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Question:
Discuss about the International Management Of Welspun Group.

 
Answer:
Introduction:

International Management is the process of running corporate operations in more than one country. The process necessitates familiarity with the culture, economic, language, and political environment of the countries, which a corporation intends on conducting business in (Dunning, 2014). International management is a product of global expansion where a company expands its business activities to various regions around the world. The concept also entails maintaining an actual business presence in countries it has set up shop (Mead and Andrews, 2009). The focus of this paper is to respond to case study questions on the globalization of Welspun Group. 

 
Challenges for the Welspun Group as it Continues to Expand Internationally

Welspun Group faces challenges brought about by cultural differences when expanding globally. Cultural differences require the group to take time and study the culture of the people in the country they wish to expand to. The company risks not living up to its expectation if it fails to understand the culture of its potential customers. For instance, the business may not be able to use time and cost-saving tools such as Skype to close a business deal it intends to execute in a country such as China. People in the country value face to face interaction and building relationships with business partners. A company may thus spend more on its expansion plan (Goh, 2010).

The company may also be subjected to unnecessary administrative and bureaucratic procedures that may be time-consuming. It, therefore, means that requirements such as gaining product approval, registering a company and opening a bank account may take months. Welspun group may also be faced with language barriers during its globalization strategy. The aspect often results in a reduced ability to communicate effectively, misunderstanding and confusion (Niagara Foundation, 2016).

Another challenge that the business may experience as it seeks to expand globally is diverse consumer preferences. The issue arises where the company is accustomed to addressing a specific consumer preference. During its globalization, the company may be required to tweak its products to suit its intended market needs or risk making losses due to poor sales (Hope, 2015).

Welspun Group may also be subjected to dissimilar business culture to the one it is familiar with during globalization. For instance, the company may not be able to apply the same business culture it uses in New York, Mexico, and Europe in China (Goh, 2010).

 
Are the High Growth Rates Sustainable? If no, what would be Group’s Future Strategy?

Welspun Group’s high growth rates are not sustainable. The company focuses on the acquisition of companies in already established markets that may be near their elastic limit of market growth. The company’s future strategy can also involve the acquisition of businesses in underdeveloped markets thus paying a lower price during acquisition and developing the company themselves thus realizing growth. Welspun will find it difficult or require more resources for the development of companies acquired in fully established markets (Tobak, 2016).

Another strategy Welspun Group can use in the future is the creation of an even stronger brand. The company may be credited for having amassed huge amounts of returns from its intended market. However, it is consumer penetration that really matters. The step can be undertaken by connecting with the public which implies making the target market feel that there exists an emotional attachment that consumers have for the products (Liabotis, 2007). The company can also choose to invests in acquisitions that seek to service a broad range of consumers not only two main consumers, Target and Walmart. Depending on these to businesses as its main consumers make it have a low seller’s bargaining power while Target and Walmart holds a high consumer’s bargaining power. The occurrence works best for its consumers and not the Welspun Group (Liabotis, 2007).

Welspun Group can also embark on a strategy that entails partnership and collaboration. The company can gain through having a partner that knows his or her way around the country thus eliminating the time required to study a market. It may also eliminate bureaucratic procedures existing in countries that serve as an impediment to foreign investors (Biederman, 2015).

 
Can the Group’s Strategy Serve as a Role Model for other Companies? How and Under what Conditions?

The group’s growth strategy can serve as a role model to other countries under some conditions. Its focus on geographical and product diversification as a strategy means that not only did the company seek new markets, but also new products thus diversifying its product portfolio.

Having a broad product diversification strategy meant that the company could gain financial advantages. The fact is supported by the occurrences benefiting from a quick cash cycle and flow thus the ability to access its profit from multiple ventures thus increasing a company’s credit score thus benefiting its growth strategy (Johnstone, 2014).

The company’s strategy can also serve as a role model as it was able to gain market share through both geographical expansion and product diversification. Through the introduction of new products as well as exploring new markets the group is able to benefit from an expanded consumer base (Johnstone, 2014).  

The group is also protected from failure by embarking on this type of strategy. If one product failed to meet up to its expectations and make losses, profits obtained from other product sales would be able to cushion the group and to enable it to get back to its feet. For instance, if its investment in the pipe and steel industry failed, it would be cushioned from total losses from investment in other industries such as textile and energy sectors (Gordon, 2004).

In addition, the group’s strategy supports its growth strategy. A diversified strategy helps growth in terms of profit or sales or number of employees.  If a business moves into an industry, it has not explored that is a growth in itself aided by investment. Growth is assured if the new investment brings in profits (Gordon, 2004).

 
What will be the One Single Factor that has had the Biggest Impact on the Group’s High Growth Trajectory?

The one single factor that is credited to having a high travel trajectory for the company is its ability to acquire established manufacturing brands abroad. Once the company acquired an already established brand, it benefited from obtaining quality and additional staff from the company thus eliminating the need to recruit new staff. Moreover, the company also benefits from knowledge of the market that the employees have. Additionally, the group also benefits established distribution channels (Cranfield School of Management, 2015).

The company also focused only on developed markets in Western Europe and the United States. It was prudent not to go for an all-out internationalization strategy, which would have proved difficult to undertake and thus shifted its focus to developing markets. In addition, its flagship businesses of textile and pipes move is a cyclic manner. Thus its investment in the two initial businesses was a good hedging strategy (Kumar, 2010).  

The same factor requires the group to reorganize constantly and realign itself. Thus the type of organizational structure and adaptable transformations allows the group to prosper in diverse business segments that are spread across multiple geographies. The group also made a prudent move to capitalize on the increasing role of outsourcing and offshoring, a strategy that was being adopted by large retailers in developed market. The strategy meant that the group had a stronger supply chain. Its strategy to tap into markets that were unconventional and risky and setting up of manufacturing plants was instrumental for the group (Kumar, 2010).

Conclusion

Welspun group of companies is a case of a group that successfully embarked on a globalization initiative. The company focused on a strategy that entailed setting up manufacturing facilities abroad as well as making acquisitions. Consequently, the group of companies has had a cumulative annual growth rate of 30% annually. It is thus able to differentiate itself from its competitors.

 
Bibliography

Biederman, R., 2015. 7 Key Steps to a Growth Strategy That Works Immediately. Entrepreneur. Available at: https://www.entrepreneur.com/article/240853 [Accessed August 20, 2016].

Cranfield School of Management, 2015. Benefits of a Merger or Acquisition. MBDA. Available at: https://www.mbda.gov/blogger/mergers-and-acquisitions/benefits-merger-or-acquisition [Accessed August 21, 2016].

Dunning, J. H. (2014). The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge.

Goh, A., 2010. The 5 Biggest Challenges Businesses Face When They Expand To China. Business Insider. Available at: https://www.businessinsider.com/the-five-biggest-practical-challenges-for-foreign-smes-in-the-chinese-market-2010-12 [Accessed August 20, 2016].

Gordon, K., 2004. Pros and Cons of Expanding Your Product Line. Entrepreneur. Available at: https://www.entrepreneur.com/article/71094 [Accessed August 21, 2016].

Hope, K., 2015. The challenges of going global. BBC News. Available at: https://www.bbc.com/news/business-33224596 [Accessed August 20, 2016].

Johnstone, K., 2014. Advantages & Disadvantages to Corporate Strategy Diversification. Small Business. Available at: https://smallbusiness.chron.com/advantages-disadvantages-corporate-strategy-diversification-62119.html [Accessed August 21, 2016].

Kumar, V., 2010. Welspun Group: Riding the Globalization Wave. Home Textiles Today, pp.22-23.

Liabotis, B., 2007. Ivey Business Journal. Ivey Business Journal. Available at: https://iveybusinessjournal.com/publication/three-strategies-for-achieving-and-sustaining-growth/ [Accessed August 20, 2016].

Mead, R., & Andrews, T. G. 2009. International management. John Wiley & Sons.          

Niagara Foundation, 2016. Challenges Businesses Face When Expanding Internationally-Niagara Foundation. Niagara Foundation. Available at: https://www.niagarafoundation.org/challenges-businesses-face-expanding-internationally/ [Accessed August 20, 2016].

Tobak, S., 2016. The Secret to Sustainable Business Growth. Inc.com. Available at: https://www.inc.com/steve-tobak/the-secret-to-sustainable-business-growth.html [Accessed August 20, 2016]. 

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