment. They can easily change their bargaining power for the new business organization. |
| Bargaining power of suppliers | The bargaining power of suppliers is low. In that case, the organization can bring effectiveness in the business strategies for future betterment. The organization has to develop proper strategies to modify its products and services. In that case, the organization has to provide proper rewards for the suppliers to run the business. |
4. Mode of entry
Licensing
According to the licensing entry mode, the organization can sign contracts with foreign countries or business organizations to expand their business in the selected business industries (Nippa, & Reuer, 2019). A new business organization has to purchase a business licence or has to pay regularly to conduct business in foreign countries. Payment for the license agreement can be paid from the annual revenues of the particular business organization.
Franchise
A franchise is quite similar to the licensing that provides the intellectual property rights to create new stores in the business market. Every country has their own rules and regulations for franchising purposes. It is the contractual aspects that have to be signed between two organizations or organizations and countries to build the new business. This helps business organizations to build proper stores in the proper location that affects positively.
Joint Ventures
Joint ventures define that two business organizations can develop one business or sell products jointly in the selected business market. One organization is the owner and another ii’s the local business organization in the local or foreign business market. This entry mode can bring effectiveness in the business strategies to gain the desired target from the selected business market.
Merger
Mergers help to combine two separate businesses into a single new legal entity for future development in business purposes. Several business organizations can bring effectiveness in their business through mergers. Merged business organizations can operate their business equally for future development. The product extension also increased by this merger process and helps business organizations enter into the new business markets.
Acquisition
An acquisition is the most important aspect to enter into the new foreign business market. The organization can purchase most of the local companies to enhance their share values in the new business market. This entry mode helps the business organization to bring competitive advantages through challenges, growth and gaining a competitive edge in the business marketplace.
Justification
Tesco Plc is a multinational organization that provides groceries and other products to consumers and runs its business in the local and foreign business market. The organization must use Joint ventures to enter into the Chinese business market. The organization can bring effectiveness through sign joint ventures with the local business organizations to build effectiveness in its business strategies for future development. The proper evaluation of the joint ventures among local companies and Tesco helps to increase the proper business in the selected business market. This entry of mode might provide the opportunity to gain new capacity and expertise for future development. The organization might enhance their business strategies to achieve its desired goals from the business market. The organization might sign all legal aspects to run its business easily in the Chinese business market. Tesco Plc has to maintain the government rules to build effectiveness in its business strategies. This organization has to develop a better relationship with customers and suppliers to enhance its business at the international level.
5. Managerial and organizational issues
Organizational Coordination
Natural Hindrance
Lack of knowledge among superiors and subordinates can build communication gaps in the business organization (Ivanova, et al. 2019). These problems can break the effectiveness of organizational coordination. Lack of knowledge and skill can also bring issues in the management and organizational operations that might hinder the business strategies.
Ideas and objectives
Lack of knowledge among the managers for the organizational or managerial objectives can also hinder the business process of the particular business organization. If managers do not have clear ideas about objectives, then the coordination will break and it might affect their business strategies.
Lack of techniques for coordination
Lack of mutual respect among the subordinates might create problems in the managerial and organizational strategies of a particular business organization. Managers have to respect the feelings and emotions of their subordinates to build coordination.
Lack of administrative talent
The autocratic attitude of the superiors can also bring issues in the managerial and organizational aspects of the particular organization. The organization must be affected through this type of administrative work in the organization.
Cultural issues (Hofstede)
Power distance
Several superiors believe that they are better than the other co-workers and try to dominate them. This working attitude might hinder the organizational culture.
Individualism- collectivism
Individualism and collectivism are the main issues that emphasise the individual’s accomplishment and self-interest versus the accomplishment and interests of working groups in the organization. The organization must be affected by these issues that bring poor work culture in the particular business organization.
Uncertainty avoidance
Uncertainty avoidance among superiors and subordinates can bring uncomfortable risks, changes, and situational uncertainty in the organizational culture. This issue also creates issues in the managerial and organizational operating strategy.
Masculinity vs femininity
Masculinity-femininity is the aspects of the organizational values assertiveness and materialism versus relationship, feelings among employees and quality of individual works. This problem might increase issues in the working culture.
Time orientation
Time orientation is mainly based upon the long term and short-term goals of the organizational operations. Several employees have no patience for the long-term goals and they start to begin short term goal operations that might affect the business strategies.
Organizational Structure
Poor communication
Poor communication among organizational hierarchies and their subordinates can bring issues in managerial and organizational operations. This issue can reduce individual productivity that might hinder the business strategies of the particular business organization.
Lack of innovation
Lack of communication plays a crucial role in the path of innovation. Basically, right resources are not reached in the proper destination that’s why it affects organizational structure.
Poor customer service
The poor customer services of the business organizations can build issues in the organizational and managerial aspects that affect the organizational growth in the international business market.
Too many bosses
In several organizations when they have too many bosses then the other employees are confused to take from whom instructions for the business process. These organizational issues can bring a problem that affects the business strategies.
Lack of teamwork
Several organizations have a lack of teamwork that might affect organizational and managerial strategies. These issues can bring problems in the future for the particular business organization.
6. Solution for issues
These organizational issues are the most important problems for a particular business organization. Those business organizations who have these issues have to develop proper communication, excellent teamwork, better innovation in processes and products, better communications for the future betterment (Healey, Bleda, & Querbes, 2017). These business organizations have to develop the proper knowledge to make business decisions and build effective business strategies. The business organization has to conduct several training periods for employees to develop effective business strategies for the business organization. The hierarchies of the business organization have to understand other feelings and emotions to make proper decisions for the future betterment. The organization must make teamwork to enhance the organizational and managerial business process for better productivity and profitability. The training periods for employees must help to develop individual productivities that build the effective organizational and managerial aspects. The business organization has to develop teamwork among employees to develop the proper business strategies for future development.
Business organizations must use the proper evaluations of the organizational and managerial aspects to develop better organizations in the selected business market. These business organizations have to develop the proper knowledge to make business decisions and build effective business strategies. The business organization has to conduct several training periods for employees to develop effective business strategies for the business organization. The hierarchies of the business organization have to understand other feelings and emotions to make proper decisions for the future betterment. The organization must make teamwork to enhance the organizational and managerial business process for better productivity and profitability. The proper and better aspects of customer services might enhance the better customer experiences that affect the business strategies. The business organization might bring effectiveness in business strategies and productivity to achieve the desired goals from the targeted business market. The hierarchy of business organizations has to develop the proper administrative work to provide effectiveness in the business process.
References
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