Essay: Expanding Yellowtails In Argentina - Opportunities And Challenges.

Executive Summary

Question- Using the global mindset framework, how will you set‐up YellowTails sportsgoods chain in this new territory/country?

EXECUTIVE SUMMARY

INTRODUCTION

VENTURING INTO NEW COUNTRY

  Global Mindset Framework

  Resources and Barriers

OPPORTUNITIES AND CHALLENGES

RECOMMENDATION AND CONCLUSION

TEAM REPORT

Organizations normally need to consider entering new markets when their center markets begin declining, or they have outgrown their center market and need new markets to proceed to grow. Many business persons have figured out precisely how expensive it is to succeed in another business sector, as well as particularly to fall flat in one. The best practices which include: Making an agreeable and genuine duty to command the business you enter; plainly recognizing the best passage point; characterizing your business section technique; gathering your business entrance playbook; approving your suppositions; guiding the Playbook; Ramping up the privilege way; and having an effective exit plan if things don't work out.

This report stresses on growing the sportgoods chain organization known as Yellowtails, in Argentina. The report will likewise investigate the opportunities and dangers of entering Argentina. The report will likewise concentrate on Global Mindset structure including its three separate parts that is social capital, intelligent capital and psychological capital that will help to create Yellowtail in Argentina. However to set up the business in Argentina it is all that much essential to know the social, social, political and temperate measurements of the nation. Subsequently the report will likewise concentrate on these measurements which will help to deal with the difficulties that Yellowtails may confront in Argentina.

The report recommends that Yellowtails should at first concentrate on investigating the Argentina market, the interest of the individuals as for sports and after that settle on different offers that they can give to the potential clients regarding their items and administrations furthermore different limited time program or showcasing projects. They have to see the worldwide market that is the Argentina showcase as a chance to help the offers of the current items and embrace a business push methodology rather than business driven methodology.

Few companies prosper by outperforming the competition in a particular geographical area or niche market. However expanding the business properly into new market helps to leverage the core business, increase revenue of the organization, enjoy higher economies of scale and also decrease the risks. There are two types of expansion one if geographic expansion and the other is customer expansion. The geographic expansion is the way of expanding the already existing capability or expertise into new area with similar customer profile and demographics etc. and the customer expansion is the process of expanding the business by targeting new customer segment with similar product and services (Esmalloffice.com, 2014). However expanding into new market requires huge research about target audience and developing in-depth understanding of growth rates in the market, potential barriers, competitors, forecasting demand etc (Stark and Stewart, 2013).

This report emphasizes on expanding the sportgoods chain company known as YellowTails, in Argentina. The report will also explore the opportunities and threats of entering Argentina. The report will also focus on Global Mindset framework including its three different components that is social capital, intellectual capital and psychological capital that will help to establish YellowTail in Argentina. However to set up the business in Argentina it is very much important to know the cultural, social, political and economical dimensions of the country. Thus the report will also focus on these dimensions which will help to manage the challenges that YellowTails might face in Argentina.

Venturing into New Country

The country Argentina is a rich and vibrant culture that influences the heritage and diverse population of the country. In past few years, the country has struggled with economic and political turmoil but due to liberalization, there is an increase in economy (Communicaid.com, 2013). To do business effectively, it is significant to understand the culture, economic, political and social dimensions. The following is the details of the four dimensions:

• Political: Argentina is the biggest country in Latin America with 37million population considered to be third biggest. The political system of the country follows a federal structure with presidential system. The country is treated as the pariah state by the fund markets of global. The major challenges of the country since the economic and political crisis in 2001 are corruption, poverty, unemployment, default in debt and also collapse of health and education.
• Economic: The economy of Argentina is suffering from low GDP growth rate due to the crisis in the year 2001-2002. According to the 2009 estimates, the GDP of the Argentina is $558 billion which fell by -2.5%. The official exchange rate of the country is $301.3billion. The unemployment rate is recorded as 9.6% and around 13.9% of the overall population belongs to below poverty line. The economy of Argentina mostly relies on the diversified industrial sector, natural resources and the agriculture sector which is export-oriented (Economywatch.com, 2014).
• Social: According to the data of 2005, the country has the second highest human development index rate in Latin America. There has been improvement in the social conditions; the poverty level has decreased to 13.6% compared to 27% (eeas.europa.eu, 2007). Argentina is considered to the country with highest literacy rate in the world. The enrolment rate in primary school is higher in the world (Estudiarenargentina.siu.edu.ar, 2014). However there is a decrease in the rate of secondary school study.
• Cultural: The Argentina culture comprises of mixed ethnic group people. The culture is influenced by the immigration of Europeans, Spanish and Italian. Sport is the most crucial part of social and cultural life in Argentina. The country’s calendar is filled with busy sporting activities like rugby, polo, football etc (Buenosaires.angloinfo.com, 2014).

Expanding the business is hitting the mainstream and is becoming the integral part of the country’s business. Selecting the right candidates for the working in the international markets gives a competitive advantage to build and develop the competency in identifying the success potential. Developing the global leadership expertise of an individual who are being posted to different parts is very important. Exposure to different cultures will help in developing the skills in the managers to deal with the people of other cultures and their working. The key ingredient to succeed in the global markets is “Global Mindset”. Global Mindset can be defined as the set of attributes of an individual that helps the global leader to persuade others who are different in the environment. This framework is the capability to evade the ease of assuming all cultures similar and also not being paralyzed by the convolution of the cultural differences (worldwideerc.org, 2014). There are three major components of this framework are (Harvard Business Review, 2010):

• Social Capital
• Intellectual Capital
• Psychological Capital

For expanding Yellowtails in Argentina, it is important to focus on these three components. Firstly is the social capital that helps the expats to develop trust and strong relationship with the local customers, supply chain partners, employees or the local stakeholders. Understanding this dimension effectively helps to generate excitement and positive energy between the local stakeholders and also help them to connect with the personal level. This helps to improve collaborativeness and leads to the flourish trust in the team environment. The three most important attributes of social capital are:

• Diplomacy- this attributes helps to ease the communication with other culture people by improving the listening skills.
• Interpersonal impact- this is the ability to maintain credibility, create consensus, build teamwork and also collaborate divergent views within and outside the organization
• Intercultural Empathy- This is the ability to connect and engage with the other culture people emotionally.

Second is the intellectual capital that mainly emphasizes on cognitive complexity, understanding, skills and knowledge. This dimension provides the ability to understand the similarities and differences of cultural histories and also manage the complex issues related to culture. This is important to create a bridge among the local host culture of the country and the corporate culture. The key attributes of this dimension are:

• Cosmopolitan Outlook: This creates an active interest in the economic and the political system, geography, history and culture of various parts of the world.
• Cognitive Complexity: This helps to successfully handle the multiple scenarios
• Global Business Savvy: This attribute is about grasping the knowledge of behavior of the customers, global market trend, potential competitors, habits, worldwide industry and also the strategic risks that may vary with the geography.

Third is the psychological capital that helps to develop a knowledge base of global issues. This is attribute enables the expats to develop motivation and also strong willingness to succeed in the host country. The main attributes are:

• Self-assurance: developing sense of humor, self-confidence, increasing level of energy according to the foreign context
• Thirst for adventure: an approval for and capability to prosper in changeable and intricate environment.
• Passion for diversity: This is the way of experiencing different culture, doing new things and exploring the different parts of the world.

To determine the viability and ease of entering the new market it is important to understand the impact of technology, infrastructure and natural resources of a country. Determining the technological capabilities of Argentina would help to determine the operations type in the country. Then the infrastructure will help to determine the simplicity of operating and doing business effectively in Argentina. Lastly the natural resources will help to determine ways to achieve profitability by having access to low-cost inputs. Apart from this fir achieving fast growth in the host country it is significant to launch products according to the needs of the people in that country. Involving into strong relationship with the local customers would help to attract new ones and promote the product and services. Further, creating partnership with the other similar business in the country would help to share the expertise and resources with other business and enable to flourish (Marketing Donut, 2014).

Global Mindset Framework

However, there exist few barriers in setting up Argentina. The major barrier in setting up in Argentina is the increasing competition. There is an increase in the competition is due to liberalization and also overvalued exchange rate is pushing the enterprises towards enhancing the competitiveness. In particular, the persistent problem of access to credit to Latin America and also the elevated interest rates level act as an obstruction to rejuvenation of enterprise. The pressure on the credit market due to state demand led the level of interest rates to increase further in such a level that makes the outcome of the productive projects incompatible. The current progressive economic revival has not been adequate to reinforce the competitiveness of enterprises and to produce conditions to overcome a number of major constraints. Due to higher transaction costs and obstacles with access to the international market, the reaction towards the international market is becoming less dynamic (eeas.europa.eu, 2007).

Understanding the sports business, the recent researches found that the sport has kept on thrive, with significant occasions seeming to become more famous than any other time. However lower level occasions are needing to work harder to draw in support. The fame of popular occasions is underpinned by progressing changes in technology and broadcasting, which permit higher-quality scope than ever before. Sports associations are discovering it progressively hard to adjust the necessities of all their stakeholders – it utilized to be about the fan who would basically vote with their feet, however now the fan has a louder voice by means of online networking. Sports likewise confronts a sensitive exercise in careful control, due to the need to keep up value for the money in light of increase in the cost of the ticket and  also increasing desires among the paying open (pwc.com, 2011).

If sports start charging more for the tickets, then observers anticipate that they will give more as an exchange. The same at last applies to the expense of media rights, which can thump on to the pay TV memberships financed by supporters. The balance value and price is further entangled by the profound sense of possession that numerous sports fans feel for their sports or club.

The country Argentina is facing a huge slowing growth rate and high inflation. There is a decline in the ability to service the finance and debts imports of Argentina which is reducing the confidence of the country towards international markets. However there are legions of high-spending fans who are taking the country currency out of the country. This shows that the interest of Argentina people towards sports as their recreation. Thus focusing on sports equipment or sports apparel would help the organization to boom the industry. Retail business is also one of the booming industries in Argentina. Sports goods are also increasing aggressively providing a wonderful opportunity for YellowTails to represent their brands in this market. Due to diversity of various sports brand, there is an excellent opportunity for the organization to develop sports Footwear or Apparel business.

Opportunities and Challenges

If compared to overall Latin America, it can be seen that e-commerce is also growing rapidly in the country, particularly in Brazil. For instance, in this present scenario, the largest sporting goods retailer those have more than 120stores receives total revenue above 15% through this e-commerce system. To succeed in the Argentina market, the YellowTails must focus on developing sports Footwear and Apparel business. This would provide the organization a good opportunity to drive the market.

The biggest challenge that YellowTails might face is the changing economical factors and the increasing competition. Argentina is facing high inflation and import restriction process. Thus YellowTails can focus on running their business through distributors instead of subsidiary. This business model would help to better their brand and also increase their EBIT. Since the Sports Footwear and the Apparel industry is growing rapidly compared to hardgoods, the market is attractive. YellowTails must reflect the trend of entertainment like sports sponsors, the product placement or the brand, instead of just a name on shirt.

Apart from this, another issue that the organization can further face is the challenge from the governing bodies that are creating pressure on the sports business to grow in the international market and at the same time the maintaining the integrity of the competitions and the support base for the local community. In this era of economic uncertainty, there is a shift of balance economic from east to south. This will help to preserve the impetus of internationalization, as sports look for new revenues.

Spending on sports merchandizing reflects the more extensive polarization of purchasing propensities, with value-based online shopping at one end, and retail as excitement at the other, with buyers spending their leisurely days at a retail chain or malls. Sports clubs are seeing a climbing extent of their merchandise exchanges relocating towards the Internet. A particular advantage of merchandizing is the capacity to captivate with fans who can't go to matches, including the individuals who live in different nations − an opportunity that has been extended by the Internet. This engagement helps both to monetize the brands of sports in those districts furthermore markets, furthermore to fabricate interest for media scope of the clubs included. Thus the YellowTails can focus on merchandising their products that would help to increase the customer engagement. This process would not only help to understand the needs of their potential customers in the new market but also provide information that would feed into the customer intelligence. This will ensure that the potential customers are getting what they want and this will retain the customers.

The process of entering or expanding into new market and then developing in that international market is really is challenging one. In basic terms it can be said that entering into new country market is just like starting up as a start-up. Thus YellowTails must initially focus on analyzing the Argentina market, the demand of the people with respect to sports and then decide on various offers that they can provide to the potential customers in terms of their products and services and also various promotional program or marketing programs. They need to see the international market that is the Argentina market as an opportunity to boost the sales of the existing products and adopt a sales push strategy instead of market driven approach.

Recommendation and Conclusion

Apart from this, the organization must also focus on the building effective strategies to implement the Global mindset framework. Different experiences and training method involve the strategies for developing proper global mindset and cultural intelligence among in the employees and the managers. Membership in the cross-broader projects, international assignments or transfers can help to develop the global mindset. Developing international experiences would help to foster the improvement of integrative leadership skills and also develop skills that would encourage handling cultural intelligence, complexities, facing conflict etc. Further, the YellowTails must focus on providing cultural training to the expats that would teach them about the culture-general values by utilizing the training methodologies like case studies, role-plays, lectures etc.

Certainly, the worldwide economy compels the organizations to take part in a highly unpredictable, customer driven market for various services and products at the competitive prices and also due to globalization it is necessary to communicate effectively with the customers, clients and colleagues across various cultures and languages. Thus the organization must focus on cross-boundary teams, cultural adaptation training and also international assignments should be used for developing the weakness of the individuals around the worldwide competencies.

In conclusion, the report presents the economic, culture, social and political dimensions of Argentina that YellowTails need to consider before expanding their business in new market. The report also demonstrates the proper application of Global mindset framework in the new market. The three different components of the framework give idea to the expats to operate in Argentina and also help them to do business effectively. The report also discusses the opportunities and challenges that YellowTails might face in Argentina with alternative solutions that the organization can use to sustain in the market.

It was nice to work in a team that is both cooperative and supportive. We started the task by setting up goals that would help us to finish the task within the given duration and also achieve the end result. Everyone in the team expressed their own views regarding the topic. Everybody was positive towards each other and was encouraging each other to complete the task as per the requirement.  The best apart about our team was that we respected each other ideas and feelings in completing this task. We supported opposition politely with proper reasons that why we cannot take or incorporate this point.

In order to complete the task we had set the following goals and divided the task accordingly among each other:

• Searching the database, online journals and articles
• Do reading and making notes
• Sharing the written notes among each other in the group

Then after sharing the notes we divided each section among each other, that is one them wrote the first draft that is the introduction part, then the other member in the group wrote the global mindset framework, resources and entry barriers, then one them covered the opportunities and challenges part with alternative solutions. At the end together we all three of us sat together to conclude the task and also proof read the overall task to find if any further modification is required or not.

However, we found that our report lag in incorporating proper international entry theories. The report writing would have been much better if few we have applied the international entry strategies along with the framework discussed in the report. However we were unable to access many online resources like relevant books or journals as they were paid. So we had to utilize only new articles or some available pdfs, pwc report etc. We had to rely on the available books only. Due to less time we could not discuss more about the topic and were unable to utilize the latest updates about the expansion to international market.

In future we have decided to work on the topic from day one itself with shared responsibilities. Instead of dividing the whole task individually we have decided to work together which would help us to effectively utilize the peer review process and help each other to develop knowledge on the subject area.

Buenosaires.angloinfo.com, (2014). Sports & Leisure - AngloINFO Buenos Aires, in Buenos Aires (Argentina). 

Communicaid.com, (2013). Doing Business in Argentina | Intercultural Training Course | Communicaid.

Economywatch.com, (2014). Argentina Economy | Economy Watch. 

eeas.europa.eu, (2007). ARGENTINA  COUNTRY STRATEGY PAPER. 

Esmalloffice.com, (2014). Grow Your Business: New Markets. 

Estudiarenargentina.siu.edu.ar, (2014). Why Argentina?.

Harvard Business Review, (2010). Managing Yourself: Making It Overseas - HBR.

Marketing Donut, (2014). Strategies for growing your business. 

pwc.com, (2011). Changing the game Outlook for the global sports market to 2015.

Stark, K. and Stewart, B. (2013). 5-Step Primer to Entering New Markets. [online] Inc.com. 

worldwideerc.org, (2014). GLOBAL MINDSET DEFINED Expat Success Strategy.