Olivia Garments is one of the renowned garment manufacturing companies that have been established in 1982. It is providing quality product and service to the consumers since past 30 years. The organization is known as the high profit making organization. The primary objective of the organization is to match the satisfaction level of the consumers from the various parts of the world. It has manufacturing firms in China, Indonesia along with Singapore. It is one of the known as quality and fashionable apparel brand among the trendy people. The organizational management always embraces modern technologies to stimulate the production procedure of the organization. Olivia is associated with a large number of retailers and distributors. The organization aims at put a strong footprint in the global market by its efficient performance. The organizational management is looking for opportunities in foreign garment industry to earn desired position in the international market (Olg.com.sg. 2017).
The below mentioned article has concentrated on the global business environment. It has discussed about the issue that business organizations face while operating in the global market. The report has articulated various aspects of global market to provide a vivid concept about the international market environment.
Globalization has opened a new path for the business organizations to establish an example in the global context. It has provided a great opportunity to the business organization to put a strong footprint in the foreign market by providing quality product and service to the consumers from the several corners of the world. It has become the primary objective of the business organizations to extend their service range in the global market (Motohashi 2015). Business organizations now a days have left no stone unturned to draw the attention of the foreign consumers. There is various importance of global business, such as:
Market Share:
A business organization can easily increase its market share by expanding its business in the global market. Global business provides an opportunity to the business organization increase its number of consumers and profit margin which is highly beneficial for expanding the market share (Bharadwaj et al. 2013).
Production Costs:
Some researchers claim that global business put a significant impact on the production process of the organization. It majorly influences the production cost. The cost of the production process decreases if the organization shifts into the lower-wage country. Eventually it reduces the product cost of the organization (Peng 2016).
Competition:
The structure of the market has been transformed in past few decades. The arrival of many rival companies has stimulated the competitive nature of the market. Every business organization needs to implement efficient strategies to beat the competitors. Global business helps the business organization to battle against the rival companies by earning huge profit. On the other hand, it enhances the capability of the organization, as business organizations often face various obstacle and tough competition in the global perspective which enhances their competitive advantage (Ferraro and Briody 2017). By providing quality products in low price, business organizations will be able to maintain healthy and strong bonding with the potential consumers. It will increase the competitive advantage of the organization.
Development of the Local Economy:
By expanding in the global market, business organization can earn huge amount of profit. It helps them to support the financial structure of the native country. It is highly beneficial for the development of the country. The organizational management of the business companies can contribute significant amount from their profit for the betterment of the country (Motohashi 2015).
Due to the previous reason the organizational management of Olivia Garments wants to extend the organizational wings in the foreign market. Although, it already operates in China and Indonesia, the organizational leaders are looking for various opportunities to set a milestone in the other parts of the world as well. However, the organizational management must include some key strategies in the organizational rulebook to ensure the development in the global market. In this context it can be stated that not all strategies are applicable for all organizations. There are some key strategies that can be implemented by the management that want to extend their service in the global context:
Direct exporting is a process where a business organization directly exports their goods or service into the market they have chosen for expanding their business. It is often used by the various business organizations to settle in the foreign market. Once the organization associates with the local distributors and the suppliers, it can easily capture the local market of the foreign country. Local distributors play vital role in the establishment of an organization in the foreign market. They act as the face of the organization in the foreign market. It becomes easy for the business organizations to achieve the desired position in the global context (Hill, Cronk and Wickramasekera 2013).
Licensing is one of the most useful strategies used by the business organization. In this strategy an organization allow another brand or company to use their products and service. The parent organization gives license to a local organization to use their product as a face of their company. It helps the organization to easily draw the attention of the local consumers and meet their satisfaction level. They provide license to other foreign organization to promote their product or service among their potential consumer. It is often used by the business organizations to establish a strong brand image in the foreign market. It helps the organizations to cover market share in the foreign market (Verbeke 2013).
Franchising is considered as the North American method to spread the wing in the foreign market. It is not possible for any business organization to understand the market trend of the foreign country or the demand of the foreign consumers without associating with any local business organization or without the help of local distributors. They will help the management to observe the market situation. At the same time they will provide a vivid concept about the requirement and preference of the foreign consumers, as they are aware of the market structure of the foreign market. Thus, the organization that wants to grab the attention of large number foreign consumers or expand their business in the foreign market in significant manner must implement the franchising strategy into their rulebook. The organizational management must associate with the local retailers, local distributors. Local franchises will work as a mediator between the business organization and the foreign consumers. They will convey the message of the foreign consumers to the brand. It will be helpful for the business organization to understand the demand of the foreign consumers (Okpara 2014). Hence, they can easily mould their organizational strategy and structure according to the requirement of the potential consumers in the foreign market. However, while franchising an organizational management must consider tow key factors, such as: the business model of the organization must be unique. It must be strong at the same time, so it can be recognized in the foreign market. The business initiative must be different from the usual business ventures, so it can draw the attention of foreign distributors. In this competitive era, there are many business organizations that want to expand their operation in the same market. Hence, while approaching local franchises, the organizational management must consider that they have to beat those business organizations by their approach. Secondly, you may be creating your future competition in franchisee (Gamble and Thompson Jr 2014).
Partnering strategy plays major role while entering in the foreign market. There are various types of partnering that can be done to enter in the global market. A business organization can associate with a foreign business company for the marketing purpose. On the other hand, sophisticated strategic alliance can also take place for manufacturing. It provides a wide scope to the business organizations to earn reputation in the foreign industry. Often leading business organizations adopt this strategy to set an example in the foreign market. Operating in the foreign market is not easy for any business organization. Thus, strategic alliance will be beneficial for the organizational management to grab the attention of foreign consumers (Grant 2016).
Joint venture is one of the efficient ways to enter into the foreign market. It is a form of partnering. However, in this kind of partnership, two companies meet together to carry out another business venture. This is one of the famous way to set an example in the foreign market. There are many leading business organization that have applied this method to expand their business in the other countries. In this competitive era, it has become very important to provide quality and efficient service to the consumers to survive in the race (Marchi, Maria and Micelli 2013). By adopting this method, business organizations can stimulate their productivity skills. Eventually it will help them to establish a strong organizational infrastructure in the global context. By using the strength of both the companies, the business organizations can easily meet the expectation level of the foreign consumers. In this type of joint venture, business organizations design their organizational structure according to the desire of the potential consumers. The primary objective of the business organizations is to match the satisfaction level of the consumers. Thus, when a business organization ties up with another business organization to enter into the foreign market, they consider the requirement as well as the preference of the local consumers. The try to implement all thee required strategy to observe the market condition of the international market before constructing the organizational strategy. It helps them to provide uninterrupted and flawless service to the target market (Cavusgil et al. 2014).
A business organization can buy a local existing business company in the foreign industry. It can be appropriate strategy for the some business organizations to enter into the foreign market. It will be beneficial for that particular business organization to cover the market share in the foreign market, as that foreign company has some substantial market share in the foreign industry. Thus, it will be helpful for the parent business organization to settle in the global context. On the other hand, the existing company must have some existing consumers in the local market which will be beneficial for the parent organization. It will provide a status to the new company of being a local company. The organizational management must have a clear concept about the local market situation and trend, they can help the parent organization to cover foreign market. The parent company can easily avail the benefit of the local market knowledge. Moreover, local government will be treating the organization as the local business organization. It is highly required for every business organization to maintain a healthy relation with the local government while operating in foreign market. Thus, in this scenario the parent company can easily earn the desired position in the foreign industry by establishing a strong bonding with the local government body (Barney 2014).
Another unique and innovative method to enter into the foreign era is piggybacking. It is one of the most innovative and interesting way to draw the attention of the foreign potential consumers. In this method, a business organization that provides its unique and interesting product or service to a large local organization that operates in the foreign market, can approach that large enterprise to promote their brand name in the global context (Wild, Wild and Han 2014). It will reduce the risk and promotional cost of the company, as that global organization will promote their product or service in the international market. It has been considered as one of the useful and efficient method to reach to the foreign market. It is often used by various business organizations. It reduces the risk of failure in the international market as well. As the business organization is not directly investing its assets to extend the business. Another company is marketing one the behalf of that company. In this scenario, it must be stated that an organization must provide quality service to the clients to earn the faith of the clients. It will be helpful for the organizational authority to approach the client for the promotional purpose. On the other hand, the goodwill of the organization will influence another organization to provide sufficient support for the betterment of the organization (Carraher and Paridon 2015).
While expanding in the global market, the organizational management of Olivia Garments must understand the challenges that can be faced by them in the global market. In order to achieve desired position in the foreign market, the organizational management must design their organizational structure according to the business environment of the foreign industry. The major challenges that often faced by the business organizations in the foreign market are as follows:
While operating in the foreign country, a business organization has to compete against the local rival companies. The organizational management must understand the structure of the international companies. Otherwise, they may face an awful conclusion in the foreign industry. The organizational structure of the foreign companies may differ from the local company. The management of the new entrant must understand its organizational strategy and structure to compete globally. It will be beneficial for the business organization to construct their organizational structure according to the market demand. There are many business organizations that have faced several challenges while competing with the foreign business organization in the foreign market. In order to survive in the foreign industry, it is important for the business organizations to redesign their organizational infrastructure according to the foreign industry (Klettner, Clarke and Boersma 2014).
Another major challenge often faced by the business organization is because of the foreign rules and regulations. While entering in the foreign market a business organization must pay close attention to the set of rules of the government of that country. Government plays major role in the success of every business organization. A business friendly and environment is highly required for functioning in a particular market. Local government is responsible for providing friendly business environment to the business companies (Sia, Soh and Weill 2016). On the other hand, it is mandatory for the business organization to maintain healthy relation and obey all the rules of the local government body. However, in the case of global expansion, it is often evident that business organizations do not have much knowledge about the foreign business rules and regulations which leads them o face an awful situation at the end. They may face massive failure in the global market. Thus, before entering in the foreign market, the business organization must conduct various market researches on the foreign market to get a vivid concept about business rules and regulations of that country. Organizational must understand whether the foreign rules and regulations is good of the future of that organization or not. It will be helpful for the business organization to avoid many future risks (Chatterjee 2017). At the same time, the organizational management must pay close attention to the labor and employment law of the country. Employees play a crucial role in the development of every business organization. However, it can be seen frequently that many business organizations often face various challenges due to the poor relation with the employees and poor employee or labor law. They may need to follow various unwritten cultural guidelines in the foreign country which is harmful for achieving long-term goal. There are many countries that have strict business law which is not affordable for all business organizations. Thus, the leaders of the business organization must stay close to the government rules and regulations of the countries they want to expand in (Meckling 2015).
There are many business organizations that face various challenges in the foreign country due to the language and cultural barrier. While any business organization expanding in overseas, the organizational management must be aware of the cultural and language barrier it may face in the foreign country. It becomes difficult to communicate with the local buyers and stakeholders due to language gap (Leonidou et al. 2015). The organizational management must adopt some efficient strategy to overcome this issue. Otherwise companies may face massive crises in the global context. On the other hand, cultural barrier is another major concern for the business organizations while operating in the foreign countries. Organizational management must follow the culture of a particular country while expanding in the market of the country. The culture of the foreign country may differ from the native country. The organizational management may face an awful consequence due to misinterpretation of the culture or miscommunication with the local stakeholders. An exemplary example of such gap is China. The color red signifies love in China; on the other hand there are many countries where the color red signifies danger or risk. Thus, the business organizations need to consider these factors while designing their organizational structure in the foreign country (Deans 2015).
Political environment of a country plays major role in the development of a business organization. It is often evident that business organizations face many obstacles due to political instability. While extending in the foreign market, the organizational leaders must research on the political environment of the country where they want to expand their business initiatives. A country which is suffering from political turmoil is not suitable for the growth of any business organization. Political corruption, ill-defined policies, unwritten guidelines may lead the business organization to face many risks in future. An exemplary example of such condition is: Face book is not allowed in many countries. Thus, it is not possible for the business organizations to promote their service or products in the social networking sites. It may restrict the growth of the companies to some extent. They will not be able to reach to the consumers from the every corner of the country. Hence, the business organizational must be careful about these factors while expanding their operations in the foreign countries. Otherwise they may face various unbearable obstacles in coming future (Pathak and Purkayastha 2016).
The emergence of the global warming and climate change has become another major concern for the management of the business organizations. Every business organizations aim to cooperate to save earth from the harmful impact of the global warming now a days. Recycling has become one of the common term among the business organizations in recent time. There are many countries where business organizations face various challenges in incorporating efficient strategies to support recycling process is not suitable for the growth of those business organizations. The organizational management may face several challenges to operate in these countries. There are some other issues like energy saving equipments, reuse of the garbage of the company. In any country where business organizations face obstacles to implement such practices is not suitable for the organizational development. Thus, it has become mandatory for the organizational leaders to conduct various market researches to identify these issues. Any country where the pollution rate is high, many business organizations avoid such countries, as it can put negative impact on the growth of the organization. Before expanding in any country, the organizational management must conduct the survey work to overcome future obstacles (Peng 2013).
Technology and communication is interrelated. The major challenge a business organization faces in the foreign market is communication issues. In recent time, communication is highly dependent on the technology. It has become very difficult for the business organizations to communicate with the potential consumers with poor technologies. Every business organizations are implementing modern technologies in the organizational structure to communicate with the consumers. Thus, business organizations may face challenges to interact with the clients in the foreign countries that has weak technical infrastructure. Thus, management must pay attention to the factors before moving to another country for business explosion. Any country where technology is not standardized is not suitable for the business organizations that required maintaining interactive relation with the consumers and stakeholders (Bonn 2014).
The success of the organization is highly dependent on effective supply chain management. In this competitive era, it has become important for every business organization to maintain a strong and effective supply chain to achieve desired position in the industry. Thus, any country where business organizations may face difficult to maintain effective supply chain management is not suitable for achieving long-term organizational goal. The organizational management of the business organizations that want to expand in the foreign market must pay close attention to the infrastructure of the country whether it is suitable for maintaining a strong supply chain or not. Otherwise, it may lead the organization to meet an awful consequence in nearby future (Fojcik 2015).
While operating in the foreign market, a business organization may face financial crisis due to currency issues. They may face obstacles while exchanging currency. A organization must possesses a strong financial background for operating organizational functions in the foreign country. Thus, lack of local currency may lead the organizational management to face many difficulties in future (Sundaramurthy 2014).
While opening a business organization in the foreign country or buying any company or any kind of new business venture in the foreign country, the organization may appoint some local natives to monitor the organizational performance and other operations. Local natives will be able to provide transparent idea about the market trend of the country or the business environment of the country. Otherwise, the business organization may fail to establish a strong infrastructure in another country. Local consumers have clear idea about the market situation and social and cultural aspects of the country. Hence, the organizational management of any business company that wants to operate in the foreign country must appoint some local and responsible people in the organization to resolve these issues (Reiche, Mendenhall and Stahl 2016).
A country must have strong financial background in which a business organization wants to expand its service. An organizational management must conduct several researches on the foreign country to identify the financial strength of the country. They must identify the tariff rate, tax, cost of raw materials and production cost of the country before expanding its service in the foreign market. These factors play vital role in the organizational development. Thus, the organizational management must design their organizational structure according to the financial structure of the country. Otherwise, it may face various challenges in future (Madsen and Walker 2015).
Being a famous garments manufacturing company of the Singapore, Olivia Garments must adopt some key strategies to operate business functions in the global market, such as:
The organizational management must conduct market research on the European country where they want to expand their business. This is considered as the initial stage of any planning. It will be helpful for the business organizations to understand the market situation, trend and requirement of the consumers of that country. Thus, the organizational management must implement some effective strategies to conduct market survey in the foreign market. By implementing such practices, the organizational management of Olivia Garments will be able to identify the strategies that can be beneficial to carry out this business venture. By such practices they will be able o learn about the requirement and preference of the target market.
The organizational management must create an efficient plan before extending their service. They must consider all the factors, challenges and strengths and weakness of the company and global market while making plan for the global business. The organizational management must involve their employees and executive team in the decision making process for global expansion. They may provide efficient suggestion which can be beneficial for the organization to run their business in the foreign business environment. They must discuss all the negative and positive aspects of the plan before working on it. It will help them to rectify all the loopholes from the plan. At the same time, they can prepare backup plan to overcome the failure they may face if their plan fails. They must discuss about the required strategy for the plan. It will provide a vivid concept to all the internal stakeholders about the change management process and they will be able to easily adopt the change management process.
In order to achieve desired position in the foreign market, the leaders of Olivia Garments must look for local franchises who can promote their brand name in the local markets of the foreign country. It will not be easy for the business organizations to reach to the consumers of the foreign country initially. By associating with the local retailers and distributors, the organizational management can reach to the consumers who belong to the various corners of the foreign country (Roh, Hong and Min 2014). Another major benefit the organization can easily avail by implementing this strategy is that local dealers have a clear idea about the current market trend and fashion sense of the local people, which is not possible to observe by the organizational authority at one time. Thus, the organizational management must associate with the local retailers to reach to the potential target market of the country. Eventually, by providing quality service to the loyal consumers they can put strong footprint in the market. At the same time they can easily influence the buying behavior of the consumers afterwards by adopting this strategy. Local retailers will work as a mediator for the company. They will convey the message of the producers to their consumers.
The organizational management of Olivia Garments must appoint some local employees in the organization to understand the requirement and feedback of the consumers. They can easily explain the market situation and demand of the consumers. It will be beneficial for the organizational management to design their organizational structure according to the requirement of their consumers. On the other hand, local people can easily aware the organizational management about the potential threat in the foreign industry. It will help the organizational management to avoid future risk and threat. Local employees will be able to interact with the local consumers and stakeholders. Thus, they will work as a major strength for the organization. They can supervise the production of the organization.
The organizational management must monitor the organizational activity in the foreign market. They must scrutinize their actions frequently. It will help them to identify their weak links. By such practice, they can easily strengthen their organizational structure by removing those loopholes to achieve the desired position in the foreign market.
Thee organizational management of Olivia Garments must maintain healthy and transparent relation with the local government. They must design their organizational structure as per the government rules and regulations. On the other hand, they must avoid all controversy and accidents that may lead them to face any kind of legal issues. They must pay close attention to strengthen their relation with the local government. It will be helpful for the organizational management to achieve the long-term goal. At the same time they must include any unethical practice in the organization. It will be helpful to maintain strong and effective relation with the local government. The organizational management must realize that it is important to maintain strong relation with the local government to operate organizational function in the foreign country. By such practices, the organizational management will be able to earn strong reputation in the foreign industry as well.
The organization may face tough competition while entering in the foreign market. Thus, the organizational management must include reward system in the organizational rulebook to maintain healthy relation with the employees. Employees are the key element of every business organization. They play significant role in the earning desired organizational goal. To establish a strong organizational structure in the foreign industry, the leaders of Olivia Garments must realize the importance of the employees. To motivate them to participate actively in the organizational function, the organizational management must implement rewards system in the organizational structure. By appreciating them for achieving short-term organizational goal, they will be able to stimulate them for giving their best effort to achieve the long-term objective of the organization. It will increase the commitment level of the employees towards the organization which will be influecial for establishing a bright future for the organization. The organization can provide monetary support, incentives and extra leaves to their employees in the form of reward. They must monitor the performance of the each of the employees to identify their strong performers and weak performers as well. By such practices, they can provide training and development program to their weak employees and reward to their strong employees.
Conclusion
As per the previous discussion, it can be concluded that global business has become a usual term for the business organizations, now a days. The business organizations are looking for opportunities to put a strong footprint in the foreign market. There are several strategies that can be implemented by the business organizations to promote their name in the global context, such as: partnering, franchising, strategic alliance, piggybacking and so on. However, the organizational management must realize that there are some threats that can be experienced while spreading business wings in the foreign market, such as: political issues, economic issues, currency problem, foreign rules and regulations d business structure of the foreign companies and so on. Such challenges may lead the organization to face various obstacles while operating in the foreign market. In this scenario, Olivia Garments, being one of the leading name in the Singapore garment industry is looking for opportunities to provide their service in the foreign garment market. Thus, the organizational management must implement some effective strategy in the organizational structure to achieve success in the European market, such as: Appointing local staff members, creating a plan, conducting market survey, appreciating employees for good performance and rectifying employees for their mistakes, maintaining a strong relation with the local government. The organizational management must allow their employees and executive team in the decision making process. They may provide creative suggestions which will be helpful for the achieving the long-term organizational goal. By implementing such practices, the organizational management will be able to meet the expectation level of the foreign consumers and they can easily earn desired position in the foreign as well as local industry.
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