Discuss about the Contemporary Strategy Analysis for Text and Cases System.
Global supply chain management has become an integral part of most of the reputed companies. Interestingly, companies across various countries in the world are finding this as their solution for the rising demand of the business. The companies are more seemingly concentrating on some global countries also for the supply chain management to establish their global stature and to become a global success. Companies are going global because of various options such as low labour costs in the foreign country, lesser logistics costs and many more (Fawcett, Ellram and Ogden 2014).
To fulfil their desire and to achieve the feat, they do set up overseas factories to get full use of regional low costs for labour, supportive political & economical environment, increasing GDP, buying power of customers and many more.
This assignment takes on Red Fish-Blue Fish LLP, which is in the United States. Fran Fisher did lay the foundation for the Company in the year 2007 as his step to change his career and give this a new look. The Company has not performed up to the mark in global countries especially in the Asian market. However, two of the most important factors have attracted the Company towards its exposure in the Asian countries such as demographic factors of the Asian countries and the Trans-pacific Partnership.
There is a huge transition in the demographic of Asian countries in the last few decades. The transition of demographic highlights the changes from the pre-industrial high mortality and fertility to post industrial low mortality and fertility. Asia demographic transition leads towards the declining of mortality rates. By the time of late 90’s the basic death rate began to decline at a very high space that was accompanied by increasing the life expectancy from 60 to 75 years between the year 1960 to 1995. There was a subsequent change in the mortality and fertility rates that led to heterogeneity in all the age structure shifts throughout all the Asian regions (Dutton, Madison and Lynn 2016).
In the East Asian region, the total amount of fertility rate drop down from around 5.6 in the year 1965 to 2.5 in 1985. In the late 90’s the average East Asia total fertility rate was almost below 2%. Therefore, the increasing working age share of the population accompanied the rapid decline in the entire fertility rate and the ratio of working age population was increased to 1.2 to 2.5 between the years 1965 to 1986.
In South East Asia, the fertility rate also declined quickly between the year 1960 and late 90’s from a regional average of 7.5 in 1960 to 3.0 in 1990. One of the most important factors of the demographics of Asian countries is that it has increased the rise of working age share within their overall population (Okada et al., 2017).
Moreover, by critically analyzing the projections of World Population Prospects it can be estimated that there is a stabilization of the total fertility rate that is depended between the ratio of working age population and non-working age populations.
In the eastern Asian regions the fertility rate is been stabilized below the replacement rate and also in the South East Asian region the fertility rate is also predicted to be stabile to almost 2.0 by the end of 2015.
Therefore, a steady decline in the fertility rate will raise the increase of working age share of the populations and the number of youth’s dependents individuals will increase in due time. Moreover, once the rate of fertility raises the number of working individuals per share of the population will also be increased along with the number of individuals entering into the workforce will be stabilized. Therefore, increasing the life expectancy of individuals and thus reducing the ascend of old age dependents will basically combine with the stable youth population that consist of working age share to reduce the non working age population ratio across various Asian countries (Cavusgil et al., 2014).
In addition, it can be observed that there is also a major shift in the age structure throughout Asia. This shift of age consists of more number of working age population that enables the Asian countries to develop their economic growth.
Therefore, the above mentioned demographic factors provides enough evidence that there is a huge potential of future trade development in the Asian countries as the country basically consists of huge number of working age populations that will help to facilitate more number of international trades. Moreover, the economic growth of the country is also rising day by day, which is an added benefit for the development of future trades within the Asian countries (Glowik 2016).
The Red Fish-Blue Fish LLP must consider various factors while they expand their business operations within the Asian Countries. In general, it can be observed that are some similarities between the Asian and Western Markets in terms of their recent customer behavior.
Therefore, it does not simplify the fact that Western marketers and advertisers must not approach the Asian consumers in the same way. It is been observed that the Asian marketing approach is more modest and submissive whereas the American approach is much straight forwarded and certain. The Red Fish-Blue Fish LLP should take this into their minds while entering the Asian Market place. The attitude of advertisements and their co-operations have serious impact on all the level of selling. Moreover, the organization must also respect workers on all the levels of the supply chain because Asian consumers will reflect these behaviors on the said brand and their product (Khanna and Palepu 2013). One of the most important factors that is quite constant among all the three Asian countries is that the strength of the brand recognition is always put ahead of all the other important factors like Price of the product. The people of Asia value their brand highly and in order to acquire competitive advantage in the Asian market place the Red Fish-Blue Fish LLP needs to develop co-operation among Asian people and firstly implement strategies to acquire their sense of trust towards their said brand. They can expand their business operations through various factors as follows:
Asian countries are one of the most complex markets and it is basically not for everyone to expand their business operations. Therefore, if the organization is been able to find an Agent they will be much beneficial to handle their daily business activities much more efficiently. However, it is very difficult to find a good Agent that can run and corporate the business activities with sound maturity and trust and he/she needs to communicate in English. Therefore, if the organization has a presence of local support of staffs those can assists them it will always open up new and bright possibilities and it will make less risky in evaluation of partners, customers and suppliers (Grant 2016).
Establishing a Joint Venture is one of the oldest a traditional methods via which a foreign companies expand their business operations globally due to number of reasons. Therefore, not only is that a Joint Venture is the mandatory choice for many multinational industries that restricts foreign controlled companies but also it is a safe method to establish and develop existing infrastructure, training of staffs and network rather than focusing to start from the scratch. Moreover, there are also several disadvantages associated with Joint Ventures like the intellectual property of the organization gets vulnerable and finding a reliable partner is very crucial at this point of time Moreover, negotiating the terms and conditions of the organization in front of the Asian partner can also be a very (Ang, Benischke and Doh 2015).complex process. Therefore, in order to expand their business in Asian countries it is important that they have a large organization and the required resources to maintain a senior team that have a good experience in the Asian market and can work with diligence in managing the joint venture (Laufs and Schwens 2014).
The one of the most popular measure that all the foreign companies take into considerations while expanding their business operations globally is representative offices. It enables them to employ employees and play them proper remuneration without taking any legal obligations in local currency (Zhao, Park and Zhou 2014).
It was one of the most common approaches such as technical support, purchasing offices and marketing support operations where the business is done by the overseas head office directly with the help of Asian partners (Shi et al., 2014).
One of the most valuable considerations that an organization must make before entering into the Asian market is that their competitors launch dates and strategy along with their competitor sales positioning and market capabilities. The organization must also provide market access strategies in their plan of life cycle management. Therefore, utilizing competitor intelligence often provides high value insights that lead in taking crucial commercial decisions while making market expansion (Holtbrugge and Baron 2013).
Moreover, gaining the competitor knowledge in Asian market place can be proven more difficult depending on the interest of the chosen market. In Asian countries, the information about competitors can be gained with the help of triangulation process. The information is available through secondary sources as if the word of mouth that is often spoken in the local languages is supplemented with all the internal expertise and validated with insights that are gathered from interviews with the analysts and company sources (Garica-Sanchez, Mesquita and Vassolo 2014).
While expanding business globally it is important to understand that the new market is very price sensitive and play a vital role in making the brand competitive in the market. It is been observed market access and price are highly influential factors in determining the revenues of the product. The primary needs of every organization is that to achieve their product market access and in the best possible price (Zhao, Park and Zhou 2014).
Therefore, it is concluded that all the above mentioned steps must be followed by Red Fish-Blue Fish LLP and take all the above mentioned considerations while expanding their business within Asian countries that will help them to overcome their losses and expand their business smoothly in the Asian Markets. It is already been discussed that Asian Markets are very price sensitive market and they needs co-operation from foreign players in order to promote their brands and to gain customer within the Asian market place (Ang, Benischke and Doh 2015).
Globalization has influenced many of companies for going global with their existing business in search of an enhanced business domain. However, it is not free from risks and challenges that are bound to happen in front of a Company, which is aspiring for its global exposure (Christopher 2016). To the Red Fish-Blue Fish LLP, their business performance in global countries has suffered significantly. They have not been able to prove their point in terms of global exposure. Although, they had recorded good sales in the European countries and Canada; however, they could not produce the same effect in the Asian countries. Nevertheless, some of the countries in the Asian part of world are a potential market such as China, Singapore, Thailand and many more.
Some of the factors are there, which has influenced the Red Fish-Blue Fish LLP Company for its expansion into the Asian regions. High rate of population in some of the Asian countries such as China, India and strong buying power of customers are two of the most important factors that are influencing the drives of foreign companies. However, high number of population does not guarantee for an increased number of customers as USA, UK is two of the potential market in the world. Both USA and UK have lesser population than China and India. Nevertheless, buying power of consumers is one of the most important factors involved in the driving forces behind the potentiality of market in China and India (Elms and Low 2013).
In spite of all the glories that a foreign Company can dream of in the global countries especially the Asian countries, it also has to face some challenges that pose strong resilience force against the prospering of foreign companies in these regions. Global supply chains are more challenging to manage than the domestic chains of supply (Fernie and Sparks 2014). Some of the challenges that a Company like Red Fish-Blue Fish LLP can face in the global supply chains are as follows:
Large Distances – It hampers the coordination in between the parent Company and the customers in the global chains. It has to go to undergo a lengthier process when the customers demand a small change in the products. It is known as the Bullwhip Effect, which happens when a small demand takes a wider swing to reach to the parent Company (Fredendall and Hill 2016).
Inaccurate Forecasting – The parent Company tends to lose its contact with the customers in global supply chains because of which, it becomes hard for the Company to understand the actual demand of the customer. The Company generally does not have any significant idea about the customers in the global part, which makes it reliable on the data that is reaching to it. Because of the process, it becomes almost difficult to maintain the accuracy to identify the actual customer demand (Heizer and Barry 2013).
Political and Economical conditions – Several of economical factors are there that makes it tougher for the foreign companies to adjust with the economical culture of the country of the global supply chains (Waters and Rinsler 2014). Factors such as economic instability, exchange rates, trade barriers and many more are some of the challenges that hamper the business operation of a Company in global chains. Political parties and different kinds of their protests are also very significant problem for the foreign companies. In China itself, it is very tough for the American companies to produce their same performance as that of their local home. The anti American unions are an added problem. Likewise, India is also very tough country for the foreign companies because of its political condition (Humphries 2013).
Infrastructure Shortages – It is another problem in global chains as targeted countries might be short of skilled labours, availability of suppliers, technological advancements and many more. In China, the high costs of labour keep deterring foreign companies from exposing their business to this market. In spite of the fact that it is a potential market, most of the foreign companies have already shut down their few shops because of its poor performance (Mangan, Lalwani and Lalwani 2016).
It is very difficult to provide the possible solutions to the problems identified in the assignment above but a strategy can be made to minimise its adverse effect to a possible extent. Solutions are as follows:
High Distance – Merger & acquisition with the local companies is the one possible solution that looks prominent in its appeal (Seuring and Goldbach 2013). This can prove its worth for the foreign companies as the local companies are well versed with the customer’s cultures. It is not advisable to open up own factories in foreign countries as it might also face some political and legal challenges. The best example in this regard is of Walmart, which is an American Company. Despite being an American Company, Walmart has successfully proved its worth in the Chinese market. It merged with the local Company Trustmart to enhance its local appeal. Moreover, this also helps in understanding the demand of local customers by improving the coordination in between the customers and the Company (Milberg and Winkler 2013).
Fault Forecasting – Merger & acquisition is also the solution for the failure of companies in this regard. Moreover, the Company acquired or merged Company would remain in contact to the local customers. This is helpful in understanding the actual demands of local customers as well as improved communication with the parent Company regarding the particular demand (Monczka et al. 2015).
Political & economical circumstances – It can well be controlled by studying and researching the economical stability of the country. The Red Fish-Blue Fish LLP needs to analyse the economic stability, labour costs and many other factors of the targeted country for an improved business operation. It is possible to follow the footsteps of Walmart in China but the high costs of labour are a significant problem that reduces the profit margin considerably. In India, the political condition is not that much favourable as it is not predicted that which way it is going. It might oppose the operation of some companies whereas it might allow the others. The Red Fish-Blue Fish Company needs to conduct a thorough study on the political condition of the targeted country (Ross 2013).
Low Infrastructure – Infrastructure can have various influencing factors such as low number of skilled labours, less number of suppliers, improper logistic operation and many more (Schönsleben 2016). The Red Fish-Blue Fish Company needs to target the most suitable country in this regard. For example, Singapore could be one of the potential selections for the Company because of the ageing employability in the country. Moreover, the HRM has ample of burdens on its shoulder to recruit sufficient skilled employees to fill the expected gaps after the departure of baby-boomers. It would create a strong drives in the country for the fresh and skilled employees. This would provide the Red Fish-Blue Fish Company a good chance to grab some potentially skilled employees for its operation (Ross 2015).
The Red Fish-Blue Fish Company needs to consider on some factors if it wish to expand its business into the Asian market. China emerges out as the most effective country in Asia, which attracts a bulk numbers of foreign companies for their globalization. China is the second most powerful market in the world, second only to the United States. It is expected to dethrone the United States from the top position very soon. The hunger to become globalized, it had attracted many foreign companies in the past such as Walmart America, Aldi, Asda and many more. However, apart from Walmart, many of the companies are struggling in China. Nevertheless, the hunger for the business expansion is not finding any significant stoppages in the country. If the Red Fish-Blue Fish has to expand its business into the Chinese market, it has to focus on some important points to prevent any failure in its operation there such as follows (Ross 2016):
Conclusion
The Red Fish-Blue Fish Company founded by Fran Fisher in 2007, has achieved a notable feat in the United States. The domestic sales have increased up but a dip in the global sales has hampered its performance in the global part of the world. In the European countries and the Canada, the sales are good but it is bad in the Asian region. The Company needs to have solutions to the challenges that are expected while operating in the global supply chains. Expanding the business in some, foreign markets such as the Asian countries do require a thorough study of its political & economical condition, legal rules, infrastructure and many more. Moreover, the domestic supply of chains is more controllable than the global chains for its control on the operation, understanding of the local customer demand and many more. For the Red Fish-Blue Fish, it needs to follow the footsteps of successful foreign companies that have constructed their story of success in the global world.
References
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