This assessment has been designed in order to:
Assist you to develop and demonstrate your learning about the nature of international business and the importance of macro-environmental scanning and research, focusing on Topics 1-6;
Allow you to develop your information searching and critical thinking skills; and
Provide you with further experience in academic writing.
It addresses the following learning objectives for this subject
Be able to describe international business practices and discuss how they are being shaped by economic theories, financial, socio-cultural and political forces; with particular emphasis on the business practices of Australia's major trading partners;
Be able to identify general, and special problems, issues facing managers of international business operations
Be able to investigate different socio-cultural and ethical environments in the international arena and explain the implications for conducting business.
For the following project we have taken West Farmers Company of Australia.Due to the saturated market in Australia the company is trying to expand its retail and hotel business in Thailand since it is considered the gateway of Asia. The company has established a good brand name in Australia itself but to earn the same reputation in world it requires to first enter the Asian market. In today's time the European market is over saturated with lot of good and medium level companies at a glance and the Asian market is known to be the current developing one due to countries like China, India, Thailand, Singapore etc. The company cannot afford to enter the rough Chinese and Indian market as it may incur loss thus Thailand can be a good option for the company since the country is peaceful and attracts FDI to a large extent like India and China .
West-farmers is basically a co-operative ltd which was formed by farmer's group so that they can fulfill their demands and requirements regarding better payment and further reduce their hours of working during 1914.The rural community was supported by Walter Harper who was the leader of the organization. His views stated that the farmers can trade their production without any further interference of politics. Thus Westralian farmers was established on 1914 27th June and with this very beginning these people started trading their goods from a place known as 14 Howard Street in Perth. Initially it was known to be a farmer company since it only focused to market its products with the help of agencies of co-operative .The ultimate diversification of the entire business took place where it grew in other sectors including Convenience stores, Hotels, Home improvement goods in the retail and other super markets. Further the manufacturing industries of chemicals, fertilizers and coal led to the drastic growth of the entire brand. Today this company is considered one of the best entrepreneur companies in the Australia itself with 220,000 workforce and stakeholders approximately ranging to 530,000.Its share is incorporated with the Australia itself further the company is also registered in Australian security exchange with the codes 'WES'. (Geppert & Dörrenbächer, 2014)
- Asia's Gateway
The country is having a strategic and proper location which is serving as a entrance or gateway towards the heart of Asia. Further its economic market is growing very fast and it offers a easy trade with countries like India, China and other countries included in ASEAN. Thailand has an easy approach to sub-region of Greater Mekong where there are current developmental potential of new markets. Hence introducing its retail and hotel business in Thailand would not be difficult thing for West farmers (Brown & Lee, 2000).
- ASEAN's Hub
Country Background: Thailand
Thailand is known to be one of the founders of ASEAN and it has played a very important role in the emergence of ASEAN's free trade route. On 1st July 2010 AFTA came into power for the 6 members of ASEAN including Singapore, Thailand, Philippines, Indonesia and Brunei and all these six members duties were charged as zero. Further Thailand have very good economic relations with are ASEAN countries hence the products being manufactured at Thailand have proper access to the ASEAN countries market. So entering Thailand market provides a gate to all the other ASEAN countries too .
Thailand as whole is considered tourist and foreigner friendly country. It basically a Buddhist country which forms a constitutional monarchy government; it has very high dignity for Thai monarchy and teachings of Lord Buddha. Mostly all the people there are Buddhist but at the same time they respect all religions apart form that His Majesty i.e. the King is considered the head of all the religions .This country is showing a drastic growth in its economy and these can be judged by fast growth, good exports and vibrant customer domestic market. The foreign investors are usually attracted by skilled man force and cheap effective work.
The country has a well developed infrastructure and transport system and apart from that it has well equipped networks of IT which enable increase of business and living standards. The industrial estates are of world class standard as they provide sophisticated and standard facilities and this advantage is utilized by many of the multinationals. The hotel business requires this facility on top most priority thus expanding West farmer's hotel Thailand can prove to a best decision.
- FDI policies
The investment policies of the country are very well defined and these policies basically dedicate towards liberalization and further contribute to free trade. The foreign investments are usually contributing towards developed skills, innovation, technologies and all these skills are actively promoted by the government itself. Apart from that Thailand is continuously raking within the top list of attractive investment countries in the survey done by the international bodies. The government agencies completely support the investors. With the help of investment board the government provided a wide range of incentives regarding tax, services of support and import duty tax reductions to a broad range of activities been promoted. The organizations which are getting the privileges regarding promotion of investment further there is no need of local content or export need as Thailand's rules with respect to investment is in total compliance with the regulations of WTO.
Social and Political Stability
Due to fast growth of economy and strong industrial support the nation's manufacturing production has increased and diversified on a large scale in both the cases regarding new and established organizations. The government has laid stress by inviting the investments largely in six regions which is considered a key to Thailand's industrial growth. The six industries include agriculture, agro –industry, electronics, automotive, agro-industries, ICT and other added value services indulging healthcare, entertainment and tourism etc. These are some of the important industrial sectors where return on investment can provide us good amount of profit.
The term corporate reputation has changed since previous years further it is not following the old intangible concept of management. This entire scenario can be ignored by the senior managers thus it is important to provide quality products and experience to the Thai people so that the company successfully establish its brand in Thailand. The mangers and senior managers of every department is responsible for the reputation of the company since entering a new country in an entirely different continent is always a delicate and challenging task as the overall marketing strategy of the company is changed according to preferred location.The proposed product for this country is retail outlets of various grocery and stationer items and hotel industries (Hoyle, 2013).
- Transparency inside the organization: In today's time corporate secrets don't remain as secrets anymore and any bad news related to business spreads like a wild fire and the company do not get any time to work on it since its very important for Westfarmers to maintain the brand value at all cost since it will open the door for rest of the Asian countries.
- Expectation from the side of stakeholder: NGO's , Investors and Customers usually run under the impression that any business which can stand by all the odds for longer duration can drastically move or shift. Hence for a new country the stakeholder's attitude and responsibility may change; Westfarmers should be prepared accordingly.
- ‘Hyper-connection’ to extended networks: To effectively run the business at times mangers depends on third –party eco-system on huge basis. This particular factors reduces the control of corporate and further impacting the image of the company's management
How this new expansion will work for West farmers
West farmers are known to be Australia's biggest chain of retailer hence it though of introducing some of the effective risk management plans in case of Thailand too in order to maintain the reputation of the company. Ben Lawrence who is currently heading the Human Resource Dept stated that: West farmers even in this growing competitive market acquire a positive reputation which is acting their favor. There are various initiatives taken by the hr dept regarding the same matter to gain the same reputation even in a country like Thailand (Hatch, 2016)
West farmers throughout has provided better employment opportunities for many employees in Australia. Currently the workforce of Australia and New Zealand accounts to 220,000. Therefore the company needs to understand that it cannot relocate the entire workforce to Thailand or else Australia will suffer lack of man force. Hence it is important for the Hr team to recruit appropriate no of employees for the expansion purpose and this time the employees from Thailand should be recruited as it will help them to establish their brand in a better manner and further providing employment opportunities for the people over there .For this purpose the Hr dept requires to recruit talented, skilled and passionate workforce who can effort to dedicate maximum labor towards the task being given. The concerned candidate needs to handle following responsibilities (Bryman & Bell, 2007).
- The candidate requires maintaining healthy relationship with the stakeholders
- The candidate needs to take strategic decisions but he should also be aware of the commercial issues.
- The candidate must be aware of local culture of Thailand so that he can properly dedicate towards providing the good service to the customers
- The candidate should have excellent skills of management so that he or she can bring needed changes in the organization but with the collaborative factors.
The company keeps improving various strategies like structure of the organization management of allocation, control within an organization, management of leadership etc .The three basic strategies are listed below:-
1) Acquisition strategy
2) Business strategy
3) Implementation strategy
The main agenda of the company is give return profit to its shareholders. As it is a well known fact that Westfarmers strictly believe in the strategy of diversity and thus it created 9 divisions regarding the same. The other units of business involved in it are insurance safety, improvement of home, energy, coal , hotels and retail outlet etc. Every division is monitored by executive member's board that has their operations independent and hence their strategies are individual for every respective division. The BCG matrix rates the 9 sectors rate of growth. The acquisition strategy is further subdivided into two groups: Additional business or primarily known as add-on-business generally relates to the joining of new business with the old one eg Coles. But at the same time every sector of the company inputs hard work in order to generate good equity and profit thus every sector in divisional level have various department of corporate under it. They are also maintaining individual balance sheet since 1984 (Weihrich, 2007)
The external factors further contribute to 2 analysis macro and micro analysis.
Macro environment and Pestle Analyses
The current government of Thailand motives to increase the competition in the entire country by the access to business in the market as a part of the economic policy. This further involves promotion of investment & indulging in the agreements of free trade, boycotting corruption, avoiding drugs and finally increasing the living standard of the public over there by developing tax and healthcare system over there. Further the government is also focusing on the sustainability factors .All these situations prove that Thailand is the perfect option for West farmers in order to enter the Asian market. At the same time one must note that Thailand has prudent and good policies so far but the corruption over there is responsible for spoiling the development often (Wedel, 2012).
Thailand's economy has recovered on the partial basis after the financial crises of 97 and 98 and finally in 2004 the country showed a drastic growth in GDP. The banking system of Thailand is very efficient the increase of fiscal deficit in the country is a matter of concern. The country is considered as a big international center for finance with a combined network of health banking. The banking has played a crucial role to uplift the country's economy. The loans increased by 13.4 % in the beginning of 2011 as compared to the previous years. But at the same time the net no-performing assets were $9.8 billion within the country itself. In spite of these factors the country has a attractive foreign investors market .Apart from that it is a developing company so the economy is growing as per the previous year's statistics hence West farmers can run in profit (Varadarajan & Menon, 2002).
New and Old Industrial Growth
The business environment of the company is quite strong but still there are no robust laws for labors introduced so far. If the World Bank report is considered then we can understand that the environment of business in Thailand have drastically grown over the years. Further the report states that the Thailand attracted new companies by launching one-stop shop ; this has made the business market attractive for the foreign investors. The country tops of the list of freedom in case of fiscal, freedom regarding monetary issues, government expenditure etc as compared to rest of the nations around the entire globe (Kotler & Armstrong, 2004). The expenditure for research and development is increasing in Thailand but at the same time weak laws regarding intellectual property rights is a major issue too. The government although has decided set of techniques in order to develop the R&D .The country established Higher Education Commission by launching National Research University project .This entire process will make the Human resources effective in case of research and R&D. Further the government is also providing incentives in finance in order to establish the private investment in R&D. This development will also help West farmers in the longer run too (Duke & Tucker, 2007).
The name Thailand is derived from the indigenous group known as Thai. The country never suffered the colonial rule of other European countries instead it had complete monarchy till 1932 but later on it finally became a constitutional monarchy. The entire country is surrounded within an area of 198114 square miles which is approximately 513,115 square kilometers. Further the entire country is subdivided into four other regions namely Laos, Burma, Cambodia and Malaysia. The estimate of population is about 62 million all over the country. Thailand's increase growth is surrounded by the areas Bangkok have balanced the underdeveloped areas of the country. This means the average salary of the workers in the other areas are far lower than that of Bangkok which provides a great opportunity for West farmers to get cheap labors across Thailand. Apart from that the expenditure from the side of government is also less in the north eastern basically for health and agriculture. The literacy rate of Thailand is approximately 95.7 % out of the entire population. The large amount of educated people shows that there will be good amount of educated workforce in the country and this is another good factor for West farmers. Further government is also collecting funds for the security services too (Jackson & Erhardt, 2003).
The following project explains about the company West farmers and its rapid expansion in the market of Thailand. In order to earn profit the company decides to expand in Asia and no other option can be better than Thailand in case of rapid expansion. The country has good business environment and market which helps will help West farmers to start its Hotel and retail outlet business. The country does not have any challenging business market which can act as an obstacle but at the same time the company requires to maintain the reputation within Thailand so that it can rapidly expand throughout Asia.
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