Global Business For Corporate Crime: Risks And Challenges With Expansion In China And South Africa

Background of the company

Discuss about the Global Business for Corporate Crime.

This study has tried to highlight the concept of global business. In this context, this study has chosen an Australian pharmaceutical company namely Herron Pharmaceutical. This organisation has aimed to expand its business in the global market. As a result, this organisation wanted to open its store in China as well as in South Africa. In addition, this study is helpful to identify the background of the company and its financial position. It can be observed that the financial position of the medicine-manufacturing organisation in Australia is at good position, which also reflects the capacity of the organisation in order to understand whether the company is able to expand the business in the global markets or not (Morgan 2012). On the other hand, this study is beneficial in order to identify the risks in case of opening of Herron Pharmaceutical’s outlet in the country like China and South Africa. In case of South Africa as well as in China, it can be observed that due to the four risks or challenges, the business of Herron Pharmaceuticals can be decreased. Moreover, this study has discussed and has suggested to expand the business of Herron Pharmaceutical’s in the country like China. Due to the lower rate of risks in China, Herron Pharmaceuticals target to expand it’s business in this country (Hoerl and Snee 2012).

Herron Pharmaceuticals Pty Ltd. is Australian pharmaceuticals along with the natural healthcare factors. It was founded in the year of 1912. Herron aimed to improve the belief of the Australian living life. According to Laukkanen et al. (2013), Herron pharmaceuticals focus to provide and manufacture a wide range of products, which is helpful to maintain a healthy life. The specialisation of Herron Pharmaceuticals is in the production of paracetamol and ibuprofen. In addition, this organisation is familiar for the production of natural and herbal medicines. On the other hand, it can be observed that the gross profitability of this organisation has been increasing in the year of 2016 by 10.9% from the previous year (Herron.com.au 2016). In this context, it can be stated that this company has been growing with the increase of time. Moreover, it can be stated that the strategies, which have been followed by the organisation, are seemed to appropriate. Therefore, the business has been growing over the time. On the other hand, the expenses of the business have increased by 10.0% compared to the previous year. Therefore, it can be mentioned that this reflects the 9.9% enhances the volume delivered. It can be also mentioned that the amount of assets, holding by the organisation has been increasing. From this observation, Real, Roldan and Leal (2014) opined that Herron will significantly improve the business performance. In addition, it can be also mentioned that the company can effectively expand the business in the global market. In this connection, this organisation has selected to open it’s store in the countries such as China and South Africa. Therefore, it can be stated that this organisation can enhance the business in these countries, which in turn help to improve the business performance more. The overall profitability statement as well as financial position of Herron Pharmaceuticals will be increased.

Analyses of risks and challenges

As per the statement of Mahmood and Hanafi (2013), it can be stated that Herron Pharmaceuticals does not set higher price for the price of the medicines. It tried to fix competitive prices of the products. More precisely, this organisation provides the products in the affordable prices. On the other hand, the workers of this organisation are willing to maintain the long-term relationship with this organisation as the company used to provide incentive to the employees.

This study has focused to identify the risks and challenges in case of opening of stores in China and South Africa. In case of opening store in South Africa, Cheng, Yang and Sheu (2014) recognised that Herron Pharmaceuticals may face four challenges, which can be discussed briefly in the following:

In this context, Kim and Gao (2013) mentioned that in case of pharmaceutical industry of South Africa, it can be observed that the operating cost is higher in this market compared to the international medicine manufacturers. As a result, it can be stated that the regional manufacturing organisation of South Africa tried to focus to reduce the overall scale and use expensive technology, which in turn increase the overall cost of financing. On the other hand, in this purpose, it can be identified that the infrastructural challenges arise due to the poor connectivity and transportation, shortages of water as well as electricity etc. Therefore, Kotrba et al. (2012) added that Herron pharmaceuticals may face the challenges due to the local manufacturers. In addition, it can be stated that higher production cost, which is connected to the old plant and equipments can reduce the overall sales of South Africa. The shortages of power, using of old technology, shortages of working capital of South Africa can lowering down the production level of the Australian pharmaceuticals organisation.

Instead of this, the performance of the South African pharmaceuticals company is going to reduce due to the declination of the economy. This in turn makes an effect to reduce the financial performance and also make a bad impact on the public spending.

According to Wellin (2016), due to the poor skill of the personnel, the production of the Herron Pharmaceuticals may be decreased. In this purpose, it can be stated that the willingness of the workers can transfer the technology and the knowhow, which is not effective to transfer the technology. This recipient of the transferred technique considers the lower absorptive capacity. The absorptive capacity can be achieved with the existence of the highly skilled labours. In addition, the presence of the business intelligence is assumed to be critical to deal with the trade or is not be able to invest and the industry challenges. Therefore, Chen and Huang (2012) mentioned that a facilitate policy is required to follow in this case, which in turn is helpful to train the workers of an organisation.

Justification for choosing China to expand the pharmaceuticals business

In this connection, it can be observed that the governance issues are seemed to the challenges or the risks in case of expanding the business of Herron Pharmaceuticals in the market of South Africa. On the other hand, foreign aid can reflect the regional business. Tsai and Yang (2013) puts that the governance and the politicians of the country can aid to allow the political collaborators along with the manufacturing procedure of Herron Pharmaceuticals. This in turn highlights the imported pharmaceuticals in order to ensure the accountability. As a result, the stronger governmental policies of the country can intervene in the expansion procedure of a business.

In the words of Grigoroudis, Tsitsiridi and Zopounidis (2013), the manufacturing procedure of the mentioned organisation can be hampered by the weak policy environment as well as the limited governmental activities of South Africa. On the other hand, higher rate of tariff on the importable, higher rate of interest on credit can reduce the overall production of the pharmaceuticals company. Furthermore, the small markets within the country reduce the production.

On the other hand, in case of China, Sadgrove (2016) cited that in case of opening of stores, Herron Pharmaceuticals can face the challenges as well as some risks. There are four challenges, which can be discussed briefly in the following:

Western foreign invested enterprises have determined the range, which is necessary for expansion of a business in the market of China. It is useful for access the distribution procedure of Herron Pharmaceuticals. Therefore, due to the lack of western foreign investment, the Australian manufacturing company cannot expand the business in this foreign market.

Born and Pfeifer (2014) opined that in case of the absence of western chemicals and the biological pharmaceuticals, the production procedure of the mentioned company may be reduced. These two factors are important for the manufacturing of the generic finished drugs.

Moreover, due to the higher population, it is not able to the company to provide medicines or drugs within the time. Again, Rose, Quave and Islam (2012) pointed that to increase the production level in the Chinese market, it is necessary to engage higher number of expertises in the manufacturing procedure.

On the other hand, it can be identified that to understand the marketing condition and the behaviour of the competitors, Herron Pharmaceuticals’ require to contact with the other research organisations and with the other domestic pharmaceuticals organisations of China.

In this section, this study has considered China in order to identify the business opportunities of the pharmaceuticals organisation. According to Braithwaite (2013), China is an advanced economy. In this connection, it can be mentioned that China is at the first position from the ranking of purchasing power parity. In addition, China is the second largest economy. It can be assumed that in case of the expansion of the business in the market of china, it can be predicted that the risks will be lower in this market. Moreover, China is the fastest growing economy and the growth rate is approximately 30 percent. Therefore, if Herron Pharmaceuticals aims to invest in the business of Chinese market, then it can be expected that this organisation can get higher return from the business in the global market. Lainez, Schaefer and Reklaitis (2012) mentioned that China is the largest global centre for medicine production procedure. Moreover, it is the world’s fastest developing consumer markets. It is also the highest trading economy.

On the contrary, it can be stated that during the period of 2014-2015, the economy of China has decreased. As a result, the research and the policies of the country have hampered. This would indirectly affect the profitability statement of a business. Therefore, the government is willing to reduce the difficulties as well as the shortcomings. In this connection, it can be stated that with the expansion of business in China, Herron Pharmaceutical enhance it’s business (Gagnon 2013).

This section is helpful to understand the strategy or the competitive advantage of enhancing the business in the Chinese economy. As per the opinion of Tsai and Yang (2013), the competitive advantage of China is required to discuss. In this purpose, the efficiency, flexibility and the learning strategy of China is needed to estimate. In the economy of China, the manufacturing cost for the operation is lower compared to the other advanced developed countries. In addition, China is able to manage the country risks, which are occurred during the time of production process (Mahmood and Hanafi 2013). In this essence, it is possible to exploit the market opportunities. It can be stated that flexibility reflects the manufacturing process. In case of machine flexibility in the market of China, Herron Pharmaceuticals can utilise the modern and updated technology, which in turn significantly enhance the overall production of the organisation. This updated technology increase the ability of the production of the machines. On the other hand, Kim and Gao (2013) added that machine flexibility can directly reflect the production process to enhance the sales volume. With the help of higher flexibility rate, the organisation can produce new products in lower time. With the help of this flexibility and efficiency, Herron Pharmaceuticals can develop the products and can also gain the skills from the global ventures. As a result, more specifically it can be concluded that the Australian Pharmaceutical organisation can significantly expand the business (Hoerl and Snee 2012).

In case of the ideal organisational culture, the management of the organisation requires to focus to the values in order to enhance the global competence. In addition, the workers of the business can focus to learn and follow the cross cultural knowledge. Moreover, the organisation always needs to maintain a connection between the headquarters and the subsidiaries. Consumers are making the transaction based on the performance and functioning of the head branch. In the pints of Real, Roldan and Leal (2014), all the employees and the managers require to focus to the business ethics within the business environment. In this connection, the employees need to follow one business corporate language in order to communicate with the other staffs as well as with the consumers.

On the other hand, in case of the global business, each of the organisations requires to understand the behavioural approach and the business strategy of the competitors. The production level depends upon the requirement of the products. In this context, Cheng, Yang and Sheu (2014) mentioned that Herron Pharmaceuticals require to identify the diseases, from which the people of the country used to suffer. On the other hand, the standard of living, the level of disposable income is required to recognise, which reflect the production of the organisation. Based on this, the Australian manufacturing company manufacture its medicines.

As per the opinion of Chen and Huang (2012), in order to make a business successful, the organisation can follow the value chain approach. As per the value chain activity, the organisation requires to aim the to the production level, marketing strategy and the after sales function of the business. Moreover, during the time of the production procedure, the employees of the organisation require to focus to the business goals and the objectives of the business.

Figure 1: The integration responsive framework

(Source: Tsai and Yang 2013)

The above figure depicted that the integration strategy is based upon the four strategies. These strategies are the global business strategy, traditional business strategy, home replication and the multi domestic strategy. These strategies are helpful to make a business successful in the market of China. As per the statement of Grigoroudis, Tsitsiridi and Zopounidis (2013), home strategy is beneficial to evaluate the opportunities of the business in case of the expansion of a business in the global market. On the other hand, the multidomestic strategy is helpful to identify the requirements of the consumers for the manufacturing products. The global strategy is able to estimate the marketing approach of the business. Furthermore, the transactional strategy is beneficial to determine the feasibility of the business of the organisation. Based on this, the manager can improve the performance of the business (Rose, Quave and Islam 2012).

Conclusion

This study is helpful to identify the performance of Herron Pharmaceuticals. It is an Australia based pharmaceutical organisation. As per this study, it can be observed that, this study has discussed that this organisation has planned to expand its business in the global market. In this respect, the organisation has selected South Africa and China as the targeted. After evaluating the risks and the challenges of both the countries, it can be stated that the risks are lower in China. Therefore, the Herron aim to start its business in China. Moreover, his study is helpful to discuss the business strategies, which can effectively enhance the performance of a business in the global market.

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