Global business environment of Good Tastes Limited

Requirement

1- Write a report on "Global business environment" with 20-25 references within 3500 words.

Solution

Introduction

The entire assignment talks about globalization in the business environment and for understanding the concepts of the Globalization process, a company called Good Tastes Limited is chosen. Good tastes limited are a food manufacturing company offering its surplus amount of food services to all its customers. 
After the revolution in 1990, the Good Taste Limited offers products like soups and other liquid foods which proves delicious and satisfies the tasty tongues of the customers. The Good taste company focuses on satisfying the customers by offering them the reliable services. The organization has beaten the kitchens in Cuisine by offering the non-vegetarian foods and meals. The food industry supplies the variety of delicious foods and the cooking ingredients both to the customers and the chain of the hotels. The major success of the business was due to the effective global operations which made them to expand their business internationally. The report helps in outlining ideas for the organization to expand its business from Hong Kong to other markets like UK in order to achieve the international marketing. The report talks about the challenges faced by the company while entering into the new market like UK. 

1.Conceptof Globalization

Globalization is a wide concept which has brought the world at a same place. It has provided the opportunity to the countries to come along and participate in trade practices. There is a common platform for the companies where they could exchange their goods and services.  It has removed the trade barrier and has bought liberalization on the same platform. There is an allocation of the currency behind any transaction that is taking place between the companies. This helps the companies by making international influence and operating at a global scale. This has given the opportunity to raise the capital for the business from different sources. International trading and stick markets are the common terms in the globalization. Companies used to purchase the shares of the other companies in order to provide strength to their capital. However, there are exposures in the market, but the return is highly considerable. This is the reason most of the companies are being indulged in globalizing their business. Good Tastes Limited has been suggested to invest in UK for expanding their business routes. This is because it is one of the emerging markets and has made FDI an easy process to facilitate in the country. Globalization means the business, people and nations are becoming interconnected with the rise of technology, improved transportation and global financing of the modern days helps the business cross borders to venture in a new market. [Referred to appendix 1]

2. Driving factors of Globalization

The driving factors of globalization include:

  • Technological advancement: Technological advancement is one of the most important factors which help in the globalization process. The technological advancements in the food industry include the new refrigeration techniques which help in the preservation of the liquid foods and vegetables. Technological advancement involves the introduction of new and innovative technologies which helps in achieving the goals of the organization. [Referred to appendix 2]

  • Capital flows: International trade helps the organization to open up multiple channels which helps in the expansion of the business. Flow of capital has been mobilized with the technological advancement. For the countries who are involved in export and import activities could easily make the transactions. Funds are being transferred with just a click that has greater roles in driving the globalization. Flow of goods and services are effortlessly done with the advancement of the technology. Thus, the mobilization of the capital has become more normal which affects the globalization positively and could help Good Taste Limited to bring maximum return. 

  • Trade flows: After the removal of the trade barriers most of the companies are being indulged in exporting and importing activators. FDI is being the major example in this scenario. Countries are now asking foreign companies to make investment in their company. UK is best example of the FDI. Therefore, making investments in the other countries is more a factor of fear. Developing countries like UK is providing huge score for the foreign companies as the people ae increasing their standard of living and getting attracted to foreign products. (Hamilton and Webster, 2018). 

3. PESTEL analysis for the organization:

  • Political: The political factors prevailing in the country of UK, say where it wants to expand can directly affect the food industry of Good Taste Ltd. If the political power of the nation is high and the entire nation is under the control of the political parties, then one can say that they can have influence over the food import and export

  • Social: The social factors are always linked with the lifestyle of the people of UK. The lifestyle of the people who are the customers of the food industry can have direct influence over the business operations. The people who are the customers are the ones who always seek for innovations in the products that they receive from the industries. 

  • Environmental: The production of the product and its distribution has to take care that the business doesn’t spoil the environment in the process of business development or operations. Therefore, the way the business is conducting itself in the larger social environment to treat the natural resources is the environmental effects for the business. 

  • Technological: The business of Good taste is going global where the UKn markets that it serves in have its own needs and demands. The technology helps all aspects of the business where the stakeholders to the management are all connected via a wireless media of the day to track the business progresses and market demands so that the future planning to meet those demands can be executed. 

  • Economic: The aspect of economy determines the purchasing power of the consumers in a market where the disposable income for purchase is higher. On the other hand, as the economy declines the purchasing powers of the consumers gets lowered. Hence the economy of the markets that the business is working in has to be economically strong to sustain and let the business grow as per its potentials. 

  • Legal: The way the business conducts itself in the market, the laws and regulations those binds the business are all been documented under the legal provisions of the market economy as it is in UK. 

In UK the business laws would be different if the brand was working in Hong Kong. So, these aspects of the legal business norms would enable the businesses to grow globally in different markets as desired by the Board of Directors (Hamilton and Webster, 2018).  Further, use of technology in production processes has reduced manpower intervention while standardized the product quality in the process making the business have the efficiency to grow and sustaining a competitive market like UK. The brand of Good Taste has maintained a low carbon footprint in their processes of manufacturing and now aims to further develop it which is the strength of the company.

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4. “Challenges of globalization and the strategic challenges this represents for the organization”

Challenges of globalization

Overall cooperation for the interest of people and countries: Company has to work for the overall interest. People are country both are the stakeholders of the company. Thus, if stakeholders found that their interest ate not fulfilled the company could face major challenges. Good Taste has to ensure that their services are marked by their stakeholders for the long run of the business. There are challenges in this operation format as well. 

  • Instability: Under the developing countries like UK there are lot of chances that the external environment could create instability. This is because of the political side which is major influencer in the economy. New government could have new reforms which could affect the decisions of Good Taste.The survey of the market from both primary and secondary sources about the culture, social status, taste, opportunities in the markets of the developed and developing nations of the globe are to be collected. (Dau et al., 2017). 

  • Global competition: The businesses of the day are getting tough competitions in the existing markets that they are operating in. Hence the globalization makes the business to seek the needful competence in its operations that would help it to develop the needful skills which would further boost its operations in other markets. The globalization has its challenges and gains which would be discussed herein. Thus, it aims to improve its business potential and also aid people of various economies that it is working in to have a better lifestyle for people and society as a whole for long term sustainability developments. 

Strategic challenges for Good Taste

  • Decision making challenges: Good Taste has to consider for the strategic challenges in terms of decision making. This is becauseonce the business has chosen its target market there are many activities taken by the political parties which could affect the investment and other strategy of the company. Business has to venture to seek the localized bases which they may call the business port for that market. Hence, the limited technologies won’t be a hindrance in such a place has to be confirmed to set up the business there. For example if the brand ventures in UK like huge market the App for sales of their products from a central point in every urban center may be served via third party delivery services like Swiggy or Zomato like mobile based apps. 

  • Strategy towards the sale of goods and services:  UK is a developing country and there is FDI which is highly supported by the country. Therefore, there are large number of competitors for the company. It has to consider their strategy twice before selling the gods and services. This could be in terms of the price and the location that need to be targeted by the company. Hence the business has to face the situation and seek the challenge to be covered with few retail outlets in major metropolitans’ in the later stages but to venture into the e-commerce model is best suited for a business based out of Honk Kong. The model in such case is the best way to go for Globalization of a brand with least risk but most efficient services are needed for such venture that would make the business stable to develop the needful infrastructures that would be built for the Metro clients in a later stage. However, the challenge is the market entry which already has a vary array of competitors in its casket. Therefore, the challenge is to overcome those and come to a point where the ways to overcome the challenges are to be designed by the business so that they may involvement them with success to go globalized (Ravanfar, 2015). 

5. Recommendations to challenges

  • Unique selling Proposition (USP): This could be used in order to deal with the competitive challenge. The challenges like market selection can be overcoming with a good study of the existing businesses business models and how they have changed it with time. Where the gap lies would be for the business.And that would be made to seek an entry into an already existing sector. The venture has to do tie ups with the local vendors of logistics which further would assist the business to reach the end users. (Saleem, 2015). 

  • Pricing: Pricing need to be done in manner such that the business can withstand the cost and do proper projections of sales in the future for needful acquisitions that sees that targets are met. Therefore, the many risk that the financials have to bear has been reduced with survey and promotions before the launch. This is the big part of the marketing plan to develop the promotions that highlights the USP and also gets in the best deals so that more and more people join with the business via the apps. (Courses.lumenlearning.com, 2018). 

The future improvements could be focusing on making the plans based on the expectations of the company. Budget and removing the exposures need to be significantly handled by the company. Making better pricing strategies that suits the customers by making proper survey of the market need to be done. 

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6. Structure, Culture and Governance and McKinsey’s 7S model

This model suggests the way the business has to develop its internal structures in a particular culture or economy to make the operations as per their desire. Style, structure, shared values, Systems, Staff, skills and strategy are the elements that makes the model work in a particular economy. It divides the soft from hard qualities where the hard factors are Strategy, structure, systems while Style, staff, skills are the components that gives the functioning a style and the staffs values to work for. 
The model can be used by the business of Good Taste to expand its markets and have the best of staffs, skills and styles for the soft values needed while develop the strategy, structure and systems which are key to the business establishment in the new market. The model is well used by the brand to ensure that the Shared values of the business can be taken to the new markets as well as with the globalized economy and marketing causes (Jurevicius, 2018). 
The structure of the company is based on ensuring risks and indulging in fair market.  It follows the corporate governance for its system. The management style of the company is based on the accountability, and ensuring timely disclosures for the stakeholders. Staffs of the company are skilled and there is a fair recruitment of the employees based on the right person for the right job. The company’s strategy is to be complied by the corporate governance and to take major decisions based on the periodical requirement.  (Bowenet al., 2015). 

7.Hofstede’s Dimensions of Culture

The Hofstede’s model too adds to the diversity that the business may face due to the change of business environment to go global where the social aspects are to be understood in its all six dimensions (Hofstede Insights, 2019). These are as follows:

  • National Culture: The way the people accepts things and the taboos for few cultures are issues which have its own dimensions. The UKn urban choices are thus important for the business long term.  Good Taste is going to face this challenge as there is higher level of diversity in UK. Therefore, they have to meet the requirement of each people belonging from different diversities in order to make the business successful. 

  • Power Distance Index: This is very important where the lesser important member of the society may have a distance from the higher one where the power distance due to class difference or age is seen. Such is the PDI and it demands justification. In UKn urban market it is applicable and needs to be deployed. It could be said that Good Taste has to make significant decisions for this index. 

  • Individualism Vs Collectivism: People in some culture are acquainted to work as individuals and don’t share their achievements with others but some others have the quality to work together and share the success together. The values of Japan are totally different to that in the US. In UK the collectivism and individualism are both visible so the diversity is a great strength that the business can boost upon which has influenced the company. 

  • Masculinity vs Femininity: In UK like Hong Kong the Urban Middle class consumers are equals in their social structure and in its gender identity. The way the society treats its people is the way it is been taken as in this case. Heroism, achievements, rewards are masculine while care, empathy, carting are the traits of Femininity.

  • Uncertainty Avoidance Index: The business tries to deliver its best gain the best from them. However, if the retention of the ambiguity is such that it has to have the control over the future, so that the uncertain effects don’t bother its operations much. This has influenced the company by taking the measures for the contingencies like treasury funds and back up plans. 

  • Long versus Short term Normative Orientation: The way the business is designing its venture in the future for its globalized operations has to be made in a way that suites its strategy. Therefore, the strategic inclination UK expansion is made up of short or long is the indicator of the time orientation. [Referred to appendix 3]

  • Indulgence vs Restrain: The business has to know whether to be associated with some events or be away from them. This gives the business an idea of what issues it should advocate for and which it should not in a given culture (Whalen, 2016). 

The cultural aspect of a market is best determined by the Hofstede’s model which is useful to determine the market of choice for the business. The business has to have the social aspects of the UK culture in mind while developing the operations there which also gives the business a clue of how the hierarchy is supposed to work best in such economy. The term of doing business and thus the style to be adopted by the business is key to its long and short term operational qualities while also making sure that the individuals of a different economy gets the fair share of the social aspects of the market applied in their working process which would make the expansion successful or Good Taste. 

8.Hofstede’s factors and decision making in international context

These factors have enabled the company to take decision for each factor. This means that while operating in UK the company will focus on several aspects. UK is said to be the most diversified country. Therefore, the plans that will be made by the company will influence the perceptions and the expectation of the customers.  The decisions will be made based on the taste and preference of the customers. Apart from the culture of the UK will be kept in mind while designing the products. The taste of the customers of UK differ from other countries. Spices are mostly preferred by the customers. Thus, it will be kept in mind while discussing on the foods and ingredients. The business tries to deliver its best gain the best from them. However, if the retention of the ambiguity is such that it has to have the control over the future, so that the uncertain effects don’t bother its operations much. The business has to know whether to be associated with some events or be away from them. In UK like Hong Kong the Urban Middle class consumers are equals in their social structure and in its gender identity. The way the society treats its people is the way it is been taken as in this case. Heroism, achievements, rewards are masculine while care, empathy, carting are the traits of Femininity.

9. Recommended routes of Entry and disadvantages and advantages

The entry routs are: 

  • Exporting- This method is used to directly export to the county which has been selected to expand the business. Good taste can get the benefit of diversifyingtheir products to other market with the help of this technique. However the disadvantage is there is lot of risks associated with international market. 

  • Licensing- The major benefit of this method for good taste is that it could help in not getting trapped into legal problems. The disadvantage is it could be a hectic process and may not be granted considering the environmental and social issues. 

  • Partnering- This process involves doing business with partnership. The major benefit of this entry mode is that it could help in acknowledging the culture of the country in which entry is being made. The disadvantage is there is threat to breach of partnership and profits also shared among the partners. 

  • Acquisition- This could be giant entry mode and could help to establish the greater position in the market. However, the drawback could be increase in the debt and culture clashes for the organisations. 

  • Greenfield venturing- Under this entry mode. It provides the best opportunity to the firms to retain overall control over the operations, gaining knowledge of local market and an insider that employs the locals. The drawback could be higher fixed cost that is required to establish Greenfield location. 

The suggested entry mode is the Greenfield venturing. This is because, it provides the best opportunity to the firms to retain overall control over the operations, gaining knowledge of local market and an insider that employs the locals.

Recommendation for changes in organization culture and structure

The business has to select the markets like UK in separate manner as the societies and cultures are very different. The taste for food, the quality, the ingredients used are all very essential for the business working in such foreign economy has to work out and project that makes it the manner that best suites the business development in that economy. The surveys and the models of cultural integrations are to be given priority while strategizing the entry strategy. Further, the promotions, the benefits for initial launch, retention of consumers, new innovations in the markets according to the specialties of the place and many more are to be added in the delivery plan when the decisions would be supported by the management due to its competence to be in that economy that the business has selected.
The business may go for chain operations in UKmarkets where they find it difficult to get the business started easily due to cost issues where other business houses can take the franchisee and work for the brand. The limitation of this is that franchisers might use the name of the business in an inappropriate manner. The goodwill of the company might reduce with this activity.UK market is not seemed to be stable and the purchasing power of most of the community is low.Further, the use of retail sales via online food deliver apps too is a good way to be in the urban UK market which is huge. Again, use of mobile retails for the survey to make a guess of where exactly to settle is also recommended for expansion. 

References

  • Bowen, H.P., Baker, H.K. and Powell, G.E., 2015. Globalization and diversification strategy: A managerial perspective. Scandinavian Journal of Management, 31(1), pp.25-39.

  • Courses.lumenlearning.com. (2018). Globalization Benefits and Challenges | Principles of Marketing [Deprecated]. [online] Available at: https://courses.lumenlearning.com/marketing-spring2016/chapter/reading-globalization-benefits-and-challenges/ [Accessed 2 Jun. 2019].

  • Dau, L.A., Moore, E.M., Soto, M.A. and LeBlanc, C.R., 2017. How globalization sparked entrepreneurship in the developing world: The impact of formal economic and political linkages. In Entrepreneurship: Concepts, Methodologies, Tools, and Applications (pp. 1881-1900). IGI Global.

  • Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University Press.

  • Hofstede Insights. (2019). National Culture - Hofstede Insights. [online] Available at: https://www.hofstede-insights.com/models/national-culture/ [Accessed 2 Jun. 2019].

  • Jurevicius, O. (2018). Conquer the Challenge of Expansion with McKinsey 7s. [online] Strategic Management Insight. Available at: https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-framework.html [Accessed 2 Jun. 2019].

  • Ravanfar, M.M., 2015. Analyzing Organizational Structure based on 7s model of McKinsey. Global Journal of Management And Business Research.

  • Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education UK.

  • Whalen, J.M., 2016. The Hofstede model and national cultures of learning: a comparison of undergraduate survey data (Doctoral dissertation, Colorado State University).

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