Key Issues in International Business Activity in the Context of Contemporary Globalisation
Arrival Ltd is the fastest growing electric vehicle manufacturer in the United Kingdom. It is headquartered in the heart of London, mainly specialising in lightweight and durable commercial electric vehicles. Primarily Arrival Ltd designs buses and vans for widespread and mass adoption within the United Kingdom, as the basic and primary mode of public transportation and commute. It was founded by the former Russian Deputy Minister and Telecom tycoon, Denis Sverdlov. The various shareholders include Black Rock, Hyundai Motors and the Russian Oligarch, Vladimir Putin. The Company was founded on 6th March 2015. As of 2021, Arrival Ltd has over 2,300 employees and its headquarters are based out of three places namely Howald, Hesperange and Luxembourg (Arrival 2022). The Arrival Ltd completed a merger with a United States blank-check company, following its Public Trading on Nasdaq, with 13 billion United States Dollar (USD) Initial Public Offering (IPO). The Company ended up finalising its position with the CIG Merger Corporation Group led by Peter Cuneo (Haill 2022). The report will act as a guidepost for Arrival Ltd (Castellani et al. 2018).
Globalisation is essential in the prospects of diversification, business growth, economic prosperity and cultural exchanges. However, with the myriad of possibilities and benefits there are some significant challenges in the paradigm of contemporary globalisation (Costa et al. 2022).
The various key issues and challenges in international business activity in the context of contemporary globalisation, in respect to the electric vehicle manufacturing firm Arrival Ltd are –
- International Recruiting: The challenges are in the assessment of the quality and the relevance of the candidate based on their education, skills, experiences and competencies, being thousands of miles away from the organisation and with zero scope for physical recruiting (Rubens et al. 2020). Hence, for Arrival recruiting outside the UK is a seemingly discouraging facet in terms of globalisation and building a global employee base.
- Managing Employee Immigration: The dynamic and sudden nature of immigration laws causes a lot of challenges for business organisation in terms of international workers and candidates. Immigration laws compliance is a must for international businesses and organisations and the sudden nature of them makes it extremely difficult for Companies to manage international operations and recruiting (Sousa and Ayarza 2022).
- Incurring Tariffs and Export Fees: The tariffs and export fees for organisations looking to sell their products and services in different international markets and economies is higher and often discourages businesses to venture that route (Estrin, Gozman and Khavul 2018).
- Payroll and Compliance Challenges: One of the biggest challenges that organisations face in international expansion is the ability to manage overseas payroll and employee remuneration, due to complex procedures and changing tax laws of the international country. It becomes extremely difficult for organisations to transition their centralised payroll system to accommodate the changes that are prevalent in the international frontier (Galatoulas, Genikomsakis and Ioakimidis 2018). Hence, for Arrival Ltd to build a global business, it will require to create a unified and a global compensation and remuneration system that can cater to the globalisation goals of the Company.
- Loss of Cultural Identity: Globalisation has made access to foreign countries easy and reachable. However, it has also paved the way for dissolving unique cultural identities and unique cultural facets into unified moulds and cultural identity. (Rubens et al. 2020). Arrival Ltd will need to account for the local cultural and social facets and will need to build its international business based on that fabric.
- Foreign Workers Exploitation: Rapid contemporary globalisation and foreign market entry by various organisations, makes the exploitation of employees and workers rampant and on a large scale, due to excessive competition and market aggression. It is a serious violation of human rights and professional rights of workers and can cause serious consequences for organisations (Sousa and Ayarza 2022). Arrival Ltd. will need to provide fair and just working condition and benefits to foreign workers and workers and employees, employed in the foreign markets.
- Global Expansion Difficulties: Businesses looking to enter the overseas market and establish business ventures it is extremely complex and difficult to do so for a large number of reasons. The traditional route of entry into a foreign market and setting up of businesses is extremely capital and cost intensive, requires a huge amount of planning and allocation of critical organisational resources for diversification. It is also difficult to maintain businesses with large amount of capital yearly. It is also important and difficult for organisation to keep up with the latest labour laws. Else, it can lead to serious consequence and financial and legal losses and troubles (Estrin, Gozman and Khavul 2018). For Arrival Ltd it is important to understand the best entry mode that is suitable for its electric vehicle automotive business model.
- Immigration Challenges and Local Job Loss: Many countries are tightening their boundaries and creating stricter immigration rules and policies. This is affecting the jobs of millions of people and resulting in local job loss as well. It is becoming difficult for organisations to manage and effectively work on both fronts and create value. This is also a reason behind rise of labour costs and often exploitation of workers. (Galatoulas, Genikomsakis and Ioakimidis 2018). Arrival Ltd. will have to build a global policy framework that is flexible enough to account for the changes in the labour laws and the local governments laws.
Technological Scenario: The United Kingdom is the most technologically advanced Country in the World, with London being the heart and Capital of innovation and excellence. London is the great hub for both technological and financial institutions. Various businesses are in the task of frequently developing new advancements and technologies to offer the best solutions for their customers and for the United Kingdom. (Li, Khajepour and Song 2019).
One of the well-known models for Internationalisation is the Uppsala Model and Arrival Ltd can use this model to enter their prospective markets viz; Norway and the Netherlands (Eduardsen and Marinova 2020).
The Uppsala Model focuses on the interest of the internationalisation process which is apt for Arrival Ltd. The Uppsala Model is a suitable model for the entry of Arrival Ltd. into the Norway and the Netherland Market. It will allow Arrival Ltd. to enter the market in stages and only when the organisation has gathered enough information and evidence that suits their expansion and internationalisation model and interests (Vahlne 2020).
Uppsala Model for Internationalisation and Entry into New Markets
The Uppsala Model is divided into four distinctive modes of entry into a foreign market where every successive stage represents a higher degree of involvement and association within the international market.
- Stage 1: No Regular Export Activity (sporadic export).
- Export via Independent Representatives (export modes).
- Establishment of a Foreign Sales Subsidiary.
- Foreign Production Manufacturing Units (Vahlne and Johanson 2020).
Image: Uppsala Model of Internationalisation
Source: As depicted by the author
Image: Uppsala Model of Internationalisation
Source: As depicted by the author
Arrival Ltd can enter the market of Norway and the Netherlands in the four mentioned stages. In stage one, Arrival Ltd. can enter the market and engage in marketing and promotional activities to capture the market and test its buses and vans on the roads of Norway and Netherland, to assess the viability of their products in the local environment and market of the two Country. This will allow Arrival Ltd. to get every form of legalities and the respective requirements for entry into the respective foreign markets completely, with changes and modifications of their offerings to suit the needs of the foreign market, while building a strong community-based demand for their upcoming products into the market. In the second stage, after successful completion of the first stage, Arrival Ltd. can start exporting its vehicles into the Norway and the Netherland Market. This will allow Arrival Ltd. to have their buses and vans on the road of the respective foreign countries and assess and analyse the performance, the response, the impression of the local people of the Country, and based on that Arrival Ltd. can adjust its business model to suit the needs of its foreign markets. In the third stage, after the successful introduction and initiation of its vehicles into the targeted foreign markets, Arrival Ltd. can proceed to set up its own sales units to locally sell its buses and vans and lay the foundation for a Global Supply Chain. This will allow Arrival to establish its production networks within the local market of Norway and the Nertherlands in the future and also offer its vehicles at a lower cost than that of export. In the final and the last stage, Arrival Ltd. can complete its internationalisation procedure by completing its entry into the foreign markets of Norway and the Netherlands respectively. After the successful introduction and initiation of its vehicles into the targeted foreign markets, Arrival Ltd. can proceed to set up its own production, manufacturing and distribution units to locally manufacture its products and lay the foundation for a Global Supply Chain. This will allow Arrival to establish its production networks within the local market of Norway and the Netherlands. (Vahlne and Johanson 20).
PESTEL Analysis of Norway and Netherland
The production for the Arrival bus is set to begin in the fourth quarter of the financial year in 2021 and for the Arrival van in the second half of the 2022 financial year. Arrival Ltd, the Oxford-based company has a detailed plan for the launch of its first electric buses and vans on the road, along with the expansion of production facilities. Arrival Ltd. is set to start passenger trials as well. Hence, it is important for Arrival Ltd to understand the target market for its internationalisation (Gorynia 2019). The selected target market for Arrival Ltd. is the Netherlands and Norway. The PESTEL Analysis of the target markets is depicted below.
- Political Scenario: Norway and the Netherlands enjoys a significant political strength and stability, with the prime minister being the head of the Government. Both the Countries are actively pushing towards green and clean alternatives to transportation and consumer vehicles. Both Norway and the Netherlands provides a feasible opportunity for Arrival Ltd to introduce its electric buses and vans into the public transportation system within the heart of the Countries respectively. Norway and the Netherlands are known for their alliance and exhibits open nature to innovations and new business ventures. Arrival Ltd. will have a strategic advantage of approval and support in the public transportation market of Norway and the Netherlands (Li, Khajepour and Song 2019).
- Economic Scenario: Norway and the Netherlands enjoy strong economic capabilities and are considered as developed nations, in terms of their Nominal GDP. Both the Countries have huge economic potential for Arrival Ltd to conduct its business trials and introduce its electric offerings in the form of public transportation. The per capita Income of the people is higher and is a favourable destination for Foreign Direct Investments (FDIs). Both Norway and the Netherlands are at the heart of the global capital and economic front, and success at that level can be a huge economic boost for Arrival Ltd. (Matovi? 2020).
- Social Scenario: The entire geographic region of Norway and the Netherlands have a huge consumer market in term so public transportation as well as the demand for electric cars and vehicles. Norway has a large population of people who depends upon the public modes of transportation to travel from one place to another, and the same is for the people of Netherlands. The people of these countries own a large number of private EVs but have been looking for economical and efficient public transportation facilities and makes it the perfect markets for Arrival Ltd to disrupt and enter The buses and vans of Arrival Ltd can be a huge boost in the public transportation service system of Norway and the Netherland, gaining huge favour and acceptance by the people. Both Norway and the Netherlands have a culturally diverse and rich population; hence it will be extremely strategic for the Company to introduce its electric vehicles into the respective markets (Pan, Chen and Zhan 2019).
- Technological Scenario: Norway and the Netherlands are the most technologically adaptive and advanced Country in the entire European Region, with being the heart and Capital of innovation and excellence. Norway and the Netherlands are great hubs for financial institutions. The advanced and richly diverse technological infrastructure offers entrepreneurs unimaginable and innumerable opportunities to Arrival Ltd to do business in heart of the Countries. The technological sector is a major contributor to the Norway and the Netherlands’ Economy as well as the Global Economy. Hence, there is greater acceptance and encouragement of newer, advanced, cleaner and greener technological innovations in the heart of Norway and the Netherlands (Li, Khajepour and Song 2019).
- Environmental Scenario: The importance of cleaner and greener business solutions is on the rise in Norway and the Netherlands especially accelerated by the Government intervention and active participation. This provides Arrival Ltd an excellent opportunity to revolutionise the public transportation system of Norway and the Netherlands By their eco-friendly electric buses and vans, Arrival Ltd. can reduce the carbon emission from public transportation system in both the Countries by as much as 95%. These are significant numbers and provides Arrival ltd a unique opportunity to leverage the situation and sustainable business scenario (Matovi? 2020).
- Legal Scenario: The legal framework of Norway and the Netherlands is inclusive of organisations like Arrival Ltd, who are transforming the business landscape of the country for the better. Norway and the Netherlands being the most populously dense countries in terms of EV adoption, provides an excellent opportunity to Arrival Ltd. to pilot test run its vehicles and services and analyse the legal parameters and the environment. Arrival Ltd, will have a lot of administrative support from both the local Government, and the Central Government of Norway and the Netherlands (Pan, Chen and Zhan 2019).
There are many factors that Arrival Ltd. will need to consider while entering into the Foreign Market after their success in the United Kingdom. Arrival Ltd will also need to curate it services and product offerings based on the market it is entering, for example, cultural considerations, GDP, per capita income, economic infrastructure, business initiation support and confidence and so on (Perraton 2019).
The various modes of entry for Arrival Ltd into the International Markets are depicted below.
- Exporting: For Arrival Ltd, exporting their buses and vans to target foreign market will depend upon the strategic relationships with the government and the export and tariff rates. The target Economy must also have supportive export and import duties and relationship with the United Kingdom and Arrival Ltd. (Reinhardt et al. 2020).
- Licencing: For Arrival Ltd. operating in the automobile industry, especially in the electric vehicle segment is a complex and intricate business production and manufacturing model. It will not be a suitable entry mode for Arrival Inc unless and until they can be absolutely sure of the production and manufacturing capabilities of the organisation in the target market and are sure to deliver on Arrival’s vision and business objectives (Reinhardt et al. 2019).
- Franchising: For Arrival Ltd, licencing is not the appropriate mode of entry into the new market, being in the electric vehicle automotive sector Sanguesa et al. 2021).
- Joint Venture: For Arrival Ltd, a partnership with Tesla might be useful and advantageous since both the organisations are committed to revolutionise the electric vehicle industry. However, a strategic partnership or joint venture between Arrival Ltd and Audi might not work since the primary business of Audi is not in the electric vehicle segment (Reinhardt et al. 2020).
- Foreign Direct Investment: This refers to investing in a foreign facility to enter a foreign market. This requires a lot of capital, technology and staff capabilities. For a start-up and fresh organisation like Arrival Ltd, foreign direct investment is extremely costly and not at all feasible (Reinhardt et al. 2019).
- Wholly Owned Subsidiary: This can be a unique prospective for Arrival Ltd. For example, if there is a innovative sustainable battery manufacturing company in Brazil, then the best way for Arrival Ltd to enter Brazil might be via buying out that company. However, this also requires huge capital (Sanguesa et al. 2021).
Arrival Ltd is an innovative electric vehicle solution that is combining modern technologies with advanced and sustainable ways to create zero emission vehicles and at lower and affordable costs. The primary aim of Arrival Ltd is to revolutionize the public transportation system in the United Kingdom via their electric buses and vans (Schwens et al. 2018). The company, has developed a unique new method for the design and production of electric vehicles (EV) that enables it to build quality vehicles for a similar price to fossil fuel equivalents. Arrival currently has three 'microfactory' plants, with the first in Bicester near Oxford recently joined by a pair in North and South Carolina in the US. Its fully electric van, made with lightweight aluminium frame and proprietary composite body panels, is designed to offer a much lower total cost of ownership, the company says, as well as zero emissions, with hardware and software components upgradeable over time to keep up to date with the latest technology, and a modular battery ranging from 44kWh to 133kWh to allow operators to choose the configuration that best suits their range requirements (Smith et al. 2021). Arrival Ltd is in the work of making public transportation vans, buses and electric cars to provide ride-sharing drivers more autonomy over their vehicle, while going fully green and sustainable (Watson et al. 2018).
External Influences and Possible Modes of Entry into International Markets
The above essay concludes the paper by enumerating the various international business facets of the United Kingdom Automaker Company, Arrival Ltd, specialising in electric vehicles for commercial transportation and commute, in the form of electric busses and electric vans.
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