Billabong's Essay On Entry Into The Indian Market.

Economic Theories for Conducting International Business

Discuss about the International Business Strategy for Billabong International.
 

The main motive of this paper is to describe the operations and activities of Billabong. Billabong has taken in the task as an example.  It is clothing company that offers apparel, clothing and other retail products. The company has decided to enter in the new market India.  Furthermore, the paper also explains key modern economic factors and international business Canvas model. Strengths and weaknesses of the international business Canvas model also have been discussed in the task. The ample of issue also have been elaborated in the task. Pestle analysis is done in the paper to identify and analyze the risks and challenges of the market. More detail of the task is discussed below.

Billabong international limited is a clothing retailer company that is originated in 1973 in Australia (Billabong, 2009). There are around 6000 employees working in the organization (Billabong, 2009). 

It is noted that various economic theories can be used by Billabong to conduct business activities and operations at international level. Some of the key modern economic theories have been discussed below.

Theory of absolute advantage: It is one of the significant theories of economic that can be used by Billabong while implementing the business activities and operations in India. This theory stated that one country produces more goods and products with the same amount of input than another country. This theory helps in producing more goods in an effective and unique way (Authorstream, 2018).

Theory of comparative advantage: This theory can also be initiated by the firm to gain competitive benefits in the international market. This theory is developed by David Ricardo in 1817. The theory is stated that two countries engage in international trade even when one nation’s employees are more effective and dynamic at manufacturing every single product than employees in other countries. By using this theory, the organization can differentiate its products from the competitors. Apart from this, it also helps in attaining desired goals and objectives effectively and efficiently (Authorstream, 2018).

Economic theory: This theory is propounded by E.Porter to beat and hit the competitors in the international market. There are four variable of economic theory that include demand condition, factor condition, related and supporting industries and firms, structure, strategy and rivalries. This theory is developed by the Porter to stand out against the competitors in Indian market (Authorstream, 2018).

These theories can be used by Billabong to expand and flourish the business operations and activities in the global market. The economic theories help in making dynamic image in the minds of the customers in Indian market. There are ample of key events that could affect the international business globally. The political populism in 2016 was one of the biggest events that can affect the profitability of Billabong in India (Borg, 2015). Weak economic activity and low productivity growth also would have direct impact on the productivity and efficiency of the company. The global insecurity and refugee crisis are biggest issues in international business. Weak growth an choppy markets may put direct impact on the success and growth of the organization (Borg, 2015).

Key Modern Economic Theories: Absolute, Comparative, and Economic Theory

Business model is a plan for the effective and successful operation of a business, determining source of revenue, the intended products, customer base and details of financing. Each and every company uses effective and dynamic business model to conduct business operations smoothly (Osterwalder & Pigneur, 2010). Billabong can use Canvas business model to initiate the business actions in the global market. The Canvas business model has been discussed below.

Key Partners It is noted that the company is unable to reach an agreement with US private equity funds Altamont capital partners and Sycamore partners. The subsidiary of the company is element skateboards Von Zipper.	Key Activities It has been found that Billabong provides sporting goods and apparel to the customers. Thus, the company invests ample of amounts in the online presence and digital marketing to promote the products in the international market.	Value Proposition To satisfy the needs and requirements of the customers, the company can use value proposition model in the international market. Furthermore, Billabong needs to use dynamic and effective pricing strategy to attract and retain maximum number of the customers in the competitive market.		Customer Relationships It has been noted that the firm should focus on the customer’s relationship to attain rivalries benefits. Dynamic feeback and reviews can be taken by the firm to improve and enhance the quality and features of the products.	Customer Segments Billabong segments its products on the basis of geographic, psychographic, behavioral and demographic areas. It is stated that the company focuses on the needs, wants and requirements of the customers accomplish the long term goals and objectives in Indian market. It produces the products after considering the wants and desires of the customers in the competitive market.
	Key Resources The key resources of the company billabong include human resources, capital, products and finances. Along with this, intangible and intangible resources also can be used by the company.			Channels There are several channels of communication, products distribution, and sales through which a company sell its products (Remane et al., 2017). Likewise, Jet.com uses online means to reach to its customer and deliver them through courier and various channels of distribution (Sinfield, Calder, McConnell & Colson, 2012).
Cost Structure Costing structure can be used by the company to gain trust and loyalty of the customers because they customers can easily rely on this.			Revenue Streams The organization already uses pricing strategy to provide goods at appropriate prices to the customers internationally. This strategy helps Billabong to maximize or increase revenue and profitability in the competitive market.

The strengths and weaknesses of Canvas business model have been detailed below.

Strengths

• This model focuses on the speed and agility to attain various advantages in the marketplace.
• Common language is used in this model and value proposition is the heat of Business Canvas model.
• This model is very easy to understand for everyone on the team.

Weaknesses

• It is not proper updated model.
• Generally it is used without embedding it into corresponding techniques and methods. Furthermore, it leaves out significant business model attributes such as liquidity and competitors.

There are ample of strategies can be used by Billabong to improve the business model. First, it needs to focus on the technology and equipment to carry out the business operations in India. Innovative and advanced technology can be used by the organization to run the business operations effectively. Aside this, the firm should implement an effective and continuous improvement approach to improve and enhance the international business model. Beside this, Billabong should focus on the existing market to identify the potential customers and to improve the international business Canvas model (Coes, 2014). 

A business model discusses how a company delivers, generates and captures the values in the international market. It is noted that competition would affect the business model in a large extent. The threats of new entrants also affect the growth and progress of the firm adversely. It is noted that competitors also may influence the key resources, key partners and customers relationships in new and innovative market  (Clark, Osterwalder & Pigneur, 2012). Sometimes, competitive rivalry is complex for Billabong to asses and evaluate, majorly they lack a process to aid them in analyzing all of the dimensions where competition comes into play (Hume, 2012). The substitute products also will affect the outputs and results of the company adversely in the international market. The competition is fluctuated in the country regularly thus, it has adverse impact on the performance of the workers in the competitive market. The competitors offer similar products in the marketplace therefore it can be biggest issue for Billabong in India. The advertisement and promotional strategies of the rivalries would also be affected the revenue and returns of the organization. Hence, Billabong needs to focus on the competitors while entering in the Indian market. The company needs to focus on the strategies, plans and processes of the competitors to stay in the rivalries market (Martin, 2015).

India is projected to become one of the largest economies in the world in coming years. After the various studies, it has been measured that Indian business practices are quite different from the West. The people of the country follow unique and dynamic culture, beliefs and values. It is stated that Indian economy is mostly dependent on the agriculture industry (Kohli, 2012). A high proportion of Indian population is dependent on the agriculture that contributed maximum share in the national income of the country. In 2004, approx 58% of the total working population of India was engaged in agriculture and allied operations (Kwat, 2018). In addition, the capital formation rate is very poor in the country. 

Issues Affecting International Business: Political Populism, Weak Economic Growth, Global Insecurity, and Refugee Crisis

If Billabong enters in the Indian market then ample of risks and challenges would be faced by the company. Lack of preparation is one of the leading and biggest risks that can be faced by the firm while implementing the business actions in the Indian market. The country renders huge rewards to individuals and companies that take time to identify and understand its business culture but can be frustrating to those who think that they can make a speedy buck there (Amritt, 2018). The new entrant of competitors is another risk in India that can affect the long term objectives and goals. Moreover, the marketing and human resources are significant and major issues in the country. Due to human resource and marketing issue, the company is unable to recruit and hire talented staff in Indian country. The leadership issues can also be faced by the firm in the Indian market (Cheru & Obi, 2010). Thus, leadership and management issues will also be raised if Billabong initiates the business actions in India. Legal and political risks also would also be associated while implementing the business in India. Ethics and code of conducts is another issue that can hamper the financial position of the company in Indian market. The ethical issues include fundamental issue, diversification issue, decision making issue, and compliance and governance issues. The organization needs to focus on these issues to cope up and strive with rivalries in the marketplace (Oster, 2018).

Pestle analysis can be done by Billabong before implementing the business activities and actions in India. This analysis helps the firm to identify and analyze the opportunities and threats of the market. The pestle analysis for Billabong in the Indian market is discussed below.

Political factor: It is noted that political situation in Indian market is stable and dynamic thus, it will help in reducing the business risks and challenges in the market. The country has a federal republic democracy that entails political stability with dynamic and efficient government policies.

Economic factor:  The economic factors such as economic growth, interest rate, exchange rate, inflation rate and taxation changes that can put unfavourable and favorable impact on the outputs and effectiveness of the firm. It is noted that India follows strong and dynamic tax structured system. Thus, it will help in attaining the desired objectives and mission (Rao & Varghese, 2009).

Social factor: The social factors include custom, values, beliefs, lifestyle and behavior of the people that can affect the selling activities of the company. The culture of the India is different from the other countries. The company needs to focus on the social factors to analyze and evaluate the needs and desires of the customers in Indian market.

The Canvas Business Model: Key Partners, Activities, Value Proposition, Customer Relationships, Customer Segments, Key Resources, Channels, Cost Structure, and Revenue Streams

Technological factor: The country has an excellent percentage of self sufficiency in terms of total power energy needs and wants. Along with this, the country is a biggest market in the mobile sector and new operators in the international market (Szirmai, Naudé & Goedhuys, 2011).

Legal factor: The legal factors will affect the operations and activities of Billabong. The success and progress of the firm would be affected by the International trade regulations and foreign trade act. Billabong needs to focus on the legal factors before implementing the business in Indian market.

Environmental factor: The environmental factors such as weather, pollution and climate change are biggest concerns for Billabong in Indian market that can affect the goodwill and image of the company adversely in the global market. Air pollution is one of the biggest issues in Indian market that puts direct impact on the business of the corporation.

Apart from the pestle analysis, the company can also use SWOT analysis, porter five forces analysis, corporate level strategies and business level strategies to capture the entire market in the Indian market. Aside this, it will also help in reducing and preventing the issues and challenges related to the Indian market. The company should also focus on the innovative and unique strategies to beat the rivalries internationally. 

Conclusion

On the above mentioned limelight event it is evaluated that Billabong is Retail Company provides retail products to the customers in Australia. The above analysis shows that how Billabong company explore the business activities in India. The economic theories and business Canvas model provide ample of benefits to the company while conducting the business in Indian market. The paper analyzes the strengths and weakness of the international business Canvas model. At the end, some mitigations have been suggested to prevent and address various issues such as leadership, human resources and marketing issues. 

References 

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Szirmai, A., Naudé, W., & Goedhuys, M. (Eds.). (2011). Entrepreneurship, innovation, and economic development. Oxford University Press.