Research Korner: International Business Environment

Dominance Of Nestle Products After 30 Years In The Global Market

Dominance of Nestle Products after 30 years in the Global Market The humble beginning of Nestle Company   just started as a small food company,    with its very first product line the milk food formula.  However, it turned out a success in the market. And, because the owner’s dedication and hard work, it had been able to serve a diverse consumers in the world market.    Consequently,   it had always complied with the strict standard requirement and policy in processing its products.  The company has a clean and healthy working environment that had been even gone beyond the strict standard of the food industry law.  This essay reveals that Nestle has been using LC1 ingredient that best mixed with all their food and beverage products.   It was found out too that LC1 has been considered the most sought food ingredient in all Nestlé’s products. As a matter of fact, it is the active ingredient of most of the Nestle food products because of its outstanding health characteristics and health value provided to the human consumption.  Not only that, medical research even proved that robotic agent for human microbial food supplements that helps the human intestine to function better is the  active ingredient  in every Nestle product.  So, Nestle products have the ability to strengthen the human immune system against various diseases.     Obviously,  Nestle products  such as   such as baby foods, yogurts, breakfast cereals, dairy products, chocolates, ice creams,  confectionery, bottled water, prepared foods, beverages  among many others are  very dominant in the world market until these days. The affordability of the Nestle products as well as the wellness quality that the company has been promoted in the global market made them one of the leading and respected brand even in this new generation.  Apparently, the secret of the continuing success of the brand attributed to the core missions and objectives that it has for the whole world.  It has a strong commitment to its consumers to provide them with complete high quality made-natural food for the entire family.  Aside from that, Nestle never failed to provide babies food supplement and bottled milk for infants in every part of the globe.  The company brand has been a long time partner of all mothers out there   on raising their children well. This is also the major reason that until now, Nestle products are prominent brand over the rest of its competitors. (http://articles.castelarhost.com/nestle_background.htm) Furthermore, Nestle has been able to evolve with the modern world and society at large.  Every product has been tested to suit the taste of the consumers, from older, adults, young adults, teenagers, toddlers, and even babies in the market.  All its products have had captured the entire food requirements of the whole family. Apart from deepest understanding of its main responsibility to its consumers worldwide, it is also the best effort of the company to be able to identify the both basic and   advanced need of the customers.  More than that, every product that is out in the world market associated with complete health benefits that many people do not get from other products in the industry.  Foremost, the customers in this new generation are so meticulous and even smarter in choosing the right products or brands for them and for their families.  They   even go beyond commercialization; they know already the products that truly provide them continuous benefits   in terms of health and financial aspects.  The company knows very exactly to take good care of the welfare of the clients more than anything else.   (http://www.research.nestle.com/NR/rdonlyres/BD74B3CC-3E8C-4957-A009-35E8B69A7982/0/rd_brochure.pdf) Nestle   has a high standard R & D that  has been developed  new concepts and   create more wellness food for the whole family.   With the help of their advanced technology, the company never failed to bring premium natural food to the consumers...  Also, the very nature of  the food  only contains limited   industrial processed  food ingredients ;  the products contain more   natural ingredients  that have essential nutrients for the growth and  development  of  human bodies.  As a result, the company stills the number one trusted wellness brand of millions of consumers worldwide.   In similar manner, it even offers effective health solution to physical   problems among the consumers.   The company’s advocacy of healthy living and lifestyle    lead the consumers to become health conscious and put extra effort to engage in a regular fitness program during these days.  As various physical activities and sports together with the company’s global product campaign have been touching many lives all over the world.   This   lifetime advocacy of Nestle caused consumers to stick with their products.  Seemingly, it has already a tradition of every family to pass on the   patronage of Nestle brands from one generation to another generation.  1(http://www.research.nestle.com/NR/rdonlyres/BD74B3CC-3E8C-4957-A009-35E8B69A7982/0/rd_brochure.pdf)   References: (http://articles.castelarhost.com/nestle_background.htm) (http://www.research.nestle.com/NR/rdonlyres/BD74B3CC-3E8C-4957-A009-35E8B69A7982/0/rd_brochure.pdf)

Dominance Of Nestle Products After 30 Years In The Global Market

Dominance of Nestle Products after 30 years in the Global Market The humble beginning of Nestle Company just started as a small fo...

Global Business & International Business

Introduction             Political and social environment, as the macro environment of any business, considerably have an impact in the international and global business spectrum.  In this paper, it discusses about the basic nature of international and global business, exploring into the external environment influences using the Political, Economic, Socio-cultural, Environmental and the Likely Future Trends (PESTEL) analysis. The PESTEL analysis, despite of it not being able to capture all the complexities of the external environment, it can still aide the firm in the development of an appropriate strategic framework.  Further, it seeks to discuss the future developments of the international and global business, with emphasis in the political and the social environment   Main Part International Business and Global Business Seemingly, international and global business sounds synonymous.  However, both businesses with its complexities, have different and varying nature.  International business pertains to the cumulative topics that deals with the companies expressing interest to operate in several companies.  Companies that are operating internationally is sometimes referred to as a multinational corporations (MNC’s), McDonalds, General Motors, Sony, General Electric, and so on, as it examples, and that of which generally have a subsidiary.  As the operations of international business venture increases, it is can be considered a contributing factor leading to globalization.  Thus, integral to globalization process is an increase in the intensity of competition in the international marketplace. Global business, on the other hand, presumably covers a vast field and it’s broader than that of an international business.  Fundamentally, the orientation of a global business focuses on the exploitation of business opportunities across boundaries to achieve corporate goals synergistically.  Moreover, it takes into consideration the overall effect of diverse markets in the designing and in the implementation of strategic objectives.    The PESTEL Trend In an international and global business setting, corporations must carefully and thoroughly foresee rather than oversee the macro environment especially in the context of political and social components.  It is evident that social, cultural, political and economic factors can either push or hold back the process of globalization.  Among the key aspects in the use of PESTEL analysis are to grasp the pivotal drivers of change, the focus impact of environmental factors, the combination of effects, and the like.  To gain an in-depth analysis of the political and social environment, it is deemed important to look into the respective PESTEL analysis, and not only focusing on the social and political context because these factors are somewhat dependent over the rest of the factors.   Political The political influence generally includes the stability of the government, policy of taxation, regulations of the foreign trade and social welfare policies.  In this paper we would look into how the international and global business should adopt and fit in into the political arena, particularly in the country that holds a capitalist political ideology, and in the imposition of tax law. The capitalist is descriptive of the country sparing some parts of its economic activity to local citizens.  Foreign-owned firms, in this regard, generously offer a tempting target for local politicians, and such that, firms already operating in a foreign country braces an ongoing public relations problems as they may be harassed by the local populace. With the fact that majority of foreign firms are wealthier, plausible cases of exploitations can surmount and indirectly found somewhere, which in turn, are counteracted in a means of a façade, like for instance, international firms promoting the locals to a managerial positions.  Another factor that has an influence politically are the imposition of local tax law that is applicable and are mandated by individual countries to foreign companies.  In some countries, especially the corrupt countries, there are cases, in which international operations are asked more than their normal tax payments. An import duty like in Saudi Arabia, for example, is a local tax not levied on local firms or companies but is being levied to international firms.  Consequently, the income taxes levied to the international and global business operations have a direct affect on the businesses net profitability, resulting to changes in financial planning, new investments, dividend payouts, and similar factors.  Similarly, the sales and excise taxes required on final products affect prices.  Simply, stated the political ideology trend interrelates with both international and local barriers, such that political philosophies of the leaders of a particular country are highly influenced from which the political leader has been a part of.  Additionally, the political attitudes and philosophies held by a political leader mirrors partly in the sociological and educational factor in the given country.   Economic Generally, economic analysis encompasses the particular country’s business cycles, GNP trends, interest rates, money supply, inflation rate, unemployment rate and the disposable income.  The importance of determining resources would likely predict the competitiveness of a country as stressed by the conventional trade theories.  Consequently, it prompts for international firms to ensure that adequate resources that are of sufficient quality can be accessible and the availability of the said resources are present.  Thus, access to global resource base is a key factor influencing international production.  For both international and global business, labor quality is a determinant of competitiveness such that it is resistant of imitation and the most immobile factors.  To be specific, the IMS has a profound impact on the global business environment such that it evolves in a set of exchange rates between the states and primarily is the basis of trade. The importance of IMS is valuable because it enables states to finance respective trade deficits and in the accessibility of enterprise access in the realization of strategies.  Overall, the economic factors, both domestic and foreign, tend to alter rather rapidly, resulting to great alterations in the legal rules.  Further, country may now in turn, imposed very tight exchange controls, restrictions in the profit remissions and strict in the import restrictions.  Nevertheless, the failure of an international and global business to anticipate and miss out economic developments spells profit lost.    Socio-cultural The socio-cultural context typically comprises the population demographics, population’s income distribution, social mobility, consumerism, level of education, technological efforts and among others.  Among the PESTEL trend, socio-cultural analysis is the most difficult to look into since aside from its unpredictability, it is said to be barely readily quantifiable.  Citizens of every country greatly have a deep sense of national identity.  By deep it connotes it is difficult to alter or can be instantly transformed.  For international and global businesses to fit in they must be adaptive, recognize and give utmost respect to the national identity projected by the local populace.  National identity impacts the foreign firms or companies into two folds; one is the indirect effect from the laws, restrictions, regulations that mirrors the national attitudes and two is the direct and unofficial, such as aggressive attacks towards a United Stated embassy in a dominantly Muslim country.  Also evident is the way the local populace views foreigners, since in some countries foreigners are being viewed evil and opportunists.  Although, there are also countries who views foreigners as only hope for development.  From the sense of natural identity that is innate to the people, emerges the national ideology that can be viewed as a linkage of the citizen to the country, like it is a unified thinking and strong beliefs often leading to stereotyping.  Political leaders reflect on the national ideology and the attitudes of the people and are largely considered most of the time.  For instance, the Egyptian president publicly expresses disgust over the Americans, he is expressing reflectively the strong national ideology he held being an Egyptian.  The sociological analysis, as been discussed, revealed that it is interlock with both legal-political and economic analysis.  EnvironmentaI Environmental analysis includes the measures of environment protection, competition law, employment law, product safety, and basically all factors that are related to environment.  In fact, according to Hurell and Kingsbury (1992), the interaction between economic development and the complex, often fragile ecosystems on which that development depends has become an international political and economic issue.  In this paper, we would particularly be discussing about the labor law.  As a general rule, all countries necessitate the foreign corporation to treat the local employees just like local firms have rightfully treated the locals. It is mandated that foreign companies should and must at all times observe the local labor legislation.  The local labor legislation varies between countries that are indicative of the presence of the variety of political factors.  Like in the communist country, for example, unions are banned and are subject to authoritative management.  An alternatively second type of labor law is existent such that foreign firm employees are treated disparately by local employees.  Common law of this type is embodied in countries like Costa Rica, wherein 90 percent of the workforce should be Costa Rican and must receive 85 percent of the salary wage.  Likely Future Trends Lastly, are the likely future trends in the operation of international and global businesses.  For instance, energy as a key resource for all businesses, when it will be used as a political weapon, its impact will be significant to the economic growth.  That is why, countries like the United Stated who have dispute to some of the Middle East countries, are forced to find and develop alternative sources of energy.  By being not able to do so, would mean that in the future, United States would extremely suffer in the scarcity of energy.  Future Developments With economic institutions such as the World Trade Organization (WTO), the World Bank (WB) and the International Monetary Fund (IMF) monitoring and implementing fair practices in the business, the future development of international and global business would likely lead into globalization.  The degree to which businesses has been internationalized is a function of changes and developments in the world economy. Towards the twentieth century, apparently, changes in the world economy deeply affects business, politics, society, citizens and the interaction between the stakeholders is what is come to be known as globalization.  Globalization as defined by the International Monetary Fund (IMF), is the growing interdependence of countries world-wide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.  By growing interdependence of economies, it pertains to the increasing acceptance of economic liberalism that serves as a precursor to globalization.  Moreover, as competitive liberalism extends into domestic economic policy had somewhat deepened the roots of globalization. The changing regulations and attitudes promotes additional and more opportunities for investment security, like the increasing participation of privatization programs in developed countries, like the United Kingdom, at one level.  Interestingly, included in the key drivers that characterize the future growth of international and global business, are the involvement of international governance and regulation (the political environment) and the convergence of socio-cultural.  First, is the stretch of international governance and regulation, wherein, it is at first formulated in a regional level like the European Union or at the international level.  Second, is the socio-cultural convergence as a resulting consequence of liberalization and the emergent outstretch of the global communication technology. It is like the continuing efforts of international and global business to foster a careful dealing with the hard to transform social and cultural components as a barrier have been somewhat conquered already but does not necessarily mean that there are altered to a very great extent, however, there is only an accommodation with regards to the operation of the international and global business. Conclusion   The development of both international and global businesses extends their opportunities to maximize profits and gain a competitive edge.  However, with the presence of macro environment that is hard to penetrate, these businesses looks for means to get through and get over the barriers for them to penetrate successfully.  Political environments are dependent with the social environment such that political leaders are mainly influenced from pertinent social factors.  The social factors, on the other hand, also have a political influence such that they are subject to the political environment they are operating.    The future marked by globalization offers boundless growth and prosperity, not only for the developed countries but for the developing countries as well.  But given its opportunities, there are also the negative impacts globalization can bring such as further widening the gap between the rich and the poor promoting inequality, anarchy in the economy, surrender in political control and the extreme negative impact may be the lost of cultural identity of a country.

Global Business & International Business

Introduction Political and social environment, as the macro environment of any business, considerably have an impact in the...

Assessment # 3 Marketing Issues :Starbucks

Starbucks               Starbucks Corporation was formed in 1985. Starbucks purchase and roast high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complimentary food items, coffee-related accessories and equipment, a selection of premium teas and line of compact disks, primarily through Company-operated retail stores (Starbucks Annual Report 2007).   Starbucks Foreign Entry Mode               Starbucks’ licensees are often their partners in a joint venture. Starbucks International is using licensing agreements in order to penetrate markets where it has no ability to open its own stores. In markets outside North America, the strategy of Starbucks is to license a local company that is reputable and possess retailing expertise. Often times Starbucks enter in joint venture partnerships with these local companies. Starbucks Coffee International is the subsidiary that manages Starbucks’ overseas expansion.   Expansion to China             China is among the most attractive markets in the world. Many international companies have ventured in China and many are following their lead. China had enjoyed spectacular growth during the 1980s as well as 1990s. The continued growth of China has attracted Starbucks and the company started their market entry.             Starbucks employed different strategies in entering the Chinese market. the entry strategies that Starbucks employed are wholly owned subsidiary, joint ventures, and licensing.             In 1995, Starbucks established as subsidiary called Starbucks Coffee International Inc. The subsidiary is responsible for all Starbucks business development outside North America, including developing new businesses, financing and planning stores, managing operations and logistics, merchandising, and training and developing Starbucks international managers (Kotha and Glassman 2003). Starbucks international, as a wholly owned subsidiary, manages the international expansion programs and strategies of Starbucks coffee. Starbucks International, in entering new markets combines two strategies. These are joint venture and licensing.   Marketing Challenge             One of the biggest challenges to Starbucks entry to China is coffee’s unpopularity in the country. The Chinese people are largely tea-drinking people and coffee shops do not do well in China.   Integrated Marketing Communication             Integrated Marketing Communications is a concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines (examples: advertising, sales promotion, public relations) and combines these disciplines to provide clarity, consistency, and maximum communications’ impact through the seamless integration of discrete messages (Kotler 2000). Varey (2001) defines integrated marketing communications is the strategic, selection, execution, evaluation, and control of all communicative actions that can effectively and efficiently enable and facilitate exchanges in the provider’s stakeholder relationship network (p.251).   Starbucks Communication Task             China is a very promising market and Starbucks’ success in China will result in high revenues and more opportunities for growth. However, Starbucks is faced with a challenge – the Chinese market does not consume coffee as much as it does tea. The communication task of Starbucks is to ensure that rational product information are presented in a style that is relevant to the target audiences and that would serve as a foundation to deliver focused messages. The product strengths of Starbucks are summarized into four key attributes embracing the Starbucks offering. These are: <ul style="margin-top: 0in; margin-bottom: 0in" type="circle"> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Quality</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Relaxing Ambiance</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Accessible Premium Brand</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Modern</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Innovative</li> </ul>    Communicating to the Consumers: Marketing Mix Price             Starbucks’ line of products in known for its quality and price. In most Asian countries, the products of Starbucks are considered as luxury but still remains as the most successful international coffee store. Entering the Chinese Market, Starbucks must employ the same strategy that it used in other markets. Premium price must be employed in Starbucks products in order to maintain its brand positioning and to create an image of high quality standard. Starbucks must also make sure that the products’ price are within the acceptable limits. The price of Starbucks’ products must not be five tomes the price of the mass product.             Price still remains as an important influencer in the decision making process of the Chinese consumers.   Place             In terms of place, it is almost imperative for the company to position its stores in places that are within business districts and places near universities and campuses where majority of the population are in the middle and upper classes. The said locations are the most convenient spots for Starbucks as majority of coffee consumers in China are young and middle-aged.   Promotion             In terms of promotion, the company can use its present and most used marketing strategy, the being everywhere approach. It will help the company to promote their product to the vast geographic area of the country. China is known for its rich and colorful culture. Chinese traditions and festivals are celebrated almost all-year round in China. Starbucks can use this as an opportunity to reach out to the Chinese market. Starbucks can sponsor events and festivals in order to promote its products. Corporate Social Responsibility can also serve as a promotional tool. Having a good reputation and highlighting its commitment to the Chinese people, society and environment can create a positive image of the company in the consumers’ minds.   Product             According to the survey Consumer Outlook Survey for China, the Chinese consumers are becoming more and more discerning and moving faster from the paradigm of finding the best price to seeking the best quality of the product. The respondents of the survey show different important factors in choosing their brand. The one that garner the highest percentage was the brand trust and quality (92%); positive impact on health (81%), care for the customers (76%) and fair price (73%) (Vargas 2004).             The said result shows that customer is China depends greatly on the brand name and the quality of the product. The fact that the price of got the 5th position shows that consumers from the said country are no longer price conscious. The result of the survey is somewhat connected to the pricing strategy of the company. It only means that the product pricing may attract the consumer in testing a certain brand, but still, the quality and the value of the product will be the one that will keep them from coming back and purchasing a specific product (Vargas 2004). It is also important to create different products that will be uniquely served in China in order to make the customers feel that the company values and respects the Chinese culture and heritage.               References   Alexandrides, C G and Bowers, B L 2005, Market Entry Strategies: Choosing a Foreign Market Entry Mode, International Business Academy, viewed 12 May, 2008,<http://www.tuckpartners.com/Iba/docs/marketing/mkt_entry_strategies_alex.pdf>.   BhidÉ, A V 2003, The Origin and Evolution of New Businesses, Oxford University Press, New York.   Kotha, S and Glassman, D 2003, Starbucks Corporation: Competing in a Global Market, University of Washington, viewed 12 May, 2008, <http://bschool.washington.edu/gbc/documents/starbucks_final.pdf>.   Kotler, P 2000, Marketing Management Millennium Edition, (10th ed.), Prentice Hall.   Starbucks Corporation 1999, The McGraw-Hill Companies, viewed 10 December,2008,<http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html>.   Varey, R 2001, Marketing Communication: Principles and Practice, Routledge, New York.   Vargas, M 2004, Chinese Consumer Report, About.com, viewed 10 December 2008,<http://retailindustry.about.com/b/2004/10/26/chinese-consumer-report.htm>

Assessment # 3 Marketing Issues :Starbucks

Starbucks Starbucks Corporation was formed in 1985. Starbucks purchase and roast high-quality whole bean coffees and sells...

Critically assess the contention that multi-national companies (MNCs) must corporate in international business to survive.

Critically assess the contention that multi-national companies (MNCs) must corporate in international business to survive.   INTRODUCTION The world is undergoing tremendous changes and part of this change is the rise of state-of-the-art technology that changes how contemporary world carry out their tasks. Changes are occurring in the very nature of the business organization as it responds to the pressures and opportunities of the global marketplace. Globalization of business has been one of the dominant characteristics of the past two decades. In the international business environment, many companies have become multinational players seeking business opportunities across countries. Globalization has become the cornerstone of a company’s overall business strategies. Globalization is no longer only a business option but also a part of effective corporate strategizing ( 2002). The impacts of globalization on the business world are many, but the most important is competition. All of this competition is pushing multi-national companies into strategic responses. As global competition increases, many companies are forced to reevaluate their position in the global marketplace. For some companies this entails strengthening their domestic position against competing foreign products. Other firms respond by expanding their undertakings into foreign markets. For many, collaborative/cooperative agreements with other businesses are an effective alternative to the more traditional approaches (1993). This paper examines the strategies of multi-national companies to respond to the opportunities and pressures created by the process of globalization of business. MAIN BODY International business is increasingly developing multi-national networks composed of alliances, affiliates, licensees, and other partnerships. The most rapidly changing route for large multi-national companies entering overseas market / international business is through a growing variety of joint ventures and strategic alliances (1993). Multi-national companies have come to characterize global business, and to dominate industries and national economies. Multi-national companies evolve from domestic firms that go beyond simple exporting and importing activities to acquire foreign affiliates. The growth and prosperity of the company become interlinked with business linkages to foreign firms. As the business linkages deepen between the two companies, the need for broad coordination and cooperation emerges ( 1995). Many companies increasingly understand the significance of a growing global marketplace. They realize that exporting and establishing overseas ventures are no longer the only choices they have in participating in international business. Cooperation, like in the form of an alliance, with businesses abroad is becoming significantly evident as an alternative response (1993). Alliances have become an important strategic option in international business ( 2002). The presence of an emerging worldwide market underscores the necessity for firms to develop strategies that will enable them to compete successfully on a global scale. Although many strategies are available for companies to pursue -- cooperative contractual relationships, strategic alliances and joint ventures, and the establishment or acquisition of overseas production facilities -- the need for globally oriented companies to get their products into foreign markets is paramount (1993). A strategic alliance means forming a long-term collaboration between at least two firms without one firm fully owning the other. A strategic alliance presents two distinct properties: long-term commitment and contribution to strategic performance of the partnering firm(s) (Culpan, 2002). Strategic alliances are not a guaranteed formula for successfully competing in international business. Many companies believe that alliances are necessary to reduce the risks associated with operating in an uncertain and fast-changing global marketplace. Yet the nature of alliances is essentially one of a trade-off between risk-sharing and innovation. Risk-sharing may help ensure that a company obtains or maintains a competitive position in the short run, but innovation and the ability to adapt to changes in the world market are far more important in determining a company’s position in the long run (1993). In collaborations and alliances there may well be factors that remain hidden. Not all technologies are disclosed to the partners and some knowledge will remain confidential. For example, Coca Cola has many franchise bottlers whose job is to process and bottle the condensed Coca-Cola syrup, but the recipe for which is never disclosed. The bottlers understand this and make a profit by working at the lower end of the value chain (2001). Driver of Alliances The motivations for strategic alliances are complex and varied. The major external forces behind international strategic alliance formation are often interrelated and may stem from varying causes. The key identifiable current factors seem to be the globalization of markets and technologies, the shortening of product life cycles, and the consequent need for enterprises large enough to take advantage of scale and scope economies, and to be able to access adequate resources and competencies. Other factors exist in specific situations (1998). A motive behind the conclusion of strategic alliances is the need for speed in reaching the market or the need to compete in all major markets. In the economic world of the 1990s, first-mover advantages are becoming dominant, and often the conclusion of an alliance between a technologically strong company with new products, and a company with strong market access is the only way to take advantage of an opportunity in time. Alliances are the fastest means of achieving market goals to meet an opportunity, if the partners each have strong resources and competencies, but alone insufficient to achieve critical mass. A second reflects the continued importance of national boundaries: government preferences for 'local' firms in industries such as aerospace where an alliance with a national or regional firm may be a necessary requisite of sales to either the military or a national airline. The most important motivation for alliance formation, however, is the increasing cost, risk, and complexity of technology. The high cost of technological development has encouraged companies to collaborate to share both the costs and the risks of this activity. The need to limit financial risk is a further factor advancing alliance formation as opposed to merger/acquisition or organic development. Even the world's largest and most international companies can no longer 'bet the company' on the next generation of semiconductors or jumbo jets; in many industries the cost of a competitive R&D budget has risen to the point where it is no longer possible to 'go it alone' (1999). In other cases, collaboration may take the form of interaction between assemblers and component suppliers - a common situation in the automotive and electronic appliance sectors. Objectives Performance measure for strategic alliances is whether gains are achieved as a result of the collaborative/alliance venture. The companies exist to create value for stakeholders. Following the same logic, alliances should also be established to create value for their stakeholders. An alliance can only be justified when the value created by the alliance exceeds the value that can be created by the companies alone. The combined effort of working together of two or more business organizations should produce a result that is greater than the sum of each company’s individual effects or capabilities. Otherwise, there is no need for an alliance. That is, in an alliance context, synergy exists when the alliance partners produce greater value together for their given constituents (for example, shareholders) than those partners produce individually. From a synergistic point view, strategic alliances create joint economies of scope between two or more firms. By creating synergy across multiple functions or multiple businesses between partner firms, strategic alliances are supposed to facilitate competitive advantage (2002). One of the considerations in choosing whether to cooperate with other companies, and the form of that cooperation, is the level of transaction costs. In the absence of common interests and mutual trust, an alliance needs to provide each partner with adequate incentives not to take advantage of the other and with systems to monitor their respective contributions. There is a need to balance and reconcile cooperation and competition between partners (1998). Advantages Cooperation and alliances have become commonplace for a number of reasons to the benefit of the multi-national companies. For one, cooperative strategies can enhance market power. Corporations form business relationships with others for a wide variety of reasons, largely because the partner has some asset or can perform some function which the firm needs in order to pursue its own strategic objectives (1994). Alliances can tend to create a sheltered, secure and stable environment because of the members' monopolistic position. Alliances should increase the opportunity for initial mutual learning. Not only should current knowledge be passed on but each partner should acquire and generate new knowledge as the environment and technology changes (2001). The preference of companies to stick to what they do best, or their core competencies, means they must let others outside the organization, often abroad, help them with everything else. In this way, the best practice can be called upon irrespective of source in all aspects of the company's market offering. By bringing together different companies with unique skills and capabilities, alliances can create powerful learning opportunities. As alliances become more common, exploiting the learning potential of alliances will become more important ( 2004). Overall, alliances and collaborations enable companies to leverage the assets, skills and experiences of their partners for the purpose of enhancing competitive advantage (2003). Disadvantages Business alliances are anything but easy. They require extreme clarity in regard to objectives, strategies, policies, relationships, and people ( 1993). In a strategic alliance, both companies share some risk in the investments they have made, financially or otherwise, in the common activity (James, 1993). The problems associated with joint ventures and their high failure rate implies that great attention needs to be paid to the effective planning, negotiation, and management of such deals. While effective management of the joint venture process will never guarantee success, it will considerably reduce the likelihood of failure (1996). The following are potential pitfalls/drawbacks of strategic alliances according to leading authors in the field: coordination costs, erosion of competitive position, creation of an adverse bargaining position, mutual dependency, uncertainty regarding outcomes, division of authority and decision-making power, top management time and effort, risks, imbalance in benefits, imbalance in commitment and motivation, difficulties in achieving an agreement, communication problems, conflict between partners, retaliation from governments and competition, resource generation and redistribution, adjustments to environmental changes, developing new business to meet emerging growth opportunities, delaying with internal conflict, competitive compromise, dependency spiral and distrust and conflict ( 1996). An alliance can expose the partners to the temptation to steal each others' secret and run, so long as the alliance is of indeterminate length, the penalties for defection are high, and reputations matter (1998). The GM-Fiat alliance US-based General Motors (GM), the world’s largest automobile producer, formed a strategic alliance with the Italian automobile company Fiat in March 2000, creating an important partnership for the companies in two of the world’s largest automotive markets: Europe and Latin America. The alliance promises significant benefits for both GM and Fiat through synergies in the areas of material cost reductions, the leveraging of each group’s power train activities, efficiency in financial service operations, the cross-sharing of automotive technologies, and the effective leveraging of each other’s platforms ( 2002). In this alliance, GM acquired a 20 percent stake in Fiat while Fiat bought approximately 5.1 percent of GM. Fiat expects a cost leadership status based on the unique synergies provided by this alliance and the capability to draw upon the great R&D resources of GM to face the increasing technological challenges of this new century. Importantly, GM and Fiat will remain independent from one another and will continue to compete in markets around the world (2002). To realize its key strategic objective of strengthening its position in Europe and South America, GM is aggressively moving ahead to grow its global automotive business. By creating an alliance with a large and technologically strong company like Fiat in a capital-efficient manner, GM serves its objective. The alliance enables GM to capture significant benefits in the areas of platform and component sharing as well as cost efficiencies, thus providing a more competitive base for GM brands. It is an important illustration of the commitment of GM’s approach to grow profitably through the use of alliances. On the other hand, Fiat is aggressively creating key sources of cost advantage based on the combined strengths in Europe and Latin America and on the opportunities that both companies are seeking to capture the growth trends in emerging markets. This situation will enable Fiat to further accelerate with structural measures and ongoing profitability recovery. Fiat believes that such an alliance helps the company focus more clearly on serving the customer with a leaner organization. Both companies try to build upon each other’s strengths while continuing to operate autonomously and competing aggressively in the marketplace (2002). CONCLUSION The process of globalization forces multi-national companies to sell their goods and services to as many different places as possible - a practice which frequently requires help from other people and other organizations. Economic globalization, world competition and the consequent need of expanding markets beyond national and continental borders have driven and are still driving multi-national companies towards cooperation with other companies through mergers and alliances.

Critically assess the contention that multi-national companies (MNCs) must corporate in international business to survive.

Critically assess the contention that multi-national companies (MNCs) must corporate in international business to survive. INTRODUC...

International Business of Pizza Hut

International Business of Pizza Hut             Running a business is a difficult task for the management team, as well as, the owners. The managers and owners must face the challenges and the risks involved in managing a business, especially if it spans internationally. Pizza is one of the most popular foods in the world. Almost every people in this world, at some point in their lives, have tasted Pizza. Pizza marginalised the social status of the people, from class A to E individuals eat Pizza. Therefore, the demand for the food is high and businesses catering to this market have emerged over the past years. One of the most popular Pizza parlours in the world today is the Pizza Hut. The company is one of the oldest chains of restaurants in the industry today, having been in the food industry for almost 50 years. Pizza Hut continues to flourish in the business, adding more chains in every part of this world.             This paper describes the appropriate tools and techniques in the strategic analysis in order to examine the current trends and issues in the business environment of Pizza Hut. In addition, at the beginning of this paper a brief history pf Pizza Hut will be provided. In the strategic analysis of Pizza Hut different methods will be used. For the analysis of the impact of the external environment a PEST analysis will be used, in determining the mobility barriers and the strategic space, strategic group analysis will be utilised. Moreover, for the determination of the competitive advantage of Pizza Hut, Porters Five Forces Analysis will be used and competitor analysis will be used for the determination of the wherabilities of the competitors in order to assess the opportunities and threats in the industry.               Pizza Hut was established on June 15 1958 in Wichita, Kansas by two brothers  and . The brothers had the concept of opening a pizza parlour which was relatively new during the 1950s and the potential of this business was seen by the two. They borrowed around $600 from their mother to buy second-hand equipments and rent a small space to open the first Pizza Hut. The next year, the second store was opened in Topeka, Kansas and for only just a decade Pizza Hut already has 310 pizza parlours in various locations serving approximately a million people. In the year 1970, Pizza Hut was listed in the New York Stock Exchange under the symbol PIZ.  In 1986, Pizza Hut already had 5,025 branches in the United States alone with half of it franchised. During the same year, the company introduced the concept of deliver service; the total amount of the sales of the company in 1986 alone amounted to $2 billion dollars. In the years 1990, the total sales of Pizza Hut reached $4 billion dollars world wide. By the year 1996, the sales in the domestic market, which is the United States, have reached over $5 million dollars; the company had the largest share of the market in that year for 46.4%. In the year 1998, Pizza Hut launched their campaign, “The Best Pizzas under one Roof,” in celebration of the company’s 40th anniversary. (2007)             The restaurant of Pizza Hut has a particular concept and design which is a prominent red roof. The services of all the restaurants range from eat-in and carry out with approximately 60 to 90 seating for people.             Pizza Hut, no longer dominates the pizza industry, a number of restaurants have emerged, and thus the playing field for this particular industry have been more competitive in the past decades.  In order to keep up with the competition and remain one of the top players in the industry Pizza Hut must examine the trends and issues using the proper techniques and methods. Impact Analysis             The external environment plays an important role in the sector of business. According to the  (2005) the PEST Analysis is a method utilised in order to examine, identify and assess the external forces that have a huge impact in the performance of an organisation. In addition, the PEST Analysis is used to aid an organisation to obtain a better comprehension of the broader environment in the sector of business and can be used in carrying out the continuous process of environmental analysis. PEST stands for Political, Economic, Social, and Technological Factors. Political Factors- the policies and actions of the government wherein Pizza hut is located, whether national of local affects how the business is being conducted. The political and legal conditions that could affect the business of Pizza Hut are the policies of the local and national government towards business, if the government is more open in the establishment of numerous Pizza Hut restaurants, then more restaurants will be established. On the other hands, if the policies do not protect the business then fewer restaurants will be established. Another factor is the regulation of the business and the environment. If the business environment is not friendly with the company, then there is a possibility that Pizza Hut will not open a restaurant and instead move to a more business-friendly government. Economic Factors- this part is concerned on the overall perspective of the economy. The macro economy of a nation has a huge impact on the business such as Pizza Hut. Factors in the economy include the gross domestic product, the unemployment and inflation rates, the foreign trade deficit and surplus. If the overall economy of a country is not favourable, lesser people will franchise Pizza Hut because they will most likely loss a great amount of money instead obtaining profits. Social Factors- it is the most difficult from the four factors because the attitudes and beliefs of people are difficult to quantify. Aside from the attitudes and beliefs, demographic factors such as population and life expectancy are also important aspects in the analysis of the social factors. The influence of the values and beliefs affects the business of Pizza Hut, example in Muslim countries such as Egypt and Middle East; the recipes of the Pizza do not include pork. In the case of India beef is not served in the Pizza. The changing trends in the taste of the consumers also play an important role in the external analysis of the environment, if the current trend in food is Thai, Japanese or Vietnamese, therefore Pizza Hut can add an additional food such as Vietnamese or Thai soups. If the current trend in the society is being health conscious, thus consumers will demand that the foods be healthy. Technological Factors- the fast changes in technology nowadays has far-reaching effects in the businesses. The factors that have a huge impact are the research and development, internet and e-commerce, and new technologies. The research and development has effects on the business of Pizza Hut because through R&D new products are developed for the business, the internet and e-commerce also contributes to the technological factors because through them customers can give feedback regarding the products of Pizza Hut which can also aid in the research and development, and the service of the company. Strategic Group Analysis             According to  (1985) strategic group analysis is an analytical technique that gives insights in the various approaches utilised by the competitors in the marketplace and the resulting indirect indications for the performance of the organisation. According to Bensoussan (2003) there are five steps in which strategic group analysis can be applied and these are: Analyse industry structure- in the analysis of the structure of the industry wherein Pizza Hut markets, Porter’s Five Forces Industry Analysis can be utilised. Threats of New Entrants- new entrants in the pizza industry could be a threat in Pizza Hut because it can lessen the market share of the company. Usually new entrants offer cheaper products than the established; therefore more customers could be lured in buying their products which eventually would shift from Pizza Hut to these new entrants. The new entrants in this field usually offer cheaper prices of products; therefore Pizza Hut should create measures to counter the approaches used by the new entrants. Bargaining Power of Suppliers- the supplier power is the capability of the supplier to control the cost and supply of the raw materials used in the market. Pizza Hut uses raw materials in creating their products; in order to shift the power from the supplier to the company Pizza Hut can alter it in a number of ways, such as replacing it with substitutes that are cheaper than the prices of the suppliers, Pizza Hut should order in bulk so that the prices will be cheaper, and if Pizza Hut thinks that the suppliers are over-charging then shift to another supplier. Threats of Substitution- it exists when the demand for the product decreases because there are substitute products that performs better at a cheaper price. Although the Pizza Industry has low threats of substitutes, still it poses threats such as instant pizzas, and sandwiches that have pizza flavours. Bargaining Power of the Buyers- the power of the buyer can either be low or high. In low buyer powers the conditions of the market allows the companies or entrepreneurs to enter easily because of the wide markets. On the other hand, a high buyer power the entry to the industry could be hard. In the case of Pizza Hut, the buyers have low power because almost all the people love Pizzas and there arte only few players in the industry, therefore entering to new markets in different parts of the world is easy for Pizza Hut. Degree of Internal Rivalry- it is the final factor in the Five-Force theory, the degree of rivalry can either be low-level or high-level.  In the case of Pizza Hut the competition is in the high-level, although the market is wide, the degree of competition is tough, in order to gain the biggest market share, Pizza Hut must have aggressive advertisement and competitive pricing. Map the Strategic Groups- In mapping the strategic groups, Pizza Hut should list the relevant competitors into strategic groups, and the senior managers should look at the following: Mobility Barriers- the barriers to entry in the pizza parlour industry is relatively low, due to fewer barriers in the entry and the employees do not need to be highly experienced. Bargaining Power- the bargaining power of the suppliers and buyers in the industry is low, therefore the threats to these two is low, however Pizza Hut must still be aware on the changes that may occur. Threat of Substitution- Just like, the mobility barriers and the bargaining power, the threat of substitution is also low; therefore Pizza Hut must also be aware with the entry of the substitutes so that they could create measures to counter it. Rivalry from other strategic groups- the rivalry is stiff in the case of the food industry and in order to come out on top, Pizza Hut must develop attractive menus, as well as, prices so that the company could be one of the top players in the industry. Gauge the Strength of barriers between groups- gauging the strength of the barriers has five steps in which Pizza Hut must follow; first is to determine the factors that prevent companies in a strategic group to compete with companies in another group. Second, Pizza Hut must identify the strength of bargaining power between the buyers and suppliers and the strategic groups and the industry. Third, identify the threats of substitutes between the strategic groups. Fourth, is to examine the strengths of the rivalry between the strategic groups. Last, is to utilise the Porter’s Five-Forces Analysis on strategic groups. Understand the strategy of the firm vis a vis strategic group’s interaction- Choose the membership of Pizza Hut in the prime strategic group. Use the Porter’s five forces model of the strategic group in which Pizza Hut belongs and assess the weaknesses and strengths of the firm. Determine the strategic group that will provide the greatest opportunity to utilise the strength of the company and decrease the weakness of Pizza Hut. Identify the appropriate strategic responses- in identifying the right response to the evolution of the food industry, Pizza Hut must analyse the strategic opportunities and threats that come with the changes in the industry. There are two types of strategic response that could be use in order to meet the challenges and these are mildly proactive and intensely proactive.             Based on the analysis the positive scenarios that could be seen in Pizza Hut is it will penetrate more markets in various parts of the world and the company will gain more shares in the market. However, there are also negative scenarios in the future such as more competition from the new entrants in the market, substitutes would be created in the future, and suppliers may be fewer in the near future.                          International Business of Pizza Hut             In businesses changes always occur in order to cater to the different tastes and trends in the environment. In order to address the changes in the business, strategies are used by the managers and owners so that it could aid in shaping the decision-making and strategic thinking process. Pizza Hut is one of the well-known international businesses in the world today. Almost every country in this world has at least two or more Pizza Hut restaurants. The company has been in the business for almost 48 years and it is considered one of the key players in the industry. For the past years, Pizza Hut has faced a number of challenges over the past years, from new entrants in the market that pose threat in the company, to the shifting tastes of the consumers and the company have surpassed and continues to counter those challenges and threats.             This paper examines the appropriate tools that determine the strategic capability of Pizza Hut.  The techniques the will be utilised in this paper are the resource audit for the analysis of the value and extent of the use of assets, Value Chain Analysis for the examination of the linkage of the value adding activities in order to develop sustainable competitive advantage and core competencies to identify the extent of the exploitation and protection in the business.               It is difficult for a company, like Pizza Hut, to maintain its status for over 40 years and remain one of the top players in the food industry. The restaurants that were established at the same time as Pizza Hut have disappeared completely or have been acquired or merged by other companies. The companies that were not able to withstand the challenges in the business environment were the outcomes of the failure to adapt in the changes in the trends and tastes of the consumers, as well as, the proper utilisation of the techniques in strategic capability and management.             According to   (1996) strategic management is defined as a set of decisions and actions that could lead to the development of efficient strategies that could aid in attaining the objectives of the company. On the other hand, according to  (2007) strategic capability is the ability of an organisation to deliver the future value of their products and services. In the analysis of the strategic capability of Pizza Hut the following methods will be used: Resource Audit              (2007) defined resource audit as the one that determines the available resources to a business. The resources for a business can be categorised in to different categories:             Financial Resources- it is the ability of a company to finance the strategy that it will be utilised. In the case of Pizza Hut since it is an established company and has been in the industry ever since it began, it already has significant investments in its new products, capacity for production and other factors concerning the financial capability of the company. In auditing the financial resources of the company it includes: Existing finance funds- which is the cash balances of Pizza Hut, the overdraft of the bank and loans, the capital of the stakeholders, the capital that is already invested in the business and the creditors. Ability to raise new funds- in raising added funds by adding more stakeholders in the company, Pizza Hut must continuously sustain their reputation of having a good business and management team, the relationship between the investors and lenders to Pizza Hut must also remain strong, and the company must remain attractive, especially to the consumers and the stakeholders. If the company attracts more customers in their restaurants then more stakeholders will invest in Pizza Hut.             Human Resources- according to Tutor2u the human resources in the business is the skills-base of an organisation, such as the skills possessed by the company. In auditing the human resources of Pizza Hut, these factors must be considered: Existing staffing resources- Pizza Hut must identify the number of staff functioning in a particular area of the business, the location of the staff, the qualifications and skills. In a business wherein Pizza Hut is operating having a good staff is important in ensuring the quality of products and consumer loyalty. Aside from the existing staff, Pizza Hut must also keep in track the wastage of incompetent staff and must assess these people. The standard of training for particular jobs in the company is also essential in assuring that the employees will deliver excellent products and services to the consumers. Every now and then Pizza Hut must assess their intangibles such as the culture of the business and determine if it still fits the business strategy or not. Changes required to resources- in the human resources of Pizza Hut changes occurred alongside the utilisation of new strategies in business such as new products and locations. In new business strategies the added human resources are required, in the case of Pizza Hut, every time a branch or franchise is opened in various locations in the world, human resources are being added. The human resources in the new strategies of Pizza Hut could be sourced through employment.             Physical Resources- the physical resources are the operational resources used by organisations to deliver the business strategy and these include: Production Facility- in the production facilities of Pizza Hut it includes the location of the restaurants and the maintenance and investment of each store whether it is a branch or a franchise, another is the process of production of the food the quality of the process of pizzas and the methods used by the Pizza Hut restaurants all over the world. Marketing Facilities- the marketing of Pizza Hut and distribution is involved in the marketing facilities. Pizza Hut was the first restaurant to launch the service delivery to consumers, therefore, adding to the profits of the company. The company also employed advertisements on television, print, and radio. The distribution channel utilised by the company is through person-to-person wherein customers interact with people, however with the advancement in technology and the internet, people can already order online via their website. Information Technology- Just like mentioned above, Pizza Hut is using technology particularly the internet in interacting with its customers, through the internet, consumers can give feedback and order pizza online.             Intangible Resources- these resources cannot be easily distinguished in a business especially when determining how to deliver the business strategy it includes the following: Reputation- Pizza Hut has a reputation of establishing the first Pizza Parlour in the world and the company already has a good track record in the business, therefore, the suppliers and the consumers will probably support if the company changes some of the aspects in the business. Brands- having a strong brand is important in the success of the growth strategy. Pizza Hut was able to do that and the company was able to penetrate in other markets aside from the United States. The brand of Pizza Hut is very strong wherein individuals all over the world have associated Pizza with Pizza Hut. Value Chain Analysis             According to  (2007) value chain analysis is a helpful tool in creating and developing the best possible value for the consumers, at the same time, maximising the profit through using the best route possible. Moreover, according to(2007) it describes the activities that happen in the business and associates it to the analysis of the strength of the business in the competition, the work of Michael Porter stated that the business activities can be grouped into two and these are:             Primary Activities- the primary activities are those directly concerned in the development and delivery of the product. In the value chain analysis the activities that are involved are: Inbound logistics- in inbound logistics in firms such as Pizza Hut the activities are concerned with receiving and storing the sourced materials such as flours and cheese used in making Pizzas. Operations- in Pizza Hut the operations are when the raw materials are converted into Pizzas, and other foods that are in the menu of Pizza Hut. Outbound Logistics- outbound logistics activities in Pizza Hut include the delivery of the Pizzas to the customers and serving the Pizza and foods to the consumer dining-in the restaurants. Marketing and Sales- in marketing the products of Pizza Hut, the company uses advertisement in television, radio and print in order to inform the existing and new products of the company, it also includes prices on new products. Most of the time, Pizza Hut offers affordable prices on its new products in order to entice the consumers to try it. Service- the service does not only mean during marketing and selling the product but also in sustaining the quality of the products. In the case of Pizza Hut, maintaining the taste of the Pizzas and food served in restaurants is an important aspect in the business because it is a key to the loyalty of the consumer. Consumers will buy the product, even if it the prices were raised, as long as the taste and quality is sustained.             Secondary Activities- these are activities not directly involved in the production but aids in the efficacy of the production. Support activities include: Procurement- it is concerned in the acquisition of the raw materials from the suppliers, in the case of Pizza Hut the products are sourced domestically or locally and the procurement managers negotiate the prices. Human Resource Management- the activities mainly concerned in recruiting, training and rewarding the employees of the company. In Pizza Hut, most of the employees are recruited and trained for the specific jobs they applied for. Technology Development- in this activity, the managers utilised various technologies in assessing the status of every Pizza hut restaurants. Technology development also enables Pizza Hut to identify the current trends in the industry through customer feedback and determine the performance of employees, as well as, the restaurant.  Infrastructure- it does not only mean the building that is used by Pizza Hut but also functions such as finance, quality control and senior management. Steps in Value Chain Analysis The first step in Value Chain Analysis of Pizza Hut is to divide the organisation into important activities under primary or secondary, wherein Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and service. And the secondary activities are procurement, human resource management, technology development and infrastructure.The next step is adding value in the products through cost leadership strategy or differentiation strategy. Pizza Hut could invest more in creativity, marketing and engineering skills, and the research and development of new products. Last, is to identify the strategies that can be utilised wherein it gives emphasis on activities in which Pizza Hut can gain and sustain competitive advantage. Core Competencies             According to  (2002) core competencies are the abilities that are crucial in attaining the competitive advantage of the business. Core competencies were developed by  and  according to them there are three factors that would aid in the identification of the core competencies of the business and these are: Provides potential access to a wide variety of markets- Pizza Hut was able to enter to various markets all over the world because Pizza Hut was able to develop a clear and distinctive brand that give emphasis on a defined group of customers, which are the Pizza and fast-food lovers. Pizza Hut also developed new type of service which is the delivery service to households, in addition to the aggressive marketing campaign.     Makes a significant contribution to the perceived customer benefits of the end product- Pizza Hut was able to successfully capture the market in Pizza parlours because the company was the first to establish the delivery service, Moreover, aside from Pizzas, Pizza Hut also introduced variety of foods in their menu lists making the food offering more diverse. Pizza Hut has an efficient and reliable service delivery, may it be in the restaurant or not. Difficult for competitors to imitate- although the business can be easily copied, Pizza Hut remained on top due to the excellent quality of the products at affordable and competitive prices.             Pizza Hut has its share of strengths and weaknesses. The strengths include brand recognition because Pizza Hut has been the pioneer in the industry; strength is that Pizza Hut restaurants offers full service and delivery services. Because Pizza Hut has restaurants the company could be able to market to various segments of the society. However, the restaurants can also be the weakness of Pizza Hut because the costs would be doubled than its competitors that have no restaurants. Due to the high costs of restaurants, the prices would also be higher than others.

International Business of Pizza Hut

International Business of Pizza Hut Running a business is a difficult task for the management team, as well as, the owner...