International Operations in Singapore-Free-Samples for Students

Questions: 1.Identify a potentially attractive target Market for the company's future International expansion strategy. 2.Discuss your rationale for the selection of your chosen Market. 3.Critically analyse the opportunities and threats in the firm's industrial environment in your chosen Market. 4.Critically analyse the strengths and weaknesses in the firm's Internal Environment. 5.Evaluate the various modes of entry available to the firm and recommend with justification based on the findings of your analyses. Answers: Introduction In the present scenario, development of effective strategies has become very important for the overall success of a business enterprise. It can be stated that companies operating at international level needs to develop strategies at regular intervals in order to stay competitive in the marketplace. In addition to this, organizations are also required to carry out changes in their international strategies at regular intervals as per the changing macro and micro environment of a nation. The present report is based on Tesco which is a UK based chain of grocery store, operating in different countries of the world. This report explains the potential market which can be used by the selected business organization for its international expansion in the future. Apart from this, the threats and opportunities existing in new selected international market is also highlighted in the present research. 1.Identification Of A Potentially Attractive Target Market With The Help Of Pestle Analysis Latvia Pestle Analysis Latvia is a country located in Northern Europe, more specifically in the Baltic region. Its neighbor countries are Russia, Lithuania, Estonia and Belarus. At present, Raimonds Vejonis is the president of country who has been elected in the year 2015. The political environment of Latvia is somewhat stable for doing business (Dobele and Pietere, 2015). However, it can be critically argued that its tension with Russia has really grown up in the past few years. For a brand such as Tesco, this tension can have great impact on overall sales and profitability. On the other side of this, it can be explained that Latvia is operating with an open economy which is very good for business growth. The nations GDP has grown by 1.6 in the first quarter of the year 2017 (Latvia GDP Growth Rate, 2017). An average growth rate of 4% per year can be termed as a positive sign for a brand like Tesco. It will help the company to attract more customers and maintain adequate volume of sales and profits in long run. Latvia is also facing issues linked with society and this can have impact on the operations of company such as Tesco. It can be stated that all sort of discrimination is banned in the country (Stivrins, Brown, Reitalu, Veski, Heinsalu, Banerjea and Elmi, 2015). However, women still face discrimination in context of hiring and payment. This means male candidates are being given more preference over female candidates. The society is also facing issues associated with minorities who has not received the citizen of Latvia till date. In terms of technological advancements, the country is growing at a very good pace and at present there are fifteen institutes for research and development. Adequate support from government is received in new product development and this is a good sign for Tesco. The legal environment of Latvia is very strict and every business enterprise is requi red to adhere to all the laws linked with labor and employment (Macroeconomic and Political Stability, 2017). Workers are not allowed to exceed the daily working hours which are eight hours a day and total of 40 hours in a week. At the time of carrying out its international operations in Latvia, it will be required by Tesco to adhere to all the laws strictly. In terms of environmental issues, water and air are the two major challenges which have been faced by the nation (Reeves, McKee, Gunnell, Chang, Basu, Barr and Stuckler, 2014). Apart from this, majority of Latvias forest and natural resources are getting destroyed because of acid rain. Therefore, Tesco may face issues linked with environment in future if it selects to operate in Latvia. Singapore Pestle Analysis In the last few decades, amazing economic growth rate has been achieved by Singapore. Further, there are wide ranges of factors which have contributed in attaining such economic growth. In terms of political environment, it can be stated that the politics in Singapore is very stable and this has helped many businesses to grow in adequate manner (Ho, 2014). For a company like Tesco, low political risk can be very beneficiary for achieving higher profits in the marketplace. The country operates with a vibrant and free market economy and this is a positive sign for organizations. An environment which is free from corruption can support Tesco to establish itself easily in Singaporean market. It will also help the organization in future growth and expansion. On the other hand, societies in Singapore are rich will cultural values and belief. Purchasing power of people in the country is also very high and this will help Tesco to sell its products and services easily. The rate at which technological advancements are being carried out is also very high and this can help Tesco in operating effective in Singapore. Technology will assist the brand in developing new products, interacting with people in the market and attaining higher degree of customer satisfaction (Teoh, Abhishek, Lundburg and Carter, 2013). The laws related to labor, employment and working hours are very strict and the brand will need to take care of the same. Any violation in laws will resulted in affecting the brand image and overall operations of Tesco. Apart from this, the company will also need to ensure that its operations and activities will not have any negative impact on the environment. The lack of water resources and increasing air pollution are major environment issues which have been faced by Singapore (Rose, Prager, Chen, Chatterjee, Wei, Heatwole and Warren, 2017). Taiwan Pestle Analysis It can be stated that at present the political environment of very stable as it has been now take care by Koumintang Party. Furthermore, the part y is allowing foreign companies to enter the market and assists in development of the economy. In terms of economic analysis, the country has performed economically well in the last few decades and has provided adequate growth opportunities to businesses (Harrison, 2013). The rate of employment is nearly about 4.2% and majority of people are employed. At the time of carrying out its operations in Taiwan, Tesco will be required to make sure that it adheres to its social culture which is generally influenced by China. The legal environment for doing business in Taiwan is a bit complex and the brand may face issues linked with tax and legal formalities (Smith, ed., 2014). On the other hand, Tesco will be also required to make sure that its working policies and practices complies with the environment laws which has been developed by the country. Any kind of violation in these laws may result in creating obstacles for Tesco in terms of doing business in Taiwan. Deeper analysis of selected Singaporean market According to the report which has been developed by competitiveness survey, it has been analyzed that the market of Singapore is considered as one of the best and most effective markets to do business. There are adequate businesses opportunities present in the country and the market is also known for its international business position. It can be explained that there is wide range of factors which have contributed in making Singapore a popular market for doing business. For example, the country is located in the middle or heart of Southeast Asia and such kind of strategic location helps the country to attract international investments from all across the world. An international organization operating in Singapore has the opportunity to connect with more than 3 billion people only by taking a flight of few hours. Furthermore, the infrastructure and basic amenities in the above-selected market are so effective that businesses are able to carry out their day to day activities with ease. The environment provided by Singapore in terms of doing business is another major factor which has resulted in making the market so popular. From the research carried out, it has been analyzed by the researcher that the policies related to immigration are very flexible in Singapore and this provides the market with a competitive advantage over other international countries. It is not difficult for companies such as Tesco to set up stores in Singapore and expand its market share internationally. The above-selected market is also having a high number of free trade agreements which will support company such as Tesco to carry out its business activities easily. The customers in Singaporean market are open-minded and usually, prefer straight talking. This will benefit Tesco in terms of an understanding culture of the country and develop services/products according to the same. Apart from this, the company will not face issues linked with human resources hiring and recruitment in Singapo re. The rationale behind this is that the selected market is having one of the best professional workforces in the entire world. The reason why Singapore market is more suitable as compared to the other two markets is that here Tesco will not require investing large resources in terms of training and development of employee as the workforce here is already skilled. 2.The Rationale Behind Selecting Singapore Market For a brand like Tesco, it is very beneficial to expand its operations in Singapore. There are wide ranges of factors available in the country and these factors can assist the company in achieving long term growth and profitability. As compared to other nations of the world, Singapore has largest per capita foreign reserves. Furthermore, the country also has best education facilities and this can help Tesco in acquiring talented and effective human resources. Skilled and talented labor is easily available in the country and the brand will not face issues linked with recruitment and selection of employees for its stores in Singapore. It can be asserted that if the brand opts for expanding its international operation in the above mentioned market, then it will be always available with pool of skilled, effective and talented personnels (Research Bulletin, 2017). The company will not face issues in terms of registration and doing business in Singapore. The country is completely free from all sorts of corruptions and this can be an added advantage for Tesco if it selects to choose Singapore as a market for international expansion. There are proper channels developed for carrying out documentation, paper work and registration. In addition to this, Singapore has different channels for government fund which can be used by Tesco for funding and establishing its business. Other than this, the growing economy of country will support Tesco in acquiring higher market share and carry out its operations easily. At present, the brand is facing intense competition from brand such as Asda, Lidl and Aldi. Therefore, it is no longer easy for Tesco to attract customers and acquire high market share in UK. The organization will also get advantage of tax benefits which has been provided by the government of country. However, it can be critically argued that the brand will need to make sure that it follow polices, laws linked environment and business regulations. At the same time, challenges related to acquiring land will be faced by the company. The geographical area is less and because of this reason the prices are very high. In addition to this, the land is not easily available and this can create issues for brand such as Tesco at the time of expanding its operations in Singapore. However, it takes only 12 days to open a company in Singapore because the business environment and support from government is very good (Grocery Retailers in Singapore, 2017). Transparent systems are another major benefit which Tesco will have in doing business in the above mentioned country. Singapore is an open marketplace for many UK based organizations and this can be an added advantage. At present government is investing money in small cities of the country. The money is generally invested with objectives of research and infrastructure development. Large number of corporate buildings and business parks can be easily found in the country. Another key reason why Singapore is more beneficial in terms of doing business is that it can provide Tesco with an opportunity to link itself with other Southeast Asian countries (Why Choose Singapore? 2017). On the other hand, the supermarket retailer will need to take care of the fact that the interference of government in entire process of decision making is very high. This means that at the time of expansion, implementing strategies and innovations, the organization may require to take approval from the government. Along with this, Tesco will be required to respect the values, belief and culture of Singaporean people at the time of carrying out its business operations. The selected grocery store may be required carrying out certain changes in its products and services as per the culture and need of people living in the country. However making changes in products and following the laws will help the company in carrying out its business operations in desired manner. Thus, it can be stated that there are wide range of benefits available for Tesco in terms of doing business in Singapore. 3.Opportunities And Threats In The Firms Industrial Environment In order to successfully operate in the new market of Singapore it is necessary for business to carry out industrial analysis as with the help of this opportunities along with threats can be easily determined. Company like Tesco is planning to enter into the market of Singapore for which proper analysis is required to be done with the help of porter five forces. Through this model it can be easily known what the ranges of external factors affecting business operations are. No doubt, Tesco carries out its operations in retail sector where large numbers of challenges are being present which prevents business from accomplishing its desired goals and objectives. Porter five forces as one of the model highlights the range of external factors affecting business performance and it takes into consideration bargaining power of buyer, supplier, threat of substitute, competitive rivalry etc. Below shown is the applicability of porter five forces on company. Bargaining power of buyer: This factor highlights the overall power of buyer to dominate the market. Tesco carries out its operations in the market where competition level is high and due to this reason bargaining power of buyer is high (Schlegelmilch, 2016). In case if any single product has to be purchased by consumer then large numbers of alternatives are present and due to this reason company has to set moderate prices for its products in the market of Singapore. In case, when products contains some unique attributes then in such case switching cost is lower and it becomes possible for buyer to switch from one brand to another. Apart from this, it has been witnessed that consumers are easily attracted towards products which have low price and this becomes beneficial for organization in every possible manner. Bargaining power of supplier: In the retail market suppliers do not holds much power to dominate the market and their bargaining power is low. Individuals who are supplying goods are inclined towards food and grocery retailers and they have fear of losing contract with large supermarkets (Lapoule and Colla, 2016). So, this can assist Tesco to operate efficiently in the market of Singapore. Threat of substitute: In case of Tesco, threat of substitute is high as the products offered by company are already offered by other retail chains in the market of Singapore. Further, companies like Jasons market place, U Star supermarket, Yes supermarket etc are offering grocery products and they have large supermarket chain. In short, the substitutes of Tescos products are easily present in the market and the overall level of threat is also high. This hurdle can adversely affect position of business in the new market as company is new to this market and other players are well established. In order to deal with this factor it is necessary for business to highlight the basic attributes in the products so that customers can be attracted easily (Morden, 2016). Threat of new entrants: It is low in case of Tesco as company conducts its operations on wider basis and to operate at such big level large investment is needed. Apart from this, other companies operating in the market of Singapore also have wide network and they have allocated larger funds to set up their business. So, initially in case if any small business wants to enter into the retail market of Singapore then in such case there will be no threat to company like Tesco. Moreover, if any well known chain wants to enter into the market then it will act as hurdle for the business. Rivalry among existing firms: In the retail market of Singapore well established players are present in the market such as Giant, YES supermarket, Ang Mo supermarket etc. Due to this basic reason rivalry among existing firms is quite high in the market and it is a kind of situation linked with perfect competition. In near future, it can act as hurdle for Tesco as company has to deal with the issues at the time of earning higher profits and market share. In short, every firm is offering substitute of each other and this has acted as hurdle where organizations are not able to focus on accomplishment of their goals and objectives (Bischoff, 2016). The overall Porter five forces model has shown that some factors are in favorable and unfavorable for business in the retail market of Singapore. Tesco as one of the brand name can allow business to attract customers in the new market. Moreover, companys core competencies along with other type of strengths can support in dealing with the range of issues being present in the business environment. Due to presence of high level of competition it would not be possible for Tesco to dominate the market and for the same business is required to focus on marketing, branding and other areas which are associated with its development and betterment. No doubt, the external environment is full of challenges but through corrective measures and actions it will be possible for company to survive in the new market for longer period of time. 4.Strengths And Weaknesses In The Firms Internal Environment Internal environment of any business takes into consideration strengths along with weaknesses which needs to be considered necessarily especially at the time when business enters into new market. For conducting internal analysis of Tesco VRIO framework has been applied with the help of which key elements have been taken into consideration which are valuable, rare, cost to imitate and organized to capture value. Valuable: This factor is associated with the range of resources which are valuable for business (Zurabovna, 2016). Large numbers of resources are being present with Tesco which are valuable and they have supported in providing competitive edge to the company over its rivalry. Human as one of the resources is valuable for Tesco where all the employees present within workplace supports business to survive in different markets. They are assigned responsibility to develop various strategies which in turn allows delivering best products and services to the customers as per their expectations. Technology as one of the resource is also valuable where Tesco carries out overall operations with the help of advanced tools and this leads to higher profits. Rare: These resources are the real core competencies of the business which allows performing efficiently in the market. Further, Tesco has some rare resource such as its global presence in the market which is quite strong. Products and services of Tesco are worldwide famous which allows entity to attract large number of customers in short period of time. Moreover, in terms of quality company offers superior quality products to its target market which it may not be possible for other supermarket chains operating in the market of Singapore. Utilizing rare resources in effective manner is necessary for company like Tesco as through this business can efficiently work for longer period of time and in turn its target goals can be accomplished easily (Akter, Wamba, Gunasekaran, Dubey and Childe, 2016). This can become one of the main reason behind success of entity in the market and can act as development tool in every possible manner. Inimitable and non substitutable: This factor highlights that some resources are present with company whose substitutes are not present in the market and this provides direct advantage to the business (Pawliczek and Rssler, 2016). Human, financial, technology as the key resources present with Tesco are non substitutable which other companies operating in the market may not have. Apart from this, other firms may not buy such resources and this directly provides advantage to the business. Moreover, it is necessarily required for Tesco to organize all these resources in appropriate manner so that its long term performance can be well maintained with the help of this. Tesco operates with advanced tools and this has simplified the major operations being carried out by company. Apart from this, the well maintained brand image in the market which other companies may not have provides direct advantage to the company. Organized to capture value: It is the last factor in framework which states that a business is required to organize or manage its key resources in proper manner so as to deliver high value to the target market. Global market presence is one of the major element which needs to be organized in proper manner with the motive to capture value. Along with this, human as one of the resource needs to be organized in appropriate for effective working in the market of Singapore. This can surely provide long term benefits to Tesco in the new market and can act as development tool. So, the applicability of VRIO framework has shown the internal strengths of Tesco which can be easily utilized in the market of Singapore. On the other hand, it is necessary for company to prepare effective strategies to overcome with its weaknesses as it can hamper performance in the new market. Moreover, through proper utilization of strengths business can easily grab opportunities present in the business environment. Strong brand presence at global level will surely allow to deal with the issue of high competition level in the market where Tesco can easily become leader in the Singapore market. 5.Evaluate The Various Modes Of Entry Available To The Firm In order to successfully enter into the new market it is necessary for business to adopt appropriate entry mode which can support in enhancing profitability level along with the market share. Different market entry modes are present which involves exporting, licensing, joint venture, direct investment etc (Hollender, Zapkau and Schwens, 2017). It depends on every business which mode to choose as it is necessary to consider cost along with the level of return obtained by choosing mode. In case of Tesco, as organization is planning to expand operations in the market of Singapore and in turn case the most suitable option for company is direct investment. The main reason due to which this mode is appropriate for business as Tesco has strong presence in the global market. Further, business is financially strong due to which direct investment is possible. Tesco has direct knowledge of the local market where company operates and is well aware about the customers taste and requirement. This will support in the market of Singapore as organization can apply knowledge and expertise in the new market also. No doubt, organization may not have proper knowledge regarding customers preferences of the new market. Therefore, conducting market analysis is must so as to satisfy customers requirement. Tesco is specialized in large number of areas such as in new product development, understanding need and requirement of target market etc. So, this can encourage in attracting new customers in short period of time and in turn products of Tesco will be popular in the market of Singapore also. But the key challenging task is to manage all the crucial resources in the new market such as human, technology etc which are necessary to conduct operations (Surdu, Mellahi and Glaister, 2016). Tesco is not well aware about the market of Singapore and due to this reason gaining more insights and information is must. Further, it is necessary for business to hire local residents as they can provide reliable information to the business regarding customers taste and preferences. Apart from this, there is no doubt that this foreign entry market requires high investment but on the other side return level will also be high which is beneficial for company in every possible manner. Moreover, joint venture as one of the strategy which can be undertaken by Tesco where company can work jointly with other local firm operating in the market of Singapore. Through this type of market entry mode Tesco can easily grab large number of benefits which involves profits at low cost. Risk associated with carrying out business in the market is directly shared when this type of market entry mode is being chosen (Schellenberg, Harker and Jafari, 2017). Further, Tesco can build better plans with the help of local firm operating in Singapore. Core competencies of both the companies can allow in gaining competitive edge and in turn long term benefits can be obtained easily. Along with this, shared cost, expenses, benefits are the other advantageous of this entry mode which can be beneficial for Tesco in every possible manner in the new market. Related market entry method For a company such as Tesco, entry method such as direct investment will be more suitable. The rationale behind this is that this method will help the selected business enterprise to have complete control over areas such as strategy formulation and decision making. In addition to this, the direct market entry will also support Tesco in interacting directly with customers and getting reviews about products/services in the new market. Another reason why entering directly into the market is appropriate is that it will help the selected organization to protect its goodwill, patent, and trademarks in more effective manner. Theories of internationalization Internationalization can be defined as the process in which companies carries out certain changes in their products and services with an objective to make them adaptable in different cultures and nations. The two different theories of internationalization are explained below as: The opportunistic growth theory of international expansion- This theory lays emphasis on making out the best possible of advantages of circumstances and opportunities available in front of business. The application of this theory can help grocery retailer such as Tesco to enhance its overall ability to react and respond to opportunities available in the marketplace. Goshal and Bartletts Model of innovation process- This model of internationalization provides different types of structure which can be used by international business (Hollender, Zapkau and Schwens, 2017). The structures are classified into four different categories which are global for home, local for home, centralized and decentralized. For a company like Tesco, decentralized structure is beneficial as it lays emphasis on developing a culture and system as per the need of local market. Conclusion From the above carried out study, it can be concluded that macro environmental analysis of a country is very important before carrying out international expansion. It helps businesses to identify potential opportunities and threats available in the marketplace. On the basis of above research, it can be inferred that it is beneficial for Tesco to expand its international operations in Singapore as compared to companies such as Taiwan and Latvia. The reason for this is support from government, low tax rates and strong business culture present in the country. References Books and Journals Akter, S., Wamba, S.F., Gunasekaran, A., Dubey, R. Childe, S.J., 2016. How to improve firm performance using big data analytics capability and business strategy alignment?.International Journal of Production Economics,182, pp.113-131. Bischoff, A.L., 2016. Porters Five Forces. Innovation through Business, Engineering and Design. Dobele, L. and Pietere, A., 2015. 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