Changing Business Environment

Questions: 1.How would you describe Tesco's competitive environment in the uk? 2.Why do you think UK retailers were generally slow to venture abroad untill the 1990s? 3.How would you describe Tesco's competitive environment in its international markets? Answers: 1. Competitive environment of Tesco in UK market Tesco is the most popular supermarket in United Kingdom with greatest market share of almost 31% till June 2012. It is the market leader of the supermarkets as well as the UK grocery market. It can be said that after Walmart and Carrefour in terms of annual sales, Tesco ranks third in the global market of grocery and supermarkets. However, Tesco has been considered as one of the members of the Big Four. The four giant supermarkets of United Kingdom are Tesco, Sainsburys, Asda and Morrisons (Yoder, Visich Rustambekov, 2016). However, apart from the supermarkets, there are many popular departmental stores and convenient stores that are considered as direct competitors of Tesco in Unite Kingdom market. They are Asda, Lidl, Waitrose, Aldi, etc. In the competitive environment, it is seen that Asda has a market share of 17%, Sainsburys has a market share of 16.6% and Morrisons possess 11%. However, the cost leadership strategy of Tesco along with the quality of goods is the most important aspect of attracting more customers to the company. The natures of the consumers of United Kingdom are known to the company which is the reason of success of capturing the greatest market share in United Kingdom (Gollnhofer Turkina, 2015). 2. Growth of UK retailers until 1990 After getting a grip in the UK market, Tesco is trying to expand its branches outside the country. The company has adopted organic strategy as a growth strategy in the country as well as outside the country. It is seen that during 1990s the company has started its international expansion slowly initially in Ireland and other countries of continental Europe. It can be said that the case study illustrates the fact that in 1990s, Tescos international ventures was acquisition of a French retail brand in northern France known as Catteau (Dimitrova, Rosenbloom Andras, 2014). However, Tesco soon realize that there is a tough competition in the French market which is saturated in nature. The reason behind slow growth in the 1990s is the lack of research regarding the shopping behavior of the consumers as well as the growth of the competitors in the market. Apart from that, there are other European companies that are faced many complications while they have faced loss in the sales as well as capturing customers in the market. Companies like Marks and Spencer has created a loss in the market in terms of profitability. It is the reason also Tesco is taking decision of slow growth outside the UK market (Zhao, 2014). 3. Competitive environment of Tesco in international market Global supermarket retail industry is competitive in nature. It is seen that Walmart is the market leader of the supermarket industry in the world. However, Tesco ranks third in the world in the grocery retail sector. Competitive environment in international markets like in Western Europe and United States is very high. The shopping habits of the buyers are different from that of other countries. Apart from that, the shoppers usually shops from domestic supermarket retail chains rather than international supermarket brands in terms of grocery and daily use items (Yoder, Visich Rustambekov, 2016). On the contrary, the market in Central Europe and Asia are quite growing and the people are ready to buy products from the international brands. Tesco has its business operations in many countries of Asia and Central Europe that are responsible for providing business to the company. The case study portrays that Tesco is making losses in the branches of United States; hence they are on the v erge of closing their US operations. The saturation of the Asian market is less than that US market and Western Europe market (Eckman et al., 2015). References Dimitrova, B. V., Rosenbloom, B., Andras, T. L. (2014). Does the degree of retailer international involvement affect retailer performance?.The International Review of Retail, Distribution and Consumer Research,24(3), 243-277. Eckman, M., Sakarya, S., Hyllegard, K., Borja, M. A. G., Descals, A. M. (2015). Consumer receptiveness to international retail expansion: a cross-cultural study of perceptions of social and economic influence of foreign retailers.The International Review of Retail, Distribution and Consumer Research,25(3), 260-275. Gollnhofer, J. F., Turkina, E. (2015). Cultural distance and entry modes: implications for global expansion strategy.Cross Cultural Management,22(1), 21-41. Yoder, S., Visich, J. K., Rustambekov, E. (2016). Lessons learned from international expansion failures and successes.Business Horizons,59(2), 233-243. Zhao, S. (2014). Analyzing and Evaluating Critically Tescos Current Operations Management.Journal of Management and Sustainability,4(4), 184. Changing Business Environment Question: Disucss about the Changing Business Environment. Answer: Introduction: International trade has become an essential component of any business organization that wants to a substantial growth in the age of globalization. It can simply explain as the increase of rate and expansion of the interdependence of economic and business activities across national boundaries (Wood Wilberger, 2015). Whereas, International Business can be expire as the business activities and transactions of resources, products, services, skills and knowledge without affected by physical boundaries. For the customers, globalization or internationalization of business means, more product options to choose from with varied quality and pricing as well as an increasing hazy identity and source of the products or service. With the expansion of international business, it increased the dependency of economic and business behavior across physical boundaries. International business organizations gain competitive advantage, as well the reason for, the rising interdependence among economies and forming one global economy. One of the common limitations against International Trade and globalization is it deprives countries of their autonomy and sovereignty. In this essay, the author is analyzing the impact of cultural difference have when a business organization considers penetrating a new international market. Based on the analysis the study tries to explain the cultural factors, which act as a barrier for new business expansions on foreign markets. Culture as a barrier in international business ventures: In the age of technologically innovated world environment, the business environment is changing in a successive manner, and the effect cannot ignore. Therefore, to recognize and manipulate consumers' want and desires, international business organizations should be aware of the different cultures. The term culture can briefly explain as the collective programming of the mind which distinguishes the members of one group or category of people from another (Moran et al., 2014). The business organizations, operating in more than one culturally different market often face problems regarding attitude, beliefs, and values of the society or communities. As a result, the international business organizations should learn the strategic rules of the game and make an implementation to mimic the societal values and beliefs to gain the confidence and acceptance by showing respect to the concerned society or nation. Any other way, the business organization will face challenges and subsequent financia l loss. Each society and communities have own set of cultural values and beliefs. These fundamentals of culture are established along linguistic (verbal and nonverbal), belief, principles and attitude, behavior and traditions and knowledge. Adoption of the mentioned attributes depends on the level of market penetration by the business organization. The most important factor is cultural analysis, which assists the markets to plan strategically for market penetration. For instance, China is a nation state with enormous trade opportunities for foreign business organizations, but performing trade in China has a significant cultural challenge. A vibrant cultural melting pot attracts many individuals to experience the heart of its energetic environment. The factors that are important for foreign expansion by business organizations are, on the magnitude of the domestic market, the production facility and ability, and the availability of resources on the foreign market. The motive here is business organizations can position on an internationalization level ranging from the domestic market to globalization. Thus, business functions commonly improve when individuals from different cultural background identify new approach to general problems, creating solutions by involving cultural aspects and skills to view issues from different angles. Often the problem of "Ethnocentrism" occurs, i.e. when an individual feels culturally superior to others. The situation creates chaos and misunderstanding within the organization. Linguistic Barrier and communication: According to scholars, language becomes one of the major barriers when it comes to negotiating among the foreign trade partners and customers. Though is not possible to be multi-linguistic in all the time, but studies show that there is a strategic market plan to succeed in communication in the linguistic diverse market. When interacting with group from different cultures, communicating in a neutral pitch and making a alert attempt to be considerate of others' input, even if it is given in an approach to which many business organizations are not habituated, but is can help promote effective business communication (Ferraro Brody, 2015). International Business Communication is build up when the management understands the areas of commonality. The problem arises when an international business hires talents from different background and country, the diverse workforce fails to communicate and understand others. A language failure among cultures usually comes as 1) inappropriate translati ons; 2) cultural diversity between speakers of the similar language. Environment and Technology: The world economy is expanding in the age of innovative technology, which helps business organizations to conduct business overseas. However, business organizations may face some adversities in conducting overseas business. Technology helps business organizations easily connect with the stakeholders and distributors easily, but few rules and protocols should maintain. For instance, Spanish business organizations have longer lunch breaks than British or Americans have, so it is favorable to connect any Spanish businessperson during lunch hours. Also, if a business organization plans to launch technologically improved gadgets or appliances where people are less used to or not accustomed with updated technology and culturally more traditional; the product will not gain popularity in the particular market. Target Audience: When a business organization, plans to expand in the foreign market for the new business opportunity, it is advisable to conduct a proper analysis of the target audience in the selected market. The factors like, gender preferences, beliefs and attitude, ideologies, traditions and level of conservatism changes and vary in large amount from society to society and country to country. Therefore, if a particular product, service, or promoting a campaign hurts sentiments of a community or the target audience can create difficulty for the brand image of the product or service. Being conscious of cultural norms can also help your company narrow down the target audience (Pieterse, 2015).For instance, McDonalds has launched vegetable products in India like McAloo, VegPizzaMcPuff, McAloo Wrap with Chipotle Sauce, MCVeggiee, McSpicy Paneer, etc. primarily targeting the larger vegetarian customers residing in India. Thus, McDonalds' penetrated the large customer base in India and gained popularit y especially among the younger generation and urban areas modifying their product according to local customs and beliefs. Customs: A business organization, which functions in different diversely cultured countries, it is important to maintain all the cultural norms and ethics to avoid any chaos or misunderstanding in business process, which includes the fundamental traditions, mannerisms, and gestures of a cultural group. A business practice in one country may represent unethical or absurd in another. For instance, conducting informal business meetings in Australia is quite natural and often conducted in large corporate organizations, whereas in the USA business, meetings are always formal and taken attendees should be formally dressed and formal in conversations. Therefore, an American businessperson may find it shocking when interacting with Australian counterparts for the first time. Concept of power: Different societies have different viewpoint towards power and authority, which affects the interaction in the business situation notably since it forms the outlook of how communication will received, based on the relative position of the communicator the recipient. To be precise, conceptions of power manipulate the forms that decision-making and other business communications occur in a business organization. In functioning with cultures in countries like Israel and Sweden, which have a comparatively decentralized power idea, one may expect better recognition of a participative communication management model than in business cultures such as France and Belgium where participative management models are less utilized and relying as an alternative on authority-based decision making(Moran et al., 2014). Cultural Influence on Customers Behavior: Figure: Cultural Influence on Customers Behavior Source: Created by Author. In the above figure, the author has presented the cultural influence on Customers Buying behavior in a typical country. Culture in each society considered by three elements: cultural forces, cultural communication, and customer decision practice. The national identity, Educational knowledge and family background visibly influence cultural factors. Ethics and principles, behavior and roles and plan manipulate cultural messages. Culture also influenced from universal requirements and desires of the society and consumer trends. The culture differs by the change in nations. The international business organization should analyze and manage the cultural diversity and connect the stress to bring harmony in the process of business. Combination and synthesis of the cultural diversity the international business organization can incorporate diverse cultural perspectives and look for vibrant results the upcoming challenges. Strategically decisions to manage cultural diversity in international business: Despite many limitations and adversities, Globalization of business can bring sustainable growth to any business organization if the cultural diversities managed carefully. Abilities and skills in successfully manage cultural diversity are a necessary among business leaders in the age of globalization. Cultivating cultural difference in a business organization is the crucial step towards the sustainable business development. Managing diversity is a skill and ability, which takes long practice by a leader to excel in it. The initial is by understanding and knowing the cultural pattern of the domestic market. By accepting how individual and social values shape attitudes, perception and behavior, it is easier to expand to manage differences. The motive is not to evaluate but through dialogue and communication to generate better options for wider societal benefits. The suggested steps to manage diversity in new market expansion are: Critically analyzing the social and cultural norms in the newly selected market Appointing representatives from the diverse social background in the workforce so that decision and market actions taken according to the selected society or community. This way a business organization can avoid hurting or engaging communal sentiments. The management should take initiative to form a dedicated team to handle social diversification issues and challenges within the organization. Promoting different social functions and gatherings to increase familiarity and acceptance among increasing brand awareness. Conclusion: Disregarding diversity issues include revenue, time, capital, and incompetence. Successful managing of the cross-cultural edge is a vital source of a business organization's competitive advantage. Management and leaders should develop not only empathy and patience toward cultural diversity but also obtain an adequate amount of accurate information about the beliefs and values of selected market. In the above study, the author has studied why business organizations face cultural differences when expanding globally and the different aspects and factors that can come up as a challenge in the process of internationalization. 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