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Background Details of Country Road

Question:

This report is about the business strategy of the company Country Road in Australia which is going to open their business in France.
 

This report is about the business strategy of the company Country Road in Australia which is going to open their business in France. The business strategy selection is the most vital activity for starting a business in a new country. The considerations for conducting the international business operations by Country Road have been analyzed in this report. The background details of the business organizations are analyzed at the beginning level of the report. Then the different types of risks associated with the different types of business operations. Some recommendations are also given at the last section of this report for improving the production and other business operations.

One of the most popular lifestyle brands of Australia is Country Road that was established in the year of 1974. The organization mainly provides cloths with great quality that shows the brand value of the organization However, the biggest advantage of the organization is its strategy of price, which it keeps low than any other organization. Offered product of Main Road includes cloths for men, women and children. Head office of the organization is located in Richmond, Victoria region of Australia. With their sales stores in cities such as Chicago, Boston and New York, the organization has already popularity among the people of America. However, according to Hovhannisyan and Keller (2015), recently due to lack of sales the organization was forced to close down one of their stores.

Primary goal of the organization is to manufacture stylist and designed merchandise that can reflect the lifestyle of the people of Australia. The organization started as a niche women’s shirting business in the year of 1974. However, in the year of 1994, Woolworth Holding Limited (South Africa) secured a controlling interest in Country Road. Later in the year of 2004, the organization was able to re-launch them with a fresh modern identity. One of the biggest achievements of the company was its acquisition of Witchery Group in the year of 2012.  They also acquired Mimco retail brands with the strategic rationale of creating Australia’s largest fashion retail group.

Risks:

According to Hamilton and Webster, (2015), Australian companies are suggested to spend time to investigate the market to gain professional advice before starting any business in France. Some risks while exporting in France are intellectual property risks, political and commercial risks, and risk through compliance to foreign regulations and standards and non-payment by foreign buyer.

For country road, it is important that they protect their intellectual property rights while trading with France. In France, the patents and trademarks are administrated by the INPI. Therefore, it is highly essential to understand all the rules and regulations with the help of INPI before staring the business (Buckley, Cross & Mattos, 2015).

Political and commercial risks while exporting in France are local tax, tariff, customs and import laws. Besides, the restriction on repatriation of funds is another risk while exporting in France.

Considerations for Conducting International Business Operations

Besides, the Government of France is very strict if the goods do not meet the local countries import. Therefore, it will be tough to compliance to regulations and standards of France as the culture of Australia and France are quite different.

The biggest risk that the organization might face while exporting goods in the France is the chances of nonpayment by foreign buyer.

Benefits:

According to Fischer and Henkel (2012), Metropolitan France, which is also known as “L” Hexagon is perfectly situated as a prosperous export market for companies. France is the fifth largest economy in the world France is a geographical hub for doing business within European Union. The biggest benefit is that France is the largest aerospace and nuclear industries, second largest agri-food and chemical industry and third largest information and communication technology hub. Therefore, Country Road will have advantages such as proximity to European countries, easy transportation link from the France as the cost of flights is low to Paris and many other provincial cities, huge and open and diversified markets and time difference of only four hours.

In order to improve the export performance of France, the Government must lower the cost of labor. However, the Government is currently trying to reestablish a fiscal balance. Therefore, as mentioned by Ocasio and Radoynovska (2016), the best possible way to lower the labor cost is to transfer these into other another taxes. That is why the “social VAT” was developed by the previous organization. However, the current Government cancelled this policy and developed a new one named as CSG tax that has a great advantage of having a larger tax base that will include capital income.

Government of France is planning to improve the efficiency of its export policies by helping the small and medium sized companies so that they can access to support easily. The Government is also working to offer one-stop-shop so that new companies can overcome their growth challenges especially in international markets. Therefore, it can be said that Country Road will get ample help from the Government of France while exporting goods to the country. 

As the company has been taking entry into the foreign market, it is necessary to focus on the barriers for taking entry into the market. In this part, it is required to consider the objectives of the firm, the nature and types of the organization as well as the size and the available resources of the company. Brouthers (2013) has stated that whether the product has its prior experience or a subsidy in the operating country is one of the major questions. The company is required to focus on the transport costs and the trade barriers along with the political, economic risks and the business risks along with the strategy of the corporation. It can be stated that the optimal entry mode varies by several situations, depending on these above mentioned factors. However, it can be stated that analyzing the nature of the market, it is required to prepare the marketing plan likewise (Chang et al., 2012).

Risks Associated with Different Types of Business Operations

It is regardless to say that every export is highly important in the receipt country and Country Road is required to stay competitive in the newly operating market. For hold on a strong position in the market, they are required to establish a factory in the new operating country by creating a joint venture as well as taking help from the local producers. In this part, it is required to mention that the decision of how to take entry into the market might have a significant impact on the final results and taking entry into the foreign market might be achieved through exporting, licensing, joint venture as well as direct investment (Dunning, 2012).

Figure 1: Market entry strategies

(Source: Fischer & Henkel, 2012)

At the time of exporting the product to the newly operating market, it is required to focus on product sample taking into account the product sourcing, demand of these products in the market, product management, labeling, control over the product as well as ample information of the market. At the time of taking entry into the new market, the company is required to establish the prices considering several situations in the market. Apart from that, they are required to focus on discounts and competitive information (Folsom et al., 2012). Proper advertising, promotion of the new brand, direct mail to the target customers, exhibitions and the trade shows, direct selling, sales force, sales or the returns are some of the major parts that are required to focus on immediately (Holtbrügge & Baron, 2013).

As the company is one of the leading companies, it would not require huge inventory support at the initial level. However, at the time of taking entry into the market, they are required to arrange proper funds provision, raising proper capital, order processing, insurance and arbitration along with the procedure of ordering. These steps are required to follow, as Country Road has been planning to take entry into France market (Homburg et al., 2015).

From the details reports of the company, it can be seen that Country Road has been planning to expand their business in France. Therefore, it is required to analyze the market condition of the country where the company has been planning to expand. R&D has found the fact that there exist several other companies in France and thus penetrating into the market is tough enough for the organization and demands proper marketing strategy. Killing (2012) has said that the slight recovery in demand seen in the retailing industry in the year 2015 has helped the existing retailers of France to forget 2014 and looking forward to expand more in this sector. At the initial level, the marketing strategy of the company would be to maximize the value of the firm and thus the managers are required to pursue the strategies that increase the profitability of the enterprise and its rate of profit growth over time (Kohtamäki et al., 2013).

Figure 2: Determinants of enterprise value

(Source: Laufs & Schwens, 2014)

Recommendations for Improving Production and Other Business Operations

The value creation at this position is one of the major concerns of the firm and it can be stated that more value the customers place on the products of the firms, the higher the price the firm can charge for those specific products. More innovation products at this context is required to design in order to strongly penetrate the market. For attracting the attention of the new target customers in France, the corporation is required to add value to the products, so that the customers are willing enough to pay more for this. Besides adding value to the products, Country Road is required to lower the costs (Li et al., 2012).

However, it can be stated that the company is required to rely on two basic strategies for enhancing the profitability of the organization through a differentiation strategy as well as a low cost strategy. Moreover, it can be stated that it is required to make sure that the organization has the proper and appropriate organizational structure in the place to execute the adopted strategy. For holding a strong position in the market, the company is required to focus on the primary activities and these accounts creating innovation and differentiated products, marketing as well as delivering the product to the consumers and giving appropriate support and appropriate after sale service to the consumers of the innovative products (Maekelburger, Schwens & Kabst, 2012).

Figure 3: Organizational architecture

(Source: Parker & Van Praag, 2012)

Sanzo et al. (2012) have stated that additionally, the company is required to attain superior performance and earn a high return on the capital and the strategies are require to make proper sense towards the given market conditions. However, it must required to mention that market situations, strategy, operations as well as the organization must be consistent with each other as well as fit with each other, for superior performances to be properly attained (Shaver, 2013).       

In order to start their business in France, Country Road will have to adapt one of the four popular product-developing strategies that are ethnocentric approach, polycentric approach, egocentric approach and geocentric approach. According to Buckley (2016), for Country Road it would be better if they select polycentric approach. In this approach, Country Road will be aware that the French market is different from the market of Australia. The company needs to adopt new management style depending on the situation of this country. This strategy has the belief on the fact that the international business strategy should have the focus on the local preferences. The company can have huge advantage of the strategy, but they need to focus on the problem of coordination and control between the different subsidiaries. Better sale can be achieved by using more informed local management of the production management. More imitative should be taken regarding the local products. This will help the company to generate more revenues from the local products.

The following steps should be followed by the company to get the desired level of success in the business. Production planning is associated with the scheduling of employee activities, accurate delivery of the products to the customers and the effective level of supply chain management.

The Market for Doing Business in France

Step 1: Assessing and monitoring of the production capacity is the first initiative of the company. Understanding of the production capacity of the company will help to recognize which elements have to be monitored by the production managers. All the physical requirements of the company should be documented for reviewing in the planning process. The production capacity of the company need to be monitored regularly and the limitations should be measure as per the requirements of the business of the company (Buckley, 2016).

Step 2: Depending on the production planning assessment report in the previous step, the company need to develop the production plan in this step. The labor and technical resources need to determine for accomplishing all the tasks related to the production of the company. The technical requirements and manpower requirements for the production changes should be assessed by the management of the company. When the market demand is high then the manpower of the company should be increased by hiring more people. In case of any reduction in the manpower or the technical requirements, the documents have to be modified (Dunning, 2012).

Step 3: The third step of the production management is the understanding of the different aspects of the supply chain management of the company. Selection of the raw material suppliers, distributors and analyzing the storage capacity of the warehouse are the most important activities of the production management. The company should search for the highest quality of raw materials in the most reasonable price. They should select the raw materials suppliers near the production house of the company. This will be able to reduce the transportation cost of the production. New ICT technology tools and internet technology have to be used in the selection and management of the suppliers. A Supply Chain Scheduling (SCS) software need to be develop and used for the effective handing of the SCM of the company (Parker & Van Praag, 2012).

Step 4: Effective level of communication is the next requirement for the management of the supply chain activities in the production management of the company. The company should communicate with the suppliers for clarifying the requirements of the company. Both the supplier and consumer companies should ensure that the right materials are supplied at the right time.

Step 5: The company should consider the Electronic Data Interchange system for assisting the production planning. The system can be used for analyzing the production capacity of the company by production capacity and actual production.

These steps will help the company to improve the production to produce more products and to get more profit from business.

The companies which are conducting the business operations in international level should be conscious about the different cultures, economics, and legislations in the area of the Human Resource Management. The cultural values are associated with the societal forces, beliefs and the individual actions of the groups. The cultural values are associated with the locality of the countries in which they are working (Killing, 2012).

The recruitment and selection procedure of the company should consider the following issues and consideration.

Analysis of Barriers for Entry into the French Market

Managerial competence: Knowledge regarding the specific operations o related to the business of the company, leadership skills and technical skills.

Adaptability: The ability of dealing with new and challenging situations in the workplaces.

Training: The candidates must be trained about the specific business operations of the company.

The cost benefit analysis of the HRM of the company should be done by considering the economic conditions of the company. Other facilities to the employees should be provided by checking the legislations and health care facilities available in the operating countries. In this case, the management of the company should consider the health and safety related legislations in France and should consider those in their HRM operations (Shaver, 2013). 

8.0 Conclusion

After completion of the entire task, it can be stated that Country Road of Australia is one of the leading clothing retailers and has been planning to take entry into the France market. In order to carry on the entire task, focus has been shed on exporting promises and the risks in operating in the France market. The risks as well as benefits have been discussed in the context of France. Apart from that, some major steps have been mentioned for enhancing the export performance of this retail company and some more information sources along with government programs in order to help the exporters. In order to enhance the market entry, some effective recommendations have been provided and it is expected that these features would help the company to penetrate into the France market.  

References:

Brouthers, K. D. (2013). A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 44(1), 14-22.

Buckley, P. J. (2016). The contribution of internalisation theory to international business: New realities and unanswered questions. Journal of World Business, 51(1), 74-82.

Buckley, P. J., Cross, A., & De Mattos, C. (2015). The principle of congruity in the analysis of international business cooperation. International Business Review, 24(6), 1048-1060.

Chang, Y. C., Kao, M. S., Kuo, A., & Chiu, C. F. (2012). How cultural distance influences entry mode choice: The contingent role of host country's governance quality. Journal of Business Research, 65(8), 1160-1170.

Dunning, J. H. (2012). International Production and the Multinational Enterprise (RLE International Business) (Vol. 12). Routledge.

Fischer, T., & Henkel, J. (2012). Capturing value from innovation—diverging views of R&D and marketing managers. Engineering Management, IEEE Transactions on, 59(4), 572-584.

Folsom, R. H., Gordon, M. W., Spanogle, J. A., Fitzgerald, P. L., & Van Alstine, M. P. (2012). International business transactions: a problem-oriented coursebook.

Hamilton, L., & Webster, P. (2015). The international business environment. Oxford University Press, USA.

Holtbrügge, D., & Baron, A. (2013). Market entry strategies in emerging markets: An institutional study in the BRIC countries. Thunderbird International Business Review, 55(3), 237-252.

Homburg, C., Vomberg, A., Enke, M., & Grimm, P. H. (2015). The loss of the marketing department’s influence: is it really happening? And why worry?.Journal of the Academy of Marketing Science, 43(1), 1-13.

Hovhannisyan, N., & Keller, W. (2015). International business travel: an engine of innovation?. Journal of Economic Growth, 20(1), 75-104.

Killing, P. (2012). Strategies for Joint Venture Success (RLE International Business) (Vol. 22). Routledge.

Kohtamäki, M., Partanen, J., & Möller, K. (2013). Making a profit with R&D services—The critical role of relational capital. Industrial marketing management, 42(1), 71-81.

Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.

Li, P. C., & Chen, Y. C. (2012). How does social orientation influence R&D-marketing collaboration?. Asia Pacific Journal of Management, 29(1), 151-168.

Maekelburger, B., Schwens, C., & Kabst, R. (2012). Asset specificity and foreign market entry mode choice of small and medium-sized enterprises: The moderating influence of knowledge safeguards and institutional safeguards. Journal of International Business Studies, 43(5), 458-476.

Ocasio, W., & Radoynovska, N. (2016). Strategy and commitments to institutional logics: Organizational heterogeneity in business models and governance. Strategic Organization, 1476127015625040.

Parker, S. C., & Van Praag, C. M. (2012). The entrepreneur's mode of entry: Business takeover or new venture start?. Journal of Business Venturing,27(1), 31-46.

Sanzo, M. J., Álvarez, L. I., Rey, M., & García, N. (2012). PERCEPTIONS OF TOP MANAGEMENT COMMITMENT TO INNOVATION AND R&Dâ€ÂMARKETING RELATIONSHIP EFFECTIVENESS: DO THEY AFFECT CSR?. Annals of Public and Cooperative Economics, 83(3), 383-405.

Shaver, J. M. (2013). Do we really need more entry mode studies&quest.Journal of International Business Studies, 44(1), 23-27.

Stock, R. M., & Reiferscheid, I. (2014). Who should be in power to encourage product program innovativeness, R&D or marketing?. Journal of the Academy of Marketing Science, 42(3), 264-276.

Wild, J., Wild, K. L., & Han, J. C. (2014). International business. Pearson Education Limited.

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