Describe about the Strategic International Business Management, a Case Study of Hays?
Expanding into foreign countries is one of the widely used strategies that business organizations implement for further growth. Organizations generally plan their international or global expansions in such a way that that an actual operational presence can be maintained in those countries (Yu, 2012). The key to such international expansions lie in selecting an appropriate market for the expansion, besides implementing strategies to draw the attention of the target customers of that market.
This study firmly focuses on analyzing the strategy for expending the business in foreign market with a special case study to Hays’. However, this study aims to explain the selection of target market and the macro environmental factors for the selected market. In addition to this, the report also provides information regarding the threats and opportunity for expanding into the selected market (India) besides recommending the market entry strategy for Hays’.
1. Identifying potentially attractive target market
2. Rationale for choosing the market
In order to decide on the target market for the future international expansion of Hays, five countries had been chosen, namely Argentina, India, Kenya, Norway and Thailand. After considering various matrices, like that of the GINI index, the WEF reports on the global competitive index, the corruption index and the various economic factors of the said countries (provided in appendix), we have come to the conclusion that at present, India should be considered as the most attractive target market for Hays (Worldbank.org, 2015).
India is the largest democracy of the world: a federal system of governance runs the country. As in most democracies, each government decision depends upon several political factors: hence the decisions taken by the national government are generally based on the agendas of the ruling party (Malhotra, 2014). For the last few decades, the political condition of the country has been quite stable, a fact that encourages foreign investments in the industries of the country (Desai and Garozzo, 2011). Last but not the least, the government of India encourages such investments in all industrial sectors f the nation.
At present, the GDP of the country is approximately 6.3 % and the Indians ranks 3 in the list of the countries having the most purchasing powers. The liberal foreign capital policy, along with the reduction of the requisites for trade licensing has been influential in the growth of this economy (Worldbank.org, 2015). A notable point is that the India economy is quite strong and is not affected much by the recession of the western countries.
The Indian society is closely tied to the family values: family is one of the most important factors to the Indians (Kumar et al. 2014). Since the number of aged people in the country is increasing steadily, the Indian families tend to spend large quantities on the treatment and other requirements of the aged persons of the families. Besides this, in spite of education being quite expensive, Indian families emphasize much on the education of their children (Mishra, 2013). On the other hand, in spite of having a large skilled young workforce, the market is not able to provide suitable employment to them (Heritage.org, 2015). The ever-increasing expenses and the unavailability of suitable jobs are influencing the Indian youth to search for highly paid jobs outside the country.
· Largest democracy
· Federal government
· Stable political scenario
· Business environment controlled by various political factors
· Government encourages industrial investment
· Growing economy, current GDP of 6.3 % approximately.
· 3rd highest GDP in terms of purchasing power of citizens
· Well developed taxation system
· Reduced industrial licensing
· Liberal foreign capital policy
· 100 percent Foreign Direct Investment (FDI) allowed
· Strong economy, little effect of western recession (Godwin, Kalapana and Valli, 2013)
· Aging population
· Rise in aged employment
· High family values
· Educated and skilled young workforce
· Underemployed youths
· High demand for onshore employment
· Rise of the IT industry due to skilled workforce
· Steady growth of technical research and development area
· Self sufficient power sector
· Strong legal system
· Utilizes International Trade regulations
· Policies for minimum wage increase, discrimination against disables, discrimination against gender etc
· Rapid urbanization leading to large scale pollution
· Depletion of natural resources
Figure 1: PESTLE analysis of India
(Source: Parikh and Gabbad, 2014)
In the last few years, the county has also made much development in the technical and legal domains: both these factors now act as strong pillars of the economy.
Thus, it can be said that at present, India appears to be the most suitable market in which the organization s like Hays’ can expand their business to.
3.Key strategic issues the firm faces in expanding in the Indian market
3.1. The opportunities and the threats
3.1.1 Opportunities: At present, the following factors can be considered as the opportunities to the organization:
Less competition in the market: Although several local and national-level human-resource recruiting organizations exist in the Indian market, no globally accepted brand is operating in the nation as of now (Haider and Dutta, 2012). Thus, Hays’ Specialist Recruitment, being the first globally acclaimed recruiter to introduce their operations in the market, could utilize this void to the fullest.
Latest trend of seeking jobs in the Europe Union: The reports by the World Bank indicate that the unemployed or underemployed youths of India as a whole are targeting the positions or vacancies available at the European Union (Khan, 2015). Hays, being world famous name for providing employment in the United Kingdom, would naturally be their first choice (Solutions, 2015).
High Unemployment rate: The unemployment rate of India is quite high in comparison to the GDP of the country (BBC News, 2015).
Fast development: India is developing fast as far as technological advancements are concerned.
Skilled workforce: The standard of education is quite high: thus, skilled workforce is available in the market.
Demand for employment in the European Union: Most of the educated and skilled youths of the country either is unemployed or is under employed: thus, there exists a trend of searching for jobs outside the country (Rakhman, 2016). However, most of the job seekers are looking for opportunities that would provide them with higher financial benefits
3.1.2. Threats: At present, the following factors can be considered as the opportunities to the organization:
The emergence of new competitors in the market: Local or national level recruiting organizations might emerge in the market and offer services at rates lower than that of Hays. Such organizations, can thus pose threats to the business of the organization.
The condition of the economy of the United Kingdom: The current condition of the European economy is not very stable: besides this the Hays’ depends entirely on the western economy and would be largely affected by the recession prevalent in the west (Razghandi, Hashim and Mohammadi, 2012).
1. The brand name
2. Management experienced in global operations; operates across 33 countries in the world, provides employment to around 8000 workers.
3. Long industry experiences
4. Business concentrated on recruitment
5. Large market share
6. Growth in revenue collection
1. Still not established across all emerging economies of the world
2. Late entry in the Asian subcontinent
1. Less competition in the market
2. Latest trend of seeking jobs in the Europe Union
3. The high unemployment rate
4. Future Global investments
5. Continuous technical development
6. Demand for employment in the European Union
7. Presence of skilled underemployed or unemployed youth
1. The emergence of new recruiting organizations in the market
2. The condition of the economy of the United Kingdom
3. Non resistant to recession
4. Strong trade and outsourcing laws
Figure 2: SWOT analysis of Hays’
(Source: Yuniarti, 2015)
3.2 The strength and the weakness
3.2.1 Strengths: At present, the following factors can be considered as the strength of the organization:
The brand name: Hays’ Specialist Recruitment had been operating in the field of human resource recruitment from way back in 1969. At present, the organization is considered to top the list of all those recruiting organizations that operate in the international domain and recruit employees in various industries located in the UK (Kolios and Read, 2013). Needless to say, the brand name of the organization would be the primary advantage of the organization (Haysplc.com, 2015).
Management experienced in global operations: Hays’ Specialist Recruitment been operating in the international domain for more than a decade (from 2003) and at present operates across 33 nations of the world (Xingang, Jiaoli and Bei, 2013). The organization thus has an experienced management team who are able to tackle the various constraint and threats being presented to the operational activities of the country by the foreign economic environment (Magruder, 2012). This team has the potential to become a factor to the success of the new venture.
Long industry experiences: Hays’ had been operating in the market for a very long period of time, since 1969. Thus, the experience collected over this period would be helpful in conducting the business in the foreign market (Jhamb, D. and Kiran, 2011).
Business concentrated on recruitment: The business of the organization is based entirely in the recruitment sector: thus, the management is able to focus on this sector completely.
Large market share: At present, the Hays’ has the largest market share in the recruitment industry of the United Kingdom (Wrona and TrÄ…pczyÅ„ski, 2012). Needless to say,the large market share is one of greatest strengths of the organization.
Growth in revenue collection: In spite of the fact that the current economic condition of the European Union is not satisfactory, there has been a significant growth in the revenue collections made by the organization, as compared to the last financial year Kingdom (Haysplc.com, 2015)..
3.2.2 Weakness: At present, the following factors can be considered as the strength of the organization:
Still not established across all emerging economies of the world: The organization is still not established in all the emerging economies of the world (Ruhela and Banerjee, 2014). This should be considered as one of the weaknesses of the organization as the over-dependence on the European economy might affect the organization negatively.
Late entry in the Asian subcontinent: Various globally acclaimed organizations have entered in to the Asian market for quite some time (Mishra, 2013). The late entry in to this flourishing market and the inability to capture it before the others might actually be considered as a weakness on the part of the organization (Sasidhar and Reddy, 2012).
4. Modes of entry into the market
5.1 Various Modes of entry into India
In general, while taking entry into any foreign market, most organizations utilize one of the following modes of entry:
The process of providing services or products developed in one country to the citizens of another country is often termed as exporting (Wrona and TrÄ…pczyÅ„ski, 2012). Since the services provided by Hays’ Specialist Recruitment are not ‘developed’ at any country, such mode of entry would not be applicable for the organization (Caroli, Cucculelli and Pongelli, 2015).
International licenses allow foreign organization to produce products for specific markets. Since Hays does not manufacture any product, such mode of entry would not be possible for the organization (Hilmersson and Jansson, 2012).
The business mode in which independent business owners use the brand names of reputed parent companies so as to conduct business and pay royalties in exchange, is known as franchising (van Wijngaarden, Scholten and van Wijk, 2012). Even this mode of market entry would not be suitable for Hays’ Specialist Recruitment as the organization operates solely on the digital platform.
In general, while taking entry into any foreign market, most well established brands utilize the wholly owned subsidiary mode of entry (Holtbrugge and Baron, 2012). Such organizations can in practice, utilize one of the two under-mentioned strategies:
Greenfield investment: It encourages the establishment of new wholly owned subsidiary and is associated with the financial risks of setting up a new business in a foreign market (Impullitti, Irarrazabal and Opromolla, 2013).
Acquisition which encourages the merging of an existing organization with the one that is about to enter into the new market.
Since Greenfield investments require much time for their establishments in the market and are associated with high financial risk, such mode of entry is not being recommended to the management of Hays (Hilmersson and Jansson, 2012). On the other hand, acquisition processes mandate the taking over of the competitors or business partners who are currently operating in the market, thus enabling the new entrant to utilize the existing resources and competencies (Adeoye, 2015). The management of Hays can utilize this option to enter into the Indian market: taking over any existing recruiting organization would not only provide Hays with the opportunity to utilize their physical stores of offices, but would also allow them to utilize the services of employees having the experienced of working in the Indian market (Razghandi, Hashim and Mohammadi, 2012).
The strategic acquisition of yet another recruiting organization that has the experience of working in the Indian market would help Hays’ to utilize the existing distribution channels, besides using the technological and business process: needless to say the overall business of Hays’ would be benefitted due to this process (Xingang, Jiaoli and Bei, 2013). However, the management of Hays’ requires in considering the following points being the acquisition process:
The work culture of the organization must match with the work culture prevalent in Hays’ (Wrona and TrÄ…pczyÅ„ski, 2012).
The acquisition process might result in apprehension between the existing employees of the organization and the ones that Hays’ intends to employ (Holtbrugge and Baron, 2012).
This report provides a insight to the plans and strategies that should be adhered to while considering the future international expansion of the Hays’ Specialist Recruitment. The discussion made in the appendix section has been helpful in finalizing the market that should now be targeted by the organization for their future expansions: the PESTLE analysis of the target market has been provided in the section 1 of this report, which is indicative of the correctness of the choice. In the next section of the report, the SWOT analysis of the organization has been provided, so as to identify the factors which would be considered as the strength, weakness, opportunity and threats of the organization during the international expansion into the Indian market. The modes of entry that should be used by the organization for initiating their operations in the Indian market have been discussed in the third section of the report.
The discussions made in the report indicate that:
- Hays’ Specialist Recruitment should choose India as the target market for their next international expansion.
- The management should utilize the acquisition mode of market entry so as to start operating in India.
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