Content:
- What You Should Know About International Business Environment
- Understanding Success & Failure In International Business Environment
- International Business Environment and It’s Changing Nature
- Competitive Factors That Influence International Business Environment
- Requirement for General Environmental Scanning in International Business
- Systemizing the Search for Int Business Opportunities
- Key Factors That Drive The Competitive Environment
Let’s consider some examples of companies that have studied the business environment and failed and some that despite the odds seem to have succeeded.
The Virgin collection of companies have to be a success story simply because of the way that they study the business environment and take advantage of the leadership already developed in those markets by the key players. There are three product and service examples that have been successful:
Airlines: the company is operating in an established market and can be said to be following a very similar approach to the Laker company of the 1970s. The Airline is focusing on specific segments of the market through its detailed understanding of the business environment and its use of modern marketing techniques to promote, price and publicize the range of products and services offered by the company.
Financial services: the company has studied the business environment and followed the ground-breaking work of Direct Line Insurance in building a range of products and services that have a unique appeal to a specific segment of the marketplace. The aim of the company would seem to be to expand the segment of the market to its own advantage. It is following the trend towards a higher understanding of financial services amongst the population and segmenting a market that seems to be growing at a remarkable rate.
Confectionery: the soft drinks market in the UK has been fragmenting consistently during the 1990s, with a series of new and interesting combinations being offered by the key producers. Virgin has attacked this market on two levels, competing directly with the major multinationals and competing against the specialist drinks manufacturers. These markets have traditionally been very difficult to enter and the company has shown that by setting very high production targets and competing on price these markets can be penetrated.
Another example of a company which studied the market and took advantage of a market opportunity is Dell Computers. It was amongst the companies who clearly identified a market for personal computers emerging in the 1980s and sidestepped the large multinational companies such as IBM by offering the product but also recognizing that customer service was just as important in terms of the customer as the actual product received by the manufacturer.
 |
| Success & Failure - International Business |
What did they offer that was different?
The following:
HL strong emphasis on customer service; technological support available to all levels of customer; user-friendly machines that directly meet the needs of customers; market understanding which enabled a high level of understanding of the changes that where taking place in the business environment.
They managed to take a lead in a market that was so clearly dominated by a few key players in the industry.
The final success story in this group of examples is that of the French bottled water companies, typified by Perrier and Evian, who clearly recognized the broad and specific factors affecting the buying decisions of customers, particularly in the UK market. They recognized that the legal argument in the UK was becoming quite ferocious in its condemnation of the level of purity of tap water in the UK. New legislation was being introduced which confirmed the trend towards health issues. The nature of the industry was changing, with an emphasis on different methods of distribution and segmentation of the marketplace. Customer tastes in food and eating out were also changing quite dramatically. In addition, there had been liberalization and deregulation of markets, as well as supermarket proliferation and expansion of shelf space. This has resulted in a change in buying behavior, with bottled water now costing more per liter than petrol.
Disneyland Paris was a bright light in the strategic plans of the Disney Corporation, Why did the company have such difficulties in trying to transfer a perfectly good business concept into a friendly and well-researched business environment? Many explanations have been put forward, which include the following:
1. Location: the choice of location for the project has been heavily criticized as being too near the competition.
2. Incorrect pricing strategy: pricing was confusing to the end-user of the facility and this sent mixed messages to a very price-sensitive marketplace.
3. Ineffective employee relations: employee relations were not given enough priority in the planning stages of the project.
4. Poor climate: the climate was not favorable and other locations such as Spain would have offered an excellent alternative.
5. American overconfidence: expectations were too high that the business concept would travel very easily to the European market.
6. Product offering was wrong: it needed to be adapted to meet the specific needs of the European customer.
7. Marketing: The initial confusion over price and the poor public relations strategy of the company created a situation that was impossible to manage.
8. The concept is non-transferable: An American business idea of this type has to be based in the United States if it is to have any validity in the mind of the customer.
The UK retailing company Marks & Spencer has been established since the 1980s in North America. It has been a very difficult market for the management team to understand and to exploit to its full extent. Two major retailing chains were purchased by Marks & Spencer, but even with their retailing and marketing expertise they could not turn them around. The eighty People’s Stores were sold in 1992 and D’Allaird’s was downsized and restructured. The Marks & Spencer chain was extended nationwide with what is recognized with hindsight to have been reckless haste.
Why did they find difficulties in the North American market? For the following reasons: transfer of the Marks & Spencer concept was difficult; there was a lack of market testing and supporting market research; senior management perceived the business environments of the UK and North America to be very similar; business culture had different approaches to distribution strategy; the strategic decision-making process was too distant from the market; the search for market share was too ambitious; there was a lack of market research focused specifically on the marketplace; experience in international trade was lacking; ‘company strengths had been developed in the home market and did not apply to the international markets.
Marks & Spencer has had mixed success in terms of international business, but for every apparent failure in terms of international business they have experienced success in another market and, best of all, they have learnt from their experiences.
The experience curve is crucial to the success of international businesses and the success of many companies comes from extendits first European branch in Paris in 1975. It now has sixteen stores in France, with more openings planned. The company has five stores in Spain, three in Belgium and two in the Netherlands. The three stores in Ireland are now included in the European arm of the company and expansion is being planned in that part of the world. In March 1995 the company announced that it planned to open new stores in Germany and Italy.
The softly approach adopted towards European expansion has been supported by a series of careful pilot schemes to test market products and services prior to full entry into the markets. This approach is now preferred to rapid expansion by using acquisitions.
China is the next target for the company and it is planning expansion through franchising and has spent the last eighteen months on an extensive market research programme. Marketing coordination is being managed by a local marketing team who are aware of the importance of being close to the customer. This focused approach is utilizing the experience that the company gained from its time operating in international markets. The company has probably learnt from its experiences; we will have to wait and see.
Continue at: International Business Environment and It’s Changing Nature
Post a Comment