Implications Of Global Penetration And Diversification For Welssup Group Essay.

Q1. Globalization Challenges

As the need to remain relevant in the ever competitive business environment downs on may organizations, emphasis on the adoption of alternative business strategies has become quite significant. Among the major strategies that have been adopted by organizations include diversification and Globalization (Lane,2008). Welssup Group is an International Company that was established in 1985 as a Polyester manufacturing in a Small town in India. The company has ever since diversified its operation in more than 50 countries including UK, USA, Portugal, Saudi Arabia and Mexico becoming among the leading global textile companies as India’s leading home textiles chain. From textile, the company has diversified its product lines to include pipes, energy, and infrastructure. The company made its first global venture in 2000 and its first international acquisition in 2006.The Company has grown to become a major example of a success story in short span of time (Hitt, Ireland & Hoskisson,2013). This report aims at exploring the implication of global penetration and diversification the company.

As the company continues its mission of improving its global presence, it is likely to face a number of challenges

Managing Diversity

Diversity is a major challenge that the company is likely to be faced with as it ventures into new global markets. Venturing into more new markets will necessitate the development of diverse teams with different cultural and work skills in order to improve its competitiveness in the newer markets. Managing people with different attributes and possessing different cultural traits as well as operating in new cultures is likely to be a challenging task for the organization. The management will be faced with the responsibility of creating a customized workplace that balances the needs and aspirations of employees from different races, cultures and ethnicities while at the same time maintaining a common identity for the organization.

Keeping up with changes in the global environment

Another major challenge that is likely to face the organization is the dynamism of the global market environment. The environment that organizations operate in is increasingly becoming diversified which might require the need for creation of strategies to keep up with these global changes. The company will be faced with the task of ensuring that they make the right decision and create the right collaborations in order to avoid being disadvantaged.

Compliance and Regulations

The company will be faced with the task of observing various rules and regulation governing the operation of business in the various countries in which it will penetrate. It will have to comply with tax laws for various countries, export regulations among other regulations. The strictness about the type of business practices allowed differs between countries. The organization will be faced with the task of dealing with this reality of dealing with strict policies in some countries.

Managing Diversity

An organization such as Welssup Group that has recorded tremendous growth can stand a chance to remain sustainable depending on the strategies that it adopts in the operations. It has been argued that some companies record fast growth then come down crumbling as a result of lack of necessary strategies to sustain their fast growth rate. Fast growth, however, comes with issues which must be well managed. The high growth rate of the company can, therefore, be manageable. The success of the organization can be measured by a number of metrics.

Revenue. Revenue is a number of profits generated from a company’s operations. Depending on the revenues generated, an organization can be said to be downgrading or upgrading. Welssup Group Company has recorded tremendous improvement in its profit margins over the years. It’s ability to maintain these profit margins will, therefore, be used as a measure the Company’s sustainability.

Average wage the company can also measure its sustainability by the amount of wage that it is able to pay its employees, with regard to prevailing circumstances. Usually, a company’s should be able to pay its employees wages that are sufficient to enable them to afford basic commodities. The ability to achieve this can, therefore, be used as measure of sustainability (Hanitsch,2010).  

Employee Diversity can also be used as a strategy for measuring diversity. The ability of the organization to attract and retain diversified employees can also be used as a measure of diversity. The diversity of the company can also be measured by its market share. The ability of the company to maintain and improve its market share will also be used in measuring its sustainability (Norhana & Universiti Malaya,2012).

Q3. Growth strategy refers to the method used by organizations to expand its operations. A different organization may use different strategies to expand their operations depending on their financial position the level of competition in their industry as well as the prevailing government regulations. Among the main, used growth strategies include, diversification, acquisition, market expansion, market penetration and product expansion (Beck,2010).  Wellsup Group has successfully used the above strategies to expand its operations.

By adopting the various growth strategies the company has engaged itself in a risky undertaking involving a lot of money. By investing in foreign markets and acquiring firms in foreign countries as well as establishing new product lines the Company has invested its fiancés without surety on returns. This is a risky and at the same time, a bold move. Diversification and market expansion are some of the areas dreaded by the organization because they involve a lot of uncertainties. By taking this risky venture and succeeding, the company can serve as an inspiration to others that might have feared such an approach. However, this is possible under the following conditions (Kenny,2009).

Keeping up with changes in the global environment

Risk reduction. Risks cannot be entirely eliminated but they can be managed. Diversification comes with its risks that diversifying firms must confront. However such risks might be temporal and lead to long-term returns. The firm can be able to inspire others by its ability to manage risks that emanate from the growth strategy adopted.

The growth of Company’s Portfolio. Among the main aims of organization’s growth strategy is to achieve actual growth in its market share as well as revenues. The company can, therefore, inspire others if through diversification; it is able to grow its market share and revenues. Generally, it can serve as inspiration if the overall benefits surpass the overall challenges (Boudreaux,2008).

Major impact of the Company’s growth trajectory

One single factor that factor that had an impact on the company’s High growth trajectory is the company’s leadership. Organization success is to a large extent determined by the nature of the leadership that an organization has. Leadership refers to the act of leading of leading people or an organization. Leadership usually involves setting a clear vision and sharing the vision with others in the organization to ensure that they follow it. Leadership also provides information as well as knowledge and methods to be used in the realization of the vision (Steger, 2013).

The fact that it has taken the organization very few years to achieve the immense success that it has achieved can only be attributed to the leadership of its leaders such as B.K Goenka and R.R Madewewala .As noted I the case study, they have played a significant role in bringing the organization where it is today. Any major decision taken by the organization such as making its first international venture by setting up a subsidiary venture in New York was all determined by the leadership of the company. This also applied to the decision to diversify its product line from textile manufacturing to other products such as pipes, infrastructure, and energy. In particular, the leadership of the organization was responsible for setting a clear vision of where they wanted the organization to be in terms of global presence, and influencing the understanding and the acceptance of the future state of the organization by the employees (Ritzer,2011). This has enabled the employee’s performance to stay on course towards the realization of the company’s current success. An organization success is majorly determined by the workforce in the organization. The success story of Welssup Group shows an organization with a very strong and motivated workforce. It is the responsibility of the leadership to keep their employees well motivated. This well-motivated workforce has set the foundation for the various diversifications that have been adopted by the company.

Reference List

Lane, J.-E. (2008). Globalization - the juggernaut of the 21st century. Burlington, VT: Ashgate.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Competitiveness & globalization. Mason, OH: South-Western Cengage Learning.

Steger, M. B. (2013). Globalization: A very short introduction.

Oxford, United Kingdom : Oxford University Press

Ritzer, G. (2011). Globalization: The essentials. Chichester, West Sussex ; Malden, MA : Wiley-Blackwell

Boudreaux, D. J. (2008). Globalization. Westport, Conn: Greenwood Press. Westport, Conn. : Greenwood Press,

Kenny, G. (2009). Diversification strategy: How to grow a business by diversifying successfully. London: Kogan Page.

Beck, J. B. (2010). Corporate diversification strategy and divestment using an integrated TCE-RBV theoretical framework. Irvine, Calif: University of California, Irvine.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic Management. Boston, MA: Cengage Learning.

Hanitsch, K. (2010). Real Types of Diversification Strategies - An Analysis of different Types of Relatedness in German Companies. Mu?nchen: GRIN Verlag GmbH.

Norhana, S., & Universiti Malaya. (2012). The impact of diversification strategy on bank performance: Evidence from Malaysia.