Describe the international challanges and possible oppotunities for manager operating in global environment of australian callen bat manufacturer which have faced challanges internationally.
This report will provide a real-life example of an organization that has been facing issues when it comes to global expansion in international markets. The assessment will highlight the problems managers face while expanding their business to overseas market. Callen Cricket is the organization selected for evaluating the issue as it has been in the news for quite a long time. They are trying to export their products to foreign markets in India and they have been facing entry barriers. In the year of 1981, the organization started as Ian Callen Sports, however, Ian sold the business to focus on developing bats in three ranges. These products included the K-IX, Aussie Boomah and MX. The organization has been in business for the last 35 years and has been through lots of phases (Callen Cricket, 2017). The organization has aimed at maintaining a sustainable business as their business is resources dependent. The bats are handmade and are crafted form the finest English willow available in the global market. Willow Blue cricket forestry in Australia has been managed by Callen and the timber for making the bats are grown here. A.C MacLaren, one of the greatest cricketer of his time sourced the Willow Blue in 1902 and had given it to Bob Crockett, the Australian umpire. Crockett planted the cutting and made bats out of this willow till 1968 (Callen Cricket, 2017).This business has been reinvented by Callen and has been successful in re-establishing the business in the year of 1990.
The macro environment for each of the countries are different and while making an expansion it has to be kept in mid that there are certain barriers to entry that an organization has to face in order to make their business feasible in a foreign market. Pestle analysis is a tool which would give a detailed analysis of the macro environment of the business environment. This would include identification of the Political, Economic, Social, Technological, Legal and Ecological environment of the target market.
Thus, environmental concerns, business ethics, capital market and cost fluctuations are the general issues faced by the managers in the global environment. It is essential to identify the impact of the products on the environment of the host country so that it does not have any hidden impact on the society and the corresponding environment. Business ethics has become on the essential practice in global environment where the organizations will have to be transparent about their business activities (Collings, 2014). Thus, the standards of these parties are not the same in all of the countries and so many companies going global faces problems in the target market. Stability of capital market for making expansion in foreign country as it has direct impact on the economy. When there is instability in the capital there will be fluctuation in costs which will increase the cost structure of the organization on the host nation. Cross cultural diversity is another big challenge because of the differences in culture and language in the host country (Karadjova-Stoev & Mujtaba, 2016). Thus, it is difficult to communicate with the subordinates in overseas markets. Moreover, the organizational culture and the national culture will be different which will be difficult for the foreign investor to adapt.
· strong political environment
· GDP is high
· Inflation rate and taxation policies are liberal
· High growth rate
· Diversity in population
· One of the largest population
· Cricket is the most popular sports in the country
· Technologically advanced
· Focus on research and development
· There are cretin legal restrictions in terms of import and export
· Time consuming due to the hierarchical system
· Environmentally damaged and lots of concerns form the government
· Increase in pollution metropolitan cities
· String initiatives taken to protect the environment and keep the country clean
· The general population is reluctant of taking environmental protection measures
Pestle analysis of India
Source: As created by author
This show that out of these six factors, legal and environmental challenges could cause issues for the organizations entering in to global market. The same thing has happened to Callen Cricket, due to the environmental concerns in the country, the government is taking its time and delaying the entry of Australian organization in to the market. As most of willow is generally is imported from United Kingdom, there is an ambiguity in understanding the components of the willow and whether it consist of any biohazards or not. Even though the Callen has been able to form partnership with the local bat manufacturing company in India named BAS (Beat all sports), they are unable to proceed with the dealings unless there is a green signal from the Indian government (ABC News, 2017). This shows that environmental concerns are a major issue in the global market which be understood from the fact it is taking long time for the organization to get clearance from the agriculture officers. They are still evaluating the product for pest risk which shows the high degree of environmental concerns for Callen Cricket.
Callen Cricket will have to keep on waiting for the approval of the government until there is positive feedback and gain clearance. This would increase their cost structure as they inventory they have created cannot be exported to India and will hamper the liquidity of the organization (ABC News, 2017). Thus, if the wait time keeps of increasing the organization will incur losses that will be tough to recover. Moreover, with further delay in the market the organization will be facing issues in competing with the other rival companies. The current market conditions are apt for an expansion but fluctuations in the market economy will increase the setting up cost for Callen cricket.
Red-taping is an issue that the HR of any organization faces while they are directly coordinating with government while expansion. Cutting red tape is a priority for businesses as well as the citizens, who are complaining about devoting huge amount of time and resources to the related activities. The only way this red tape issue can be removed is with the help of complete government effort (Piekkari, Welch & Welch, 2014). The management and HR personnel cannot evade it totally, but they can at least attempt at reducing the impact it has by improving their own organizational processes.
Issue in this scenario
The first thing that the management can do is go completely electronic. Manual record keeping is prone to mistakes, making going electronic a good consideration. Many software is there that can be used for keeping all employee documents together for better access, editing and getting generated at the click of a button (Adekola & Sergi, 2016). There is special software for different government forms. It is important that companies learn about these to make sure all the employees’ contributions are recorded accordingly. Keeping all documents organized and in digital files, it would be easier to access them, edit, correct and submit to government agencies.
The issue of every employee not approaching the HR regarding updating their information while needed exists in all organizations. It is the responsibility of the organization to be proactive in such cases and stop future government run-arounds because of wrong or not updated information (Al Ariss, 2014). Campaigns must be held to make sure all employees update their details each month. This would be keeping all the files up to date. It would be great if there is an online portal for the employees to view and edit their information anytime.
While government documents get submitted, it would be great for the organizations if they submit at the branch where they signed up for. Generally, a single person can be given this responsibility (McFarlin & Sweeney, 2014). This would be helpful in building a personal relationship between the two parties. Simultaneously it would improve the chances of the organization to be given priority in the government processes.
Organizations often get better equipped if they are securely backing up all records of their transactions. This would be including not just the documents and the receipts but even timestamps of the transactions. This would make sure that the organization would be having proof for showing if anything goes wrong.
Organizations face the issue of lack in transparency. There is actually no way of gaining insight into the inner workings. However, it would be helpful if regular communication happens across all levels. One more way would be if the employees focus of being agile within their own role (Ardanaz et al., 2017). Accepting change in a graceful and calm way would be easier than facing the brunt of the senior management. Multiple rules must be frustrating, but they are there for a reason. It would be helpful if they are accepted and implemented to comprehend the reason for their existence and use those in own favour.
Governments have attempted a lot in cutting red tape, creating administrative regulations more cost effective and reducing administrative burden from activities. But the attention has shifted to removal of barriers of trade, entrepreneurship and investment. Administrative burdens have become a key variable in competitiveness. In such situation cutting red tape has become just a part of a range of policies that are designed for bettering performance and productivity (Doh, Luthans & Slocum, 2016). Thus, it can be understood that complete stop to regulations cannot be a good option. The answer lies in adoption of rigid regulatory quality programs for creating rules for meeting quality standards.
International expansion theory on the entry strategy and structure of the organization. The basic structure used for entry in the foreign market is alliance, joint venture, merger, acquisition, wholly owned subsidiaries, export and imports, licensing and franchising. The easiest way of getting in to international market is import and export of goods because it requires minimum investment (Davidson et al., 2017). However, the biggest disadvantage of these strategy is the rules and regulation of the foreign nation which will cause hindrance for entering in to the market. Subsidiaries in the foreign market is another option which is used as an expansion strategy as it avoids the cost of transaction, has high efficiency in managerial aspect, full control of the subsidiary and generation of heavy profits. However, there is high risk involved in this strategy and will not be efficient if multiple foreign expansion is required. Mergers and acquisitions are ways of expanding the business resources in a fast way and can generate high profit products very easily in a market. However, the cultural differences of the organization are a key factor which may cause problem for the new organization formed (McFarlin & Sweeney, 2014). Moreover, transactions costs and time constraints are typical problems in a merger which most companies will have to face. Thus, gaining synergy is strategy and structure is tough task where there is huge cultural difference in organizations. Joint venture is another entry scheme which allows two organizations to control a particular business or project. Alliance is a similar ting which refers to any type of cooperation among different companies. This would improve the operational efficiency of the organization and will gain knowledge about the local customers in the market. however, there may be disagreement between the parties and their goals may be different.
It can be said from the personal point of view that Callen Cricket should have taken preparation regarding the challenges they can face in the Indian market. The legal and the environmental aspect of the country would be a problem can be seen form the macro environmental analysis. Thus, even though importing of goods require minimum investment, the delay has caused major loss for the organization. Moreover, it is essential to select a partner that has command over the local market and the organization is facing issued because BAS does not have good holdings in the market to influence the speeding of the legal procedures.
Thus, it can be concluded from report that Callen Cricket should have identified the key issues before entering the market for avoiding all these hindrances. The organization has only few options in hand, they can either find a different market to sell their products or gather a certificate which states that their products are free of any hazardous material. Otherwise, they will have to wait for the government to give them the permit to export their products in Indian Market
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