Global & International Bussiness Contexts

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Requirement

Global & International Business Contexts (UK company to Sri Lanka tourism)

Solution

PART 1:-

PORTER NATIONAL DIAMOND ANALYSIS

INTRODUCTION:-

The Porter Diamond Model has been propounded by Michel Porter. Michael Porter explains the reasons and various factors to why companies need to become competitive in the market. In this approach, various industries are used by the Porter. (Srinivasan, 2012) With the help of this model performance of one organization compared with the performance of the other organizations. There are six main important factors included in this model which helps the organization in measuring competitiveness in the market. These factors are following:-

  1. •    Demand conditions

  2. •    Factor conditions

  3. •    Related and supporting industries

  4. •    Firm strategy, structure and rivalry

  5. •    Government 

  6. •    Chance 

An organization can suitably use this model when an organization wants to establish its business in the foreign country for the motive of expanding its business. By using this model, an organization can identify business opportunities and competitiveness. In this part of the assignment, Diamond Model is applied for measuring the competitiveness of the Tourism Industry of Sri Lanka for measuring the business opportunities for a British Company, which is trying to expand its business globally. 

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ANALYSIS OF FACTORS OF DIAMOND MODEL:-

All factors of this model are discussed in the following manner:-

1.    FACTOR CONDITIONS:-  

This factor is the combination of various factors. Factor conditions include capital resources, physical resources, and infrastructure and knowledge resources. (Fernando, 2013)  There are some important and special resources also which play an important role in a specific industry to attain competitive advantage in the market. In the context of establishing Tourism Industry in Sri Lanka, all above factors of Porter model play a very critical role in helping the industry to gain a competitive advantage in the market of Sri Lanka. British organization when trying to establish in Sri Lanka, will be able to get huge resources for establishing the industry in the foreign country.  It is necessary for the organizations to take crucial steps which are essential for the organization for attaining top position in the market. British organization can relocate its existing employees and can also recruit new employees from the foreign country. Thus, this factor proves very effective in the establishment of the tourism industry in Sri Lanka.
Factor conditions depict the following conditions:-

  • It is necessary for the every country that it creates its own important factors. For example technological base and skilled resources.

  • Less attention should be paid from the organizations toward the stock of factors till they are upgraded and deployed at a different time period.

  • It forces more attention to the organization on innovation; innovation should be such which help the organizations in gaining the competitive advantage over their competitors.

2.    DEMAND CONDITIONS:-

In this factor, the demands of the home country play an important role. This plays an efficient role in understanding the wants and desires of the customers. Through this, it can be seen that this factor proves very beneficial in shaping the attributes of the products which are produced domestically and creates a wide space for innovation and quality. Conducted research about the demand condition of Sri Lanka market for Tourism industry depicts that the demand of tourism is increasing continuously in the Sri Lanka. British organization can gain a base for its organization in the foreign country easily. British organization can gain a competitive advantage by providing better tourism services to different customers. (Fernando, 2013) Organization must focus on all the important concepts like customer relationship management which help the organization in developing a healthy relation with all customers. Most of the customer of the foreign country requires safe and better tourism services. British organization can establish its business in a good manner in Sri Lanka by satisfying all demands of the customers. Demand conditions includes the following:-

  • Demand condition depicts that when the domestic market is larger than the market of the foreign country than the British organization should focus more on the foreign country. This helps the organization in leading competitive advantage in the foreign market when the local organization begin to export the product.

  • A more demanding market of the home country leads national advantage to the British organization. It can earn maximum profit in national currency as well as foreign currency.

  • It is necessary for British organization to analyze the global trends. For this organization should build a strong and efficient trend-setting local market which analyze the global trends in an effective manner.

3.    RELATED AND SUPPORTING INDUSTRIES:-

This factor of the Porter model plays a crucial role in highlighting supportive and related industries which prove very helpful for the British company in establishing Tourism industry in Sri Lanka. All these industries provide a cost effective input which helps the organization in up gradation of the organization. This factor also encourages another organization which engaged in the similar business to undertake innovations. In the market of the Sri Lanka, there is a booming and growing trend of the tourism industry. The tourism sector has been about 4% growth in 2010. (Holtbrügge, 2016)  The main reasons for tourism growth in Sri Lanka are various tourist destinations and high income of the society. Thus it can be possible that if a tourism industry is trying to establish its organization in the Sri Lanka, it can achieve high growth. This is because there are huge chances to get the support of customers.  The British company can create a sound base for itself which helps the organization in smooth and effective functioning. Through all this organization can gain a competitive advantage in the market of the Sri Lanka after few years. Related and supported industries depict following things:- 

  • If the home country supportive industries are very competitive for the British organization, then the organization enjoys more innovative and cost effective inputs.

  • All this is possible when the suppliers are close and strong competitors.

4.    FIRM STRATEGY, STRUCTURE, AND RIVALRY:-

In the context of competitiveness, it is the fourth factor of the Michael Porter Model. This factor explains that the organizations should set their proper objectives and then should manage them in a most efficient manner. These goals play a very important role in determining the future position of the organization. It is necessary for the organization that it should develop an efficient and effective strategy which helps the organization in fulfillment of their goals. The strategy should be such which helps the organization in facing competition in the market. For facing competitors in the domestic country, the organization needs to provide better and improved customer service to their existing or new customers. These improved tourism services create a brand image of the organization in the mind of the customers. This helps the organization in attracting new customers. When the British organization is entering into the market of the Sri Lanka, it is suggested to the British organization that it should focus more on using communication and information technologies to gain a competitive advantage in the market of the tourism industry in Sri Lanka. (Fainshmidt, 2016) All the organizations which are willing to enter into the foreign market must pay high concentration on consumerism which helps the organizations in gaining various opportunities from the various investors from a foreign country. The organization should introduce innovative and attractive services for the motive of addressing competition in the different country. By using this strategy organization able to gain a strong base for its organization in the market of Sri Lanka.
This factor of the Porter model focusing on following:-

  • A British organization is affected in a large manner by the local conditions of the home country. For example - Companies which are situated in German tend to be more hierarchical. Italian companies are very smaller and headed by the more families. All these structure and strategy helps in determining which type of industries are exceed in a nation.

  • As per the model of Porter Five Forces, low level of rivalry made an industry more attractive. Over the long run of the organization, more rivalry is better because it encourages an organization to focus more on innovation and creativity.

  • Low rivalry forces enable firm to move beyond the local advantages that enjoyed by the home country. Like: low cost of factors.( Fainshmidt,2016)

5.    GOVERNMENT:-

It is the most important factor of the Porter model. Government plays an influential role in assessing the level of competitiveness in the market. Government influences the various factors like demand conditions, supply conditions and the competition among available organizations. Government intervention can occur at the supranational level, local, regional or national level.  The government of Sri Lanka provides various growth opportunities for investors from foreign countries and motivate them to enter the new market. The growth of the market leads the growth of the GDP of the country. The growth rate of the Sri Lanka is increasing day by day which is ultimately possible because of the full support from the government to the investors of the foreign country. The increase in foreign investment leads to increase in the foreign currency in that particular country. Rises in foreign investment prove very efficient in increasing the development growth of the country.  Government plays an important role in the success of the organization. Role of the government is following:-  

  • The government encourages different organizations to enhance their performance. British organization can enjoy a more competitive advantage if it gets the full support of the government. The government is enforcing strict product standards which enable the organization in produce quality services.

  • Government focuses more on created specialized factors.

  • Balancing local rivalry, through direct cooperation and regulation.

  • Government stimulates advance demand for advanced products.

6.    CHANCE:-

As it is defined by its name, it is uncertain in nature. Chance depends fully on the planning level of the organization and time that organization spent on all factors of the model. (Fainshmidt, 2016)The chance has been a critically important role in determining the fate of the organization. It is very critical in nature because it creates discontinuities in functions, which can lead success for some of the organizations and failures for some other organizations. It is necessary for the British organization to give more importance to all the factors of Porter Model.  All this helps the organization gain an additional competitive advantage in the foreign market.
Conclusion:-
All above mentioned are the factors of the porter model. They are also considered as the necessities which enable the British organization to gain a competitive advantage in the market of Sri Lanka.  This model indicates that the environment is supportive to an organization and can be helpful for the organization to build a strong base and attain a competitive advantage over their competitors. All the efforts of the British organization can gain responses in a positive manner as per all findings which are determined by the Porter, diamond model. There are basic requirements which should be considered carefully by the British organizations which help it in attaining all its future goals. Porter said that all existing strategies and theories are not adequate to explain modern trade pattern of the country. Some other authors also conclude that porter model is suitable in some way and explaining all aspects related to trade, but ends up explaining nothing. Most of the management schools suggest that that the Porter diamond model does not focus on all the attributes of the home country, most of the aspects of trading are not applicable to smaller nations of the world. 

PART 2

MARKET ENTRY STRATEGY

INTRODUCTION:-

If the organization wants to expand its business globally than it is necessary for the organization to develop attractively and suitable market entry strategies. Research should be conducted by the organization if it wants to invest its capital in the foreign market for the purpose of open its business in another country.  This a very critical and important step for the organization because it helps in determining appropriate market entry strategy for creating a successful business environment. This appropriate strategy enables the organization to generate more revenue. British organization wants to expand its business in the international area for the motive of expanding the value of their shares in the market and earn maximum profit.

Market entry strategy for Sri Lanka Tourism Industry:-
Opening business in the market of Sri Lanka offers a high potential for the British organization. It should be necessary for the British organization to conduct an extensive market research of the country so that organization can understand whether the their business in that country will be successful or not. For this purpose, British organization should structure its business plan for adapting to the new market and new country. ( Chiu,2015)
Foreign Direct Investment:-
Foreign direct investment (FDI) is considered an important and suitable strategy of entering into the market. (Hescot, 2013)Using FDI strategy by the British organization can have positive consequences or negative consequences. It has following advantages:-

FDI ADVANTAGES:-

  • Transfer of technology: - FDI involves manufacturing methods, sharing skills and all other facilities. The most important advantage of the FDI is that it helps the organizations in transfer their technologies from one country to another country which don’t have access to research facilities and any other knowledge facility. This enables the British organization efficiently transfer of technology at low cost. 

  • Overall economic growth: -  Foreign direct investment leads the overall growth of the economy. This increases the Gross Domestic Product of the country. This growth is in the form of the percentage that changes from one year to another. 

  • The increment in income: - Another benefit of the foreign direct investment is that it raises the income level of the receiving country. As foreign direct investment creates more jobs and higher wages which raise the overall income of the entire country.  

  • Creation of new jobs: - Foreign direct investment, creates more jobs. Due to the opening of new British organization employment level of the country is increasing because organizations create new job opportunities for the citizens of that country. 

  • Easy international trade: - Commonly, every country have its own import tariff, and this is the important reason why trading with it is very difficult. FDI helped the organization in removing all these barriers and made the international trade very easier.

  • Reduced disparity between revenue and cost: - Foreign direct investment reduces the disparity between revenues and costs. Through this countries will be able to reduce the cost of the production and the sale price of the goods.

FDI LIMITATIONS:-

  • Hindrance to domestic investment: - Sometimes foreign direct investment hinder domestic investment because it focuses more on resources of the investor’s home country.

  • The risk from political changes: - Political issues in different countries changes continuously, due to it FDI is considered very risky. Risk factors involved in the FDI are extremely high. British organization should do effective planning for avoiding risk. 

  • Negative influences on exchange rate: - foreign direct investment affects the exchange rate of different countries in a large manner. (Kang,2014)

  • Higher costs: - Investment in another country considered very expensive than the export of goods. So, it is very important to manage the fund level in an appropriate manner.

  • Economic non-viability:- From the point of view of the investor foreign direct investment considered capital intensive. All this can be very risky and not- viable sometimes.

  • Negative impact on the investment of the country:-  All rules related to the foreign exchange rate and FDI might have a negative impact on the investing country. Investment may be restricted in some countries.

APPROPRIATENESS OF FDI AS MARKET ENTRY STRATEGY:-

FDI considered an effective way of entering the foreign market for the British organization. Some of the reasons why organization prefers direct investment as a market entry strategy are following:- 

  • Some country's government restrict or limit imports of goods which are produced in another country, but government grant permission for build a production site in the foreign market and produce locally.

  • Through using FDI as its market entry strategy organization can avoid import duties by producing the goods in the target market.

  • Organization can utilize the services of the skilled employees.

PART: - 3

CONTEMPORARY MANAGEMENT ISSUES

INTRODUCTION:-

Contemporary management issues include all the current issues which are faced by the British organization in leadership and management. The organization have taken various steps for the motive of monitoring and managing the key indicators. The main important motive of the organization behind using these techniques are saved money and cutting down cost.  The relevant issues help in an application of the theory of management and determines the ways of putting these theories to management practices. (Wellington,2015) These issues impact the working of the organization directly. There are various contemporary management issues like corporate governance, quality of work life, corporate social responsibility, quality circles and business ethics. In this section of the assignment two main important contemporary issues, corporate governance and corporate social responsibility are discussed in detail. 

CONTEMPORARY MANAGEMENT ISSUES:-

Corporate social responsibly refers to the concern shown by the British organization towards it social environment. Organization is the main part of the society. So, it is the responsibility of every organization to take care of their social environment also. As per this concept, it is very beneficial for the organization to give more importance to the impact of the society on activities and actions, which are undertaken by them.  Is also necessary for the British organization to take steps, which will prove very beneficial for the organization as well as the welfare of the society. The motive of British organization should not only be towards the efficiency of the operations but also take care the needs of the society. 
In the context of Sri Lanka, corporate social responsibility is not only a topic of discussion, but it is also selected by some major organizations.  After apartheid era, Sri Lanka had to face many problems as a large level of inequalities in the dispersion of income, economic power, and education. For the motive of resolving these issues, the government authorities of the country taken the initiative of various social programs and establish various social organizations. (Navi, 2012)The company's act of the Sri Lanka does not give permission to any organization for undertaking corporate social responsibility practices, but the documents of the policies of the country show a high need for CSR practices. All multinational organizations situated in the Sri Lanka have taken various steps towards the society. This is done by the organizations not only the benefit of the society but also earning efficiency gains. Addressing the social issues by the organizations helps them in increase the productivity level of the organization which make a high-level change in the share value and earning capacity of the organization. All, the guidelines which are followed for the purpose of CSR in Sri Lanka have been shown in king reports in a detailed manner.
Most of the leading companies like Samsung, Sony, etc. have been taking various steps in promoting CSR in Sri Lanka. The main important purpose of adopting CSR practices is to show commitment towards society through establishing various social innovative programs which help the underdeveloped country in speeding their growth. (Clapp, 2014)  In Sri Lanka organizations have made an important role in the field of healthcare, education, and training. They aim at removing the gap between the various skills and improve the social economic. They try to overcome on all the issues which hindrances the growth of an organization.  Thus, it is very crucial for the organizations, which is willing to enter into the market of the Sri Lanka, to pay more attention towards the practices of the corporate social responsibility in order to gain a competitive advantage in the market of Sri Lanka. 

CORPORATE GOVERNANCE:-

It is very necessary for an organization to run their activities of the business in an efficient or smooth manner so that organization can improve its existing performance. This motive of the organization can be achieved only when the organization meet all ethical considerations and give value to their stakeholders outside the organization and within the organization. It is very crucial for the organization to serve their stakeholders in an ethical manner. It is necessary for the British organization to determine its existing ethical considerations among the stakeholders and fulfill all ethical considerations of the stakeholders. (McCahery, 2016)
In the Sri Lanka, there are different socio-cultural environment setting with appropriate consideration regarding social welfare and leadership and issues related to the corporate governance. It is very crucial for the British organization to focus on the different types of systems related to management that prevail in Sri Lanka. The main focus of the British organization should be on provide efficient tourism services to the citizens of the Sri Lanka and any other country. In the context of CG, Sri Lanka is known as the king. It is necessary for the British organization that it has a stable working environment so that in can survive in the market of Sri Lanka for a long time and can expand its business continuously. This can be possible only when the British organization does effective management and allocation of resources so that all available resources can be utilized in the best manner and good profits can be produced from them. (Harford, 2016) The role of Sri Lanka market is very effective because many foreign investors are involved in it. It is necessary for the British organization to get registered with all the requirements of the government and should work as per the existing business standards of the market.

CONCLUSION:-

In this section of the assignment, contemporary issues related to the management have been studied. After studied these contemporary issues, it can be concluded that British organization should consider all these issues in a significant manner before entering the market of Sri Lanka. After focusing on these issues, an organization can remove all hurdles to its success and can gain a competitive advantage in the market of Sri Lanka.

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REFERENCES:-

  • Srinivasan, P., Kumar, P. S., & Ganesh, L. (2012). Tourism and economic growth in Sri Lanka an ARDL bounds testing approach. Environment and Urbanization Asia, 3(2), 397-405.

  • Fernando, S., Bandara, J. S., & Smith, C. (2013). Regaining missed opportunities: The role of tourism in post-war development in Sri Lanka. Asia Pacific Journal of Tourism Research, 18(7), 685-711.

  • Fainshmidt, S., Smith, A., & Judge, W. Q. (2016). National Competitiveness and Porter's Diamond Model: The Role of MNE Penetration and Governance Quality. Global Strategy Journal, 6(2), 81-104.

  • Holtbrügge, D., & Friedmann, C. B. (2016). Does location choice affect foreign subsidiary success in India? An empirical study based on Porter's diamond model. International Journal of Business and Emerging Markets,8(1), 3-29.

  • Riasi, A. (2015). Competitive advantages of shadow banking industry: An analysis using Porter diamond model. Business Management and Strategy,6(2), 15-27.

  • Lall, S., & Narula, R. (Eds.). (2013). Understanding FDI-assisted economic development. Routledge.

  • Chiu, P. S. (2015). The Research of International Market Entry Strategy in Taiwan SME--The Case Study of the Wintec Co.

  • Hescot, P., China, E., Bourgeois, D., Maina, S., Monteiro da Silva, O., Luc Eiselé, J., ... & Horn, V. (2013). The FDI African Strategy for Oral Health: addressing the specific needs of the continent. International dental journal,63(3), 113-120.

  • Kang, M. J., & Kim, S. H. (2014). The Entry Modes Strategy in FDI: Expansion of Korean Retailers into China and Indonesia.

  • Wellington, J. (2015). Educational research: Contemporary issues and practical approaches. Bloomsbury Publishing.

  • Evertson, C. M., & Weinstein, C. S. (Eds.). (2013). Handbook of classroom management: Research, practice, and contemporary issues. Routledge.

  • Navi, S. T. (2012). Corporate social responsibility.

  • Clapp, J., & Rowlands, I. H. (2014). Corporate social responsibility. Essential Concepts of Global Environmental Governance, 42.

  • Harford, J., Mansi, S. A., & Maxwell, W. F. (2012). Corporate governance and firm cash holdings in the US. In Corporate Governance (pp. 107-138). Springer Berlin Heidelberg.

  • McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate governance preferences of institutional investors. The Journal of Finance.

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