The Strategy of International Business Assignment
Part A: Critical reflection
Introduction
International business strategy can be defined as the plans that guide various conventional transactions that take place among various factors in different countries. The term international business strategy is a set of actions and plans of a private or public multinational company to enhance profits.
This type of business is known as different other terms such as global business, multinational business, international firms, and so on. International business strategy can assist to expand and diversify a business. Economic globalization is a process by which a business can rapidly expand its markets to international clients.
The institution-based view of a business suggests that foreign clients and customers are required to build strong rules skills of the business in both informal and formal entertainer countries. It helps to visualize the competitiveness degree in the business and calculates the performance of the company.
It has been observed from the article that international business and institutional-based view are two closely related fields. In this context, the researcher is going to critically reflect on an article based on an institution-based view of international business strategy in comparison with resource-based and industry-based views. The main topics of this critical reflection are various areas of substantive research.
Body paragraph 1
In this section, the researcher wants to critically reflect on the article based on the institutional view of international business strategy. It has been observed from the article that there are three legs of a strategy tripod. The legs are institution-based view, resource-based view, and industry-based view.
This article argues that the institution-based view is the third leg in the strategic management of international business (Peng, Wang & Jiang, 2008). It has been also noticed that several other researchers agree with this topic in their research and stated that the first two legs are resource-based views, and industry-based views. The researcher reviews the roots of the institution-based view and identifies two important theories.
After properly analysing the views the other researcher suggests that the institution-based view indicates the third leg of a strategy tripod and controls the criticisms of resource-based views, and industry-based views (Gokalp, Lee & Peng, 2017).
The institutional-based view is considered as a main theoretical paradigm and lens in the research of international business management. Peng et al., (2017) explain institutions as constraints devised by humans that help to structure interactions between humans.
As per the definition of this researcher, institutions can be defined as the rule of the game and classified into two categories such as informal camps, and formal camps. Another researcher Lamb et al. (2018), have stated that institutions are cognitive, regulative, and normative activities and structures that give meaning and stability to the social character.
Two main theories develop the pillars of the institution-based view and they are as follows. The bounded rational perspective of choices business owners and managers sensibly follows their interested areas and develops strategic choices in the provided framework of the institution. This framework helps the business owner to decrease the uncertainty and provide proper meaning to the decision-makers of an international business (Peng et al., 2017).
The second theory is the combination of informal and formal institutions to observe the behaviour and performance of the company. It has been observed that sometimes informal constraints are playing a crucial role in decreasing uncertainty while formal constraints are failed. The informal constraints help to identify legitimacy and provide rewards to the company and managers (Peng et al., 2018).
In recent days, it has been observed that most researchers and scholars are now using these two theories to provide an interdisciplinary and integrating view to international business-related questions. These theories also help the scholars to provide answers for various topics like family control and ownership, informal economies, development of entrepreneurship, venture partner selection, compensation of executives, and so on (Gokalp et al., 2017).
From the body paragraph one of the critical reflections, it can be observed that institutional-based view is the third leg of the strategic tripod and can help to provide answers related to international business strategy.
Body paragraph 2
`Entry barriers of international business
In this section, the researcher is going to critically reflect on the first topic of the argument that is the entry barriers of international business. According to Peng et al. (2008), various international business strategies can be applied in emerging economies. The important international business strategy for an emerging economy is using antidumping as an entry barrier.
Various other researchers state that different forces can govern the competitiveness of an industry and it is considered as the important entry barrier for an international business. In international business, the entry barriers are always significant and can give rise to various terms such as responsibility for foreignness (Ugalde Azpiazu, 2021).
Antidumping policies can be defined as the policies implemented by governments on overseas imports at the time when products are going to be dumped by using low prices in the local market of a country. The duty related to antidumping is implemented in a country to save the local markets and businesses from this disloyal competition with foreign companies.
Firme & Vasconcelos (2020) have stated that in recent days, most of the researches of entry barriers are based on the different variables of the market such as differentiation of products, economic scales, and so on. Bagayev et al. (2017) argued, and stated that very rare institution-based views are considered as an entry barrier in international business.
These researchers also state that one of the important institutional and non-market-based variables is laws of anti-dumping and can be considered as the entry barriers for international business. Evidence related to antidumping has been observed after properly investigating IB. Discrimination is a piece of important evidence for antidumping. After critical reflection of this institution-based view of international business, it can be observed that the researchers are arguing about the entry barriers for the IB.
Body paragraph 3
International business strategy regarding competing in and out of India
Within this context, the researcher has reflected on the impact of Indian politics and the economic system within the business company coming within India. India is one of the rising economic countries and Different aspects like political, social as well as legal ways in India impact the businesses which are going to be taking place within India in a profound manner.
Different companies which are doing business with India are also impacted due to the changes within the social, financial and socio-ecological structure in India (Verbeke & Yuan., 2021). The IT sector among other sectors has shown an amazing development and only is second to the United States. The main USP of the IT sector within the market is that the Indian IT market provides a good quality of work at relatively lower amounts of costs.
In the case of establishing businesses related to IT pharms within India, companies from outside are going to generate a high amount of revenue for themselves along with an amazing quality of work while paying not much. The less capital consumption within the current Indian economy has been influencing big Multinational Companies (MNC) to open their branches within India (Doh et al., 2017). Not only the IT farms but also outsourced business processes are being raised within India which is better known as BPO as well.
The rise of these companies is beneficial for both India as well as outside countries as well. The differentiation of the economic levels within different countries impacts the economic situation of both countries positively.
Multinational companies increasing their businesses in India not only help India to generate a higher amount of revenue but also help the country to employ a higher amount of youth in different organizations as well. For having a high level of the population, the situation of Indian youth regarding different jobs is critical and it is required that these people get employment. With the increased number of multinational companies within India, the business is going to increase both of the company as well as within India as well.
The success of some firms of India along with change within the politics has raised insecurities within the countries of the west. Different American states have been noticed to pass different laws which ban firms of India to avail official contracts. This can impact both the positive as well as the adverse manner in the case of both countries (Rehman & Anwar, 2019). Not allowing India to have contracted is going to impact the project managers to cost a higher fortune to get the projects done while Indian people involved within the process might face unemployment and poverty as well.
Body paragraph 4
Growing a firm in china for improving international business
Within this part, the researcher has focused on the impact of growing a farm within china to increase international business. China has a poorly regulated economical system and string growth is generally not being observed much in the economical levels which are poor enough. Despite having a poorly balanced economic situation, China has been portraying an amazing rate of economic growth within the country.
This phenomenon has been searched by many researchers who came up with some interesting answers. According to the researchers, the interpersonal networks which can be seen within different managers of different organizations in China have been impacting the growth of the Chinese pharms (McAdam, Bititci & Galbraith., 2017).
Financial help and monetary help are being provided by the different managers of different companies to ensure that the growth of the other companies does not stop. Having an interconnected chain like this is going to help the forms properly while required. The financial fluidity among different organizations in china has been highly helpful for the performances which are being portrayed by the companies of China in recent times helping the different Chinese companies to generate monetary revenue.
The researcher has found that the current relationship within the different managers of the Chinese firms provides them with an institutional key to solve any kind of difficult monetary situation which might have arisen within the country. It has been noticed that not only the managers of Chinese companies but also different organizational leaders of outstanding MNCs have tied their knot with the managers of the Chinese organizations to understand the situation of China if they can expand their business within China.
The recent improvements in Chinese economics have reduced the possibilities of performing low-cost-based joint ventures within Chinese organizations (Yuan et al., 2020). In order to establish a form in China to increase and improve businesses, it is highly required for those companies to ally with the managers of Chinese organizations so that expansion of outstanding companies within China becomes easier.
Conclusion
It is highly important to determine a specific strategy to expand a company within different sectors. The business expansion strategy is required to be dependent on the countries where an organization is looking to increase its business. Different countries have different people, different interests as well as different financial situations. A company is required to analyse those aspects before they decide to expand their business.
Proper analysis not only helps the company to look into the current situation of different countries in a proper manner but also helps to understand which strategy they are required to apply or what are the choices often people within the country or whether the product is produced by the company is going to be accepted within the other country. After the analysis, the companies are required to determine a business expansion strategy so that getting into other countries to expand their business becomes easier for the countries.
Business expansion is highly required for every business organization and along with globalization; expanding business has become relatively easier. Different business expanding methods are available among which a company is required to look into the expansion strategy which is going to match the criteria’s of that company in a most perfect manner so that they can implement that business expansion strategy within their business and can expand in different countries.
Part B: Report
Executive Summary
This report is based on the institution-based view of international business strategy. In this report part of the researcher is going to select two themes of the strategy of international business. In order to prepare this report, the researcher has been selecting a retail company from the United Kingdom namely Unilever, and discuss the international business strategy of this company.
In order to prepare this report, the first theme that is going to select is the internalization path. The researcher in this theme the internationalization path of Unilever is going to discuss.
In order to enter a market, an organisation is required to look into the different aspects of the market which are financial stability, buyer power as well as preferences of the people regarding different products as well. Different market entering strategies are available which are going to be applied in order to look into the proper strategy of entering a market. Within this study, different market entry schemes availed by the company and their application has been focused on in a detailed manner.
Introduction
The era of globalization and digitalization has paved the path for international business conducted by organizations. Unilever is a multinational company headquartered in London and Rotterdam founded in 1929.
Unilever has various types of products which include food, energy drinks, confections, soft drinks, baby foods, cleaning agents, pet food, bottled water, pregnancy tests, and margarine. The product of Unilever is available in 190 countries across the world. This giant manufacturer owns more than 400 brands with a turnover of 53.7 billion Euros in the year 2017. This company is arranged into three main divisions.
They are home care, beauty and personal, foods and refreshments. In the year of 2010 Unilever has shifted its centre of attention to health and beauty products. This company has listed itself on the London stock exchange and it is a constituent of the FTSE 100 index. Unilever has total revenue of 50.724 billion Euros and an operating income of 8.303 billion Euros in 2020. It has total assets of 67.659 billion Euros with total equity of 17.655 billion Euros. The two themes that are going to be presented in this part are the internationalism path and market entry package.
Theme 1: Internationalism path
This theme describes the business scenario of Unilever more clearly. Unilever is regarded as one of the most transnational companies across the world for its impeccable transition from the very first day of business operations (Dow, 2018). This organization has diversified its business operations worldwide. In 1930 at the time of foundation, it only produced soap and packaged foods. After that, Unilever has evolved through the Darwinian system which retains useful things and rejects those which do not work for this organization.
Internationalization pattern of the company
Unilever emphasizes the practice of which respond to the marketplace well (Hokinson, 2017). This company has secured its internationalism through a continuous transition process that evolved globally as well as locally. The nature of products of any company needs proximity to the local as well as the global markets and Unilever is not the exception manufacturing its product in this regard.
The major products of Unilever are solely responsible for business profits in North America and Europe and some of the products like lox soap, Lipton tea is known even in Cambodia or Albania where the unlevel has no industrial operations (Sahara, 2018).
In the 75 countries across the world, Unilever does its business through various operating companies with a total of 500 companies in the business group. Unilever groups believe in informal types of cooperation with self-sufficient units worldwide. Internalization of business is dependent on the understanding of market opportunities to a large extent and brief scrutiny of the foreign market has supported the expansion of the concerned organization.
Over the years the company has weathered numerous changes to evolve with the international trends in business operations. During the Second World War, the food industry faced various problems to get the raw materials.
The unlevel is not the exception. But after that when the source of raw materials gets less important the primary focus of this industry has been shifted to distribution systems and preservation technology. In a time of new reorganization, this company created three board directors. In terms of product, Unilever has numerously improved its position as the new groups were more concerned for the consumer need.
Application of Uppsala model
The Uppsala model is very relevant in explaining the business pathway of Unilever towards its internationalism. The Uppsala model emphasizes the process which sets up various subsidiaries in foreign countries (John, 2018). Unilever followed the model to make it is business international (Abouts, 2021).
The Uppsala model talks about the strategic goals which a company wants to achieve in their business operations in foreign countries. Unilever set up my strategic goals in foe gin countries with their subsidiaries. The Uppsala model proved itself to be very close to the business environment so many organizations use this model to compare themselves with their competitors.
Figure 1: Aspects of Uppsala model
(Source: Cooley, 2019)
The Uppsala model was originated from the empirical observations from various Swedish manufacturers. This international model differentiates between four steps to enter into the international market. It cannot be observed independently. The four steps are no regular activities of exporting, establishing foreign subsidiaries, exporting through independent representatives, and foreign manufacturing (Cooley, 2019). Following the Uppsala model, Unilever has started its expansion with nearby markets.
It can be said that the organization has identified different opportunities in the market to invest in the parameters which have helped the company to progress steadily. The market commitment of the company has been retained through the production of quality products in a low price range (Abouts, 2021). It has helped the company to gain brand recognition.
On the other hand, involvement in corporate social responsibilities has helped the company to draw investors’ attention to their current activities. Thus diverse notions of the business have been maintained in a synchronized manner.
Theme 4: market entry packages
Entering the international markets generates wide opportunities for growth and development but it also does consist of considerable risks. Hypothetical or exaggerated demands of consumers that have to be met in a saturated market, or even alternating partnerships to meet business goals which may result in multiple failures can form huge challenges for a new business to flourish (Ahi et al.,2017).
These risk factors can be dealt with proper market intelligence information during any concerning decision-making. The comprehensive study of Market entry package analysis develops research about the existing global businesses. In-sites scrutiny, search study about the partners, consulting about strategies, and elaborate business planning has to undertake.
International market entry requires knowledge about cultural Idiosyncrasies, expansion strategies, and legal preconditions (Blackburne & Buckley, 2019).
Assessment of foreign entry modes
There are several factors before a business enters the international markets. For instance, the Unilever companies have decided to expand their business and share their facilities globally.
The expansion of their business will require importing, exporting, documentation of licenses, partnership protocols, strategic alliance in both the bases, acquisitions, establishments of the new and entirely owned subsidiaries(Greenfield ventures), these are few modes through which the organisation can step their foot into the global markets (Buckley et al.,2018)
After scrutinising the facts and figures through which companies like Unilever can step into the global markets, there must be a comparative analysis that must be conducted with the strategies and goals of the organisation. Exporting is one of the most typical and easy ways to the global markets (Del ET al.2017). The home country sources their companies’ products sales and foreign services through exporting.
Figure 2: Types of foreign entry modes
(Source: Surduet al., 2018)
The perks to entry through such mode reduces the firm’s expenses on the establishments of operations in a new country. Franchising in a new country is difficult without any licensing, if the business is licensed following the new countries legal authorization the risks reduces and the costing of the business are minimized, On the other hand, the local turns to become a competitor and the business must exercise legal regulatory resources within their business (Surduet al.,2018).
Political, cultural, and environmental effects on host country location (100 words add here with 2 citations)
International sourcing of different services are used for different types of contribution to reshaping the value chain model of the firm as well as the dispersion of physical activities, There are some basic resonations which are used for domestic activities and it can be implied for providing different types of resources in advantage which is called the offshoring (Jamontaite et al., 2017).
There are some global strategies of global sourcing and it can be reconsidered for making the exploitation in the foreign location and the strategies are used for translating the flows in intermediate level (Del et al. 2017). The intermediate level is used in the time of flow and it is 73 % of the total flow of international trade.
Usage of foreign entry modes by Unilever
Various approaches regarding global market entry modes allow companies to take part in international markets without any investments in foreign facilities and plants. As to the expansion of the market an organisation may decide to improve its competitive trump cards through investing in the operations that are conducted in that particular country.
The FDI offers the formal accomplishment of operations regarding the business on the grounds of foreign soils (Shen et al., 2017). The factories, networks that are distributed that serve the local markets of the country and the sales departments.
The concerned organization has different types of subsidiaries all over the world. It must be said that the company has planned for expansion in a structured manner to register economic benefits. On the other hand, it must be mentioned that subsidiaries offer fewer debt aspects as individual entities are responsible for their conduct which ultimately supports the growth of the organization (Jamontaite et al., 2017).
The market opportunities can also be addressed through this approach and the significance of its selection lies here. Market opportunities can also be shed light upon through such prospects. For example, Asia has a big market for packaged food products. Owning a subsidiary in the region is beneficial for growing the market share at a stable rate.
Strategies align with the corporate sector (100 words add here with 2 citations)
Strategic planning is used for the organization which mainly includes different types of activities along with the program, budgeting, planning, and measurement of performance. There are some organizational activities and it is crucial for making the control in the administration process. In the past years, organizations have gained the ability to introduce the improvement of different methodologies (Surdu, Mellahi & Glaister, 2018).
Respectively, most of the organizations are used for reconstructing the activities of BPM and it can be considered for a strategic view of organizations. Nowadays, the business process is considered the level of priority for an organization (Lamb & Roundy, 2018). These types of approaches are based on different types of notations and some key points can make an impact on organization.
Conclusion
The most business eventually ventures themselves to globalize among its industry, from which most of the organisation misses their analysis regarding the strategic planning against their internationalization ways, operations that can determine the growth of the business in that particular country, critical evaluation of corporate strategies that are analysed with the comparative study of the existing businesses in the local areas and the most important path to enter the international markets through the analytics of modes of expansion In the foreign markets.
The recommendation that can be suggested with the thorough analysis is that an organisation such as Unilever must generate a plan of action that can channel the resources of the business effectively to compete among the global businesses. Unique and reliable goals and strategic goals can counter global dominance and business growth can be assured.
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