The processes of internationalization and globalization have much changed the business world in the present times and at the same time offer diverse kinds of business opportunities to the different business enterprises (Penrose 2017). However, the effective utilization of their business opportunities depends to a large extent on the capabilities as well as the core competencies of the business enterprises (Shenkar, Luo and Chi 2014).
In this particular context, it becomes all the more important for these business enterprises to conduct a thorough analysis of their own organizations which is not only likely to offer them a pertinent insight into the key strengths as well as the weaknesses of their organization but at the same time to conduct a thorough business environment analysis as well (Forsgren and Johanson 2014).
The diverse kinds of business environment analyses provides an insight to the organizations about the key factors that the concerned organization needs to take into effective consideration for the process of their business in the business market of a particular nation (Forsgren and Johanson 2014). This is important since in the present times it is seen that the business markets of the diverse nations are greatly different from each because of the differences in the political, social, technological and other factors which affect the process of business of the diverse organizations.
The diverse business environment analyses are thus conducted to get an idea about the important factors which are likely to affect the process of business of a particular organization (Cavusgil et al. 2014). This is important since having a clear idea about the diverse factors that the organizations need to deal with or rather have to take into effective consideration provides them with the opportunity to devise effective tactics or strategies which are likely to help them not only mitigate their adverse effects but at the same time to capitalize on the opportunities in the most effective manner (Cavusgil et al. 2014).
This report will discuss about the concept of international business environment in the light of the organization TSA Pty. Ltd and their intended business expansion into Asia. The report will analyze the business environments of the nations of Pakistan and India and based on the analysis will propose the nation which can afford the maximum amount of benefits to the concerned organization on the score of its expansion into it and will at the same time analyze the business risks involved in the process.
TSA Pty. Ltd
The company TSA is one of the global leaders in the genre of the food packaging industry and is known for the innovative use of the packaging system for the process of its business. The company was established in the year 1982 through the cumulative efforts of Ald and Nataly Wood. The original idea for the business was developed by Wood and the idea was converted into a success business venture through the hard efforts of both the co-founders of the company.
The organisation under discussion here has an interesting history and it is interesting to note that initially the concerned organisation focused on the manufacture of packaging materials. However, the engineering educational background of Wood acted as a boon for the concerned organisation since it was he who came up with the innovative idea of the use of the modern technology for the packaging of the food materials offered by the food industry of the present times. The organisation soon set out to implement the innovative idea of Wood however initially it was not a very successful one because of the lack of technological expertise of the people. However, over the years the organisation soon overcome this particular technological barrier and has been able to gain a significant amount of success.
The organisation had its humble beginnings in the city of Sydney however within a very short time by virtue of the innovative strategies followed by the co-founders the organisation was able to gain a significant amount of success. It is a reflection of this particular fact that the organisation under discussion here is currently operational in the majority of the nations of the world and is planning to expand even further. Furthermore, the organisation currently is one of the highest revenue earning ones within the industry and holds a complete monopoly over the concerned industry.
Indian Business Market Analysis
India is a developing nation and in terms of the business market offers diverse kinds of marketing opportunities to the various business enterprises of the world (Cravino and Levchenko 2017). However, to exploit the marketing opportunities afforded by the business market of the concerned nation the concerned organisation would at the same time have to take into effective consideration the diverse factors which affect the business world of the concerned nation (Hovhannisyan and Keller 2015). A PESTLE analysis of the business environment of the concerned nation would reveal insightful information about the factors that influence the business world of the nation.
PESTLE Analysis of India
Political Factors
The nation of India follows a democratic system of government and the Prime Minister of the nation governs the nation on the behalf of the people of the nation (India.gov.in 2018). The nation is as such free from the diverse kinds of political turmoils however there are instances of violence, political struggles and others which can adversely affect the prospects of the various business enterprises in an adverse manner and thereby reduce their profitability (Hyder and Lussier 2016).
Furthermore, the national government of the nation takes active interest in the promotion of trade and commerce and tries to offer the kind of support as well as facilities to the diverse business enterprises of the nation which help them to carry on trade and commerce in a peaceful manner (Hyder and Lussier 2016). The net result of these initiatives on the part of the national government of the concerned nation is the fact that in the recent times various successful business enterprises of the world have expended into the business market of the concerned nations and are utilising the business opportunities afforded by the business market of the concerned nation to earn a higher amount of profit.
Thus, it can be said that the political landscape of the nation of India actually acts as an opportunity for the business organisation TSA since the concerned organisation can utilise the congenial political landscape of the nation of India to not only further the prospects of their business but at the same time to earn a higher amount of profit as well.
Economic Factors
The nation of India is a developing one and has a mixed economy which is dependent not only on the diverse business enterprises of the nation but also on the agricultural system of the nation as well (India.gov.in 2018). Furthermore, the economy of the concerned nation is the 6th largest one of the world in terms of the nominal GDP and the 3rd largest one of the world in terms of the purchasing power (India.gov.in 2018).
In addition to these, the stability of the economic framework of the concerned nation is also being reflected in the fact that the economy of the nation was only slightly or marginally affected by the global economic recession that the world recently faced. Furthermore, the concerned nation has active relations with the diverse Commonwealth nations and the other Asian nations (India.gov.in 2018). Thus, it can be said that the economic condition of the nation acts as an opportunity for the concerned nation which it can utilise in an effective manner so as to increase its profitability. Furthermore, the stable nature of the economy of the nation at the same time means that the company is likely to find a stable business market in the concerned nation.
Social Factors
Food forms an important part of the social life of the people of the nation under discussion here and it is seen that the people of the nation like to bond over food. At the same time it is also seen that the people of the nation like to order different kind of foods from the diverse food outlets (Bader and Schuster 2015). Thus, it can be said that the social landscape of the nation of India is likely to act as an opportunity for the organisation under discussion here. The organisation under discussion here can enter into diverse kinds of collaborative relationships with the various food companies of the nation for the packaging of the food items offered by them to the people of the nation.
This is likely to benefit both the food companies that are manufacturing the food items and at the same time would benefit the company under discussion here by offering them the chance to use their expertise in an effective manner (López?Duarte, Vidal?Suárez and González?Díaz 2016). Furthermore, this is likely to not only help the concerned company to earn a higher amount of profit in the nation of India but at the same time would help them to have better prospects of growth.
Technological Factors
The nation of India is not a highly developed in term of technology and it is seen that the majority of the business enterprises of the nation in the absence of better technological resources are still resorting to the use of the outdated as well as obsolete forms of technology for managing the diverse affairs of their business (Ahmed et al. 2016). Furthermore, the diverse organisations of the nation in order to overcome this particular problem are taking the help of the process of outsourcing and also entering into effective collaborations with the business enterprises of the other nations of the world (Ahmed et al. 2016).
A typical example of this trend is seen in the expansion of the business of the company Tata Steel into the business market of the United Kingdom (Ahmed et al. 2016). This particular factor of the nation acts as a threat for the concerned nation since it will have to take the help of the technological advancements of its own parent nation for the process of the management of the affairs of its business in the nation of India. In a way it can be said that if this particular aspect of the nation of India is not taken into effective consideration by the concerned business enterprise then it can significantly affect the amount of revenue or profit earned by it in the concerned nation.
Legal Factors
The legislation of the nation of India has been designed in such a manner that the business enterprises of the concerned nation are being able to conduct their business in a smooth as well as effective manner (Taneja et al. 2015). This is important since effective as well as congenial legislations are one of the key requirements of the business organisations and thus it can be said that the legislative framework of the nation acts an opportunity for the organisation under discussion here (Taneja et al. 2015). Thus, it can be said that the effective utilisation of the legislation factors of the concerned nation would help the organisation to earn a higher amount of revenue.
Environmental Factors
The nation of India is an active supporter of the Paris Agreement of 2016 and thus the diverse organisations of the nation are required to reduce the amount of pollution caused by them by almost 2% (India.gov.in 2018). In addition to this, there are other legislations as well as regulations that the diverse organisations are required to follow for the process of their business in the nation of India. This is likely to act as a threat for the company under discussion here since the effective following all these regulations are likely to reduce the profit margin of the concerned nation in a significant manner.
Business Market Analysis of Pakistan
PESTLE Analysis of the business environment of Pakistan
Political Factors
The political landscape of the nation of Pakistan is a very unstable one and the end result of this particular aspect is the fact that the diverse business enterprises find it very hard to sustain themselves in the nation (Jamil et al. 2016). Furthermore, although the nation follows the democratic system of government it has been subjected to military and also dictatorial rule in the recent times (Jamil et al. 2016). In addition to these, terrorism is another common problem that the nation has been facing for a very long time (Jamil et al. 2016). The nation has been subjected to diverse kinds of political turmoils in the recent times. Thus, it can be said that the political landscape of the concerned nation acts as a threat to the concerned organisation and can significantly affect the profit margin that they are likely to earn in the business market of the nation.
Economic Factors
The economy of the nation is a very unstable one because of the turbulent political conditions of the nation (Bilal, Khan and Akoorie 2016). Furthermore, because of the diverse kinds of terrorist activities the nation does not have effective economic relationships with the diverse Commonwealth nations (Bilal, Khan and Akoorie 2016). Thus, it can be said that the economic landscape of the nation acts as a threat for the concerned and can significant affect the financial prospects of the concerned organisation in the nation.
Social Factors
The people of the nation are food loving and bonding over food forms an integral part of their social life (Bader and Schuster 2015). Furthermore, there are diverse kinds of food companies in the nation that regularly need the help of the packaging services that are being offered by companies like TSA. Thus, it can be said that the social landscape of the nation acts as an opportunity for the concerned organisation which if utilised in an effective can significantly help in the financial growth of the organisation under discussion here.
Technological Factors
The nation of Pakistan is an under developed one in terms of technology and the diverse organisations had to use the technological advancements of the other nations for the process of their business (Morschett, Schramm-Klein and Zentes 2015). Thus, it can be said that this particular factor acts as a threat for the concerned organisation and can significant affect the revenue that they are likely to earn in the nation.
Legal Factors
The government of the nation takes active initiatives for the growth of trade within the nation however because of the absence of a strong national government these legislations and regulations are rarely followed (Sassen 2016). This has affected the prospects of the business enterprises of the nation in an adverse manner. Thus, it can be said that this particular factor acts as a threat for the concerned organisation and can adversely affect the prospects of their business.
Environmental Factors
The national government of Pakistan requires the diverse organisations of the nation to follow various kinds of environmental legislations however in the absence of a strong national government these legislations are rarely followed (Deresky 2017). Thus, this acts as an opportunity for the concerned organisation since it will not have to worry about the environmental legislations for the conduct of its business in the nation of Pakistan.
Analysis of risks in the business market of India
|
|
Present Condition |
Likely Future Condition |
Risks |
Impact on TSA |
Score (0 being the lowest and 5 being the highest) |
|
Political Factors |
Stable political condition (Ahmed et al. 2016) |
The political condition of the nation is likely to improve even more in the future times |
Political turmoils poses a high level of risk to the business of the concerned organisation |
Cancelling Business in the country |
5 |
|
Economic Factors |
Stable economy (Hyder and Lussier 2016) |
Improvement of the economic system in the future times |
If the economic system is not improved and the terrorists activities are not mitigated in an effective manner then this could pose a serious threat to the concerned organisation |
Cancelling Business in the country |
5 |
|
Social Factors |
· Food forms an important part of the social life of the people of the nation (Khan 2015). · People of the nation like to bond over food. |
· Fragmentation of society · Changes in the social pattern · Switching over to organic farms |
This is likely to affect the entire food packaging industry of the nation and thus will pose a significant amount of risk to the concerned organisation |
Significant losses |
3 |
|
Technological Factors |
Under developed (Hyder and Lussier 2016) |
Development of technology |
If the nation does not develops its technological landscape then it could a significant amount of risk to the concerned organisation |
Significant losses |
3 |
|
Legal Factors |
The legal framework has been designed to promote trade and commerce |
The improvement of the legal system is likely to further improve the prospects of the business enterprises |
Legislations can be formulated that could adversely affect the prospects of the concerned organisation |
Significant losses |
3 |
|
Environmental Factors |
· Member of the Paris Agreement of 2016 (India.gov.in 2018) · Has various kinds of legislations for the protection of the environment that the organisations need to follow |
· Making the environment legislations even more stringent · Imposition of strict penalties on the organisations which do not follow the environment legislations |
This is likely to increase the production cost and other related costs of the company |
Significant losses |
3 |
Analysis of risks in the business market of Pakistan
|
|
Present Condition |
Likely Future Condition |
Risks |
Impact on TSA |
Score (0 being the lowest and 5 being the highest) |
|
Political Factors |
Highly unstable political condition (Jamil et al. 2016) |
Unlikely to get improved in the recent times |
Likely to pose a significant amount of risk to the concerned organisation |
Cancelling Business in the country |
5 |
|
Economic Factors |
Poorly developed (Jamil et al. 2016) |
Not likely to improve in a significant manner in the near future |
Like to pose a significant amount of risk because of the ineffective economic system |
Cancelling Business in the country |
5 |
|
Social Factors |
|
|
This is likely to create changes in the food packaging industry and will in turn pose a serious threat to the concerned organisation |
Cancelling Business in the country |
3 |
|
Technological Factors |
Under developed (Bader and Schuster 2015) |
Development of technology not likely to take place in the near future |
This would pose a serious risks since it will have to depend on the technological resources of other nations |
Significant losses |
4 |
|
Legal Factors |
The legal framework has been designed to promote trade and commerce but in the absence of a strong national government it is rarely followed (Bilal, Khan and Akoorie 2016). |
Condition not likely to improve in the near future |
The government can come up with stringent regulations which could affect the business of the company |
Significant losses |
3 |
|
Environmental Factors |
Legislations are there but it is rarely followed |
Unless a strong national government is established the condition is not likely to improve |
The UN can intervene and make the organisations follow stringent regulations |
Significant losses |
3 |
Recommendation
The analysis of the business markets as well as the risks that the organisation is likely to face in the business markets of the two nations clearly shows that the nation of India is more suitable to the business of the concerned company. The Indian business market is more suitable for the business of the concerned organisation and at the same time it also poses a relatively lesser amount of risks for the business of the concerned organisation.
The sale of the services offered by the concerned company could be increased in an effective manner through the use of an adequate marketing mix which would be based on the business market of the nation. Furthermore, the pursuit of effective promotional strategies would also help the concerned organisation in a significant manner. The use of the cost leadership strategy would at the same time boost the sale of the packaging services offered by the concerned organisation.
Conclusion
To conclude, the business organisations for the process of the business in a particular nation need to take into consideration diverse factors like the political, technological, social and others of the concerned nation. In addition to this, if a particular business enterprise is planning to expand into the business market of a host nation then it needs to conduct a thorough analysis of the conditions that it is likely to face in the business market of the concerned nation. Furthermore, an analysis of the potential risks that it is likely to face in the concerned nation would also be helpful.
This can not only help a particular organisation to save a significant amount of their capital as well as resources but at the same time would provide them with an idea about the conditions that they are likely to face in the business market of a particular nation. Thus, it can be said that a thorough market as well as environment analysis is one of the prerequisites for the various organisations which are planning to embark on the process of international expansion.
References
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Bader, B. and Schuster, T., 2015. Expatriate social networks in terrorism-endangered countries: An empirical analysis in Afghanistan, India, Pakistan, and Saudi Arabia. Journal of International Management, 21(1), pp.63-77.
Bilal, A.R., Khan, A.A. and Akoorie, M.E.M., 2016. Constraints to growth: a cross country analysis of Chinese, Indian and Pakistani SMEs. Chinese Management Studies, 10(2), pp.365-386.
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