The main purpose of this task is to outline and explain the significance of international business. Billabong Company has been taken in the task to provide brief information about the global business. Billabong international limited is a surf Corporation and it is a primary clothing retailer that also produces ample of accessories like backpacks, watches, snow board and skateboard products under some other brand names. Two companies such as Vietnam and Croatia have been selected in the task to explore and expand the business operations widely. Along with this, the paper also explains the pestle analysis that plays a significant role in analyzing and identifying the risks and challenges of the market. Aside this, the paper provides a brief outline about the trade policies, risks and challenges of both the countries. More detail of the task has been elaborated below.
Billabong was incorporated in 1973 and the company offers approx 2,200 products in the global market (Reference for business, 2018). Billabong is a leading brand in Australia and it is well known among the top three brands of surfing apparel. In today’s era, the organization is maximizing its profitability and outcomes.
Billabong has decided to explore its business functions and operations in some other countries for maximizing profitability and making a dynamic image in the marketplace. With respect to Vietnam; the country has one of the biggest growing and leading economies in Southeast Asia therefore the company can get ample of benefits while expanding business in this country. The GDP of the country has increased by 350% since 1991 that can be proved great success for the firm (Lirette, 2018). It is noted that Vietnam is an attractive destination for doing foreign business. French and English are common languages spoken by people in Vietnam. On the other hand, Croatia is a European country that located between middle and South East Europe. Furthermore, the country is a member of the United Nation and council of Europe. It is further biggest tourism destination in the world thus; the company can uplift profitability and revenue by exploring business in Croatia (Export.gov.2018).
It has been analyzed from the various studies that macro environment affects the growth and progress of the firm adversely. No company can start new business activities and operations without analyzing and identifying the external environment of the foreign country. Therefore, pestle analysis is done by the company to eliminate the ample of risks and challenges of the foreign market. By using Pestle analysis, Billabong has been able to stand out against the competitors in the international market. The pestle analysis of both the countries is elaborated below.
Political factor: It is noted that assorted economic system followed by the country and still authorities and government bodies play a significant role in planning and regulating the policies. The country is well known for its communist leadership and it has a wonderful political history. Vietnam has a very unique and approachable attitude towards boosting trade relations and welcoming FDI that help in initiating the new business in such country. In addition, the government also is committed to enhance and improve the business and investment of the country. Therefore, Billabong can attain various benefits while implementing the business functions in Vietnam. On the other hand, the political system of Croatia is parliamentary democracy that plays a vital role in conducting new business. The state government is originated on the principle and rule of the separation of powers into executive, legislative and judicial power. Parliamentary system is followed by the country and the Supreme Court is considered the biggest court of appeal in the country with criminal and civil departments. Hence, the company can increase its sell in this country (Andreja, 2017).
Economic factor: The economic condition of the country is strong and stable. The GDP of the country expanded 7.38% in the first quarter of 2018 (Tradingeconomics, 2018). In 2017, GDP per capita in the country was measured at 1834.65 US dollars. If the company wants to enter in Vietnam then it will have to focus on the economic elements such as weak currency, low disposal income and high inflation rates. On the other hand, Croatia faced a serious economic slowdown that it has failed to gain recovered it. Serious concerns such as unequal regional development and investment climate still are being faced by the country. Foreign investments have been reduced in the country. The GDP in the country was approx 54.85 billion US dollars in 2017 (Tradingeconomics, 2018). The country is well known for tourism thus Billabong can also attain various advantages by selling the products and services.
Social factor: It is noted that Vietnamese peoples are confident towards their success and career. Social factors such as customs, values, beliefs and culture may affect the targets and success of Billabong. The government of the country has a strong and dynamic commitment to social change as well as social welfare (Croucher and Cotton, 2011). It is significant for the company to consider the socio-cultural factors of Vietnamese people. On the other hand, the official language of Croatian is Croats. Most of the ethnic minority groups are the Serbs and other ethnicities include Romani, Hungarian, Bosniak, Italian and Albanian. Thus, socio-cultural factors might influence the goodwill and position of the company in the foreign market (Lee and Carter, 2011).
Technological factor: Various information technological agreements have been signed by the country to gain rivalries benefits. Furthermore, Vietnam open to adopt new and innovative technologies however lacking in knowledge and skills, the country is dependent on the external expertise. The technology market is growing rapidly therefore Billabong can gain good market share in an emerging marketplace. Let talk’s about Croatia, the country uses innovative technology and resources to expand business globally. There are dozens of advanced and innovative technological companies in the country (Franzen and Vogl, 2013).
Aside this, the country needs to utilize its geographic traffic position in the market. There are seven airports in the country for international traffic. The company must focus on the technology, infrastructure and resources while expanding business in both the countries (Dixon et al, 2013).
There are enormous trade policies that have been made by both the countries to flourish the business functions in a large extent. The country agreed to join the WTO information technology agreement to reduce and mitigate tariffs on information technology products. The Vietnamese telecommunications market is widely operated and managed by three key operators Mobifone, Viettel and Vinaphone. Beside this, trade related environmental policies and standards such as environmental protection law have been set by the government in the country (Export.gov, 2018). Vietnam further maintains various forms of export subsidy under various government programs such as minimizing or exempting taxes and rendering financial support to the export of various products and services in the marketplace. In addition, export support fund is managed and handled to promote and encourage export in the international market. Bilateral trade agreements further have been signed by the country to attract wide range of companies in the international market. The country is a member of ASEAN and world trade organization. Improved trade facilitation, financial development and regulatory reforms will provide benefits all foreign and domestic companies in the country. Aside this, there are various British education institutions conducting business in such country (Export.gov, 2018).
On the other hand, Croatia is situated at the heart of the central and Eastern Europe. The country’s traditional partners are Germany, Austria and Italy. Croatia is also a member of the European Union and WTO. EU standards are followed by the country for product packaging. The United Kingdom signed a double taxation convention with Yugoslavia that is also applied in Croatia (Gov.UK, 2015).
There are enormous short terms policies have been formulated by the government of both the countries. Training and waste management policies have been made by Vietnam to protect the interests of the people in a large extent. On the other hand, bilateral agreements have also been made by Croatia to promote trade and investment.
Inadequate infrastructure is one of the significant risks in Vietnam that could affect the business operations of new companies. Due to lack of skills, Billabong would not able to run the business in the country effectively and efficiently (Hill, 2008). Tax burden and bureaucracy are significant risks in Croatia; as a result the operational income and revenue of the company would be reduced.
Language barrier is a vital and important threat for Billabong in Vietnam. Language barriers means interpreters and translators are generally required to conduct business actively (Srinivasan, 2015). It is time consuming and expensive process. Slowness of the Croatian judicial system is one of the strong and critical threats for the company. Tax burden is also very high in Croatia that may direct impact on the progress of the firm (Fleisher and Bensoussan, 2015).
On the other hand, ample of opportunities can be taken by the company while conducting business in both the countries (Wood and Wilberger, 2015). Vocational training is one of the biggest opportunities for foreign companies in Croatia. Specialized executive courses are also conducted by the institutions to improve and enhance the skills of the workers whereas effective and strong operation management is followed by Vietnam to direct the business in a hassle free manner. Along with this, English language training and technical education are provided by the country to improve the performance of the workers (Brauch et al, 2011).
Conclusion
It concludes from the above mentioned analysis that Billabong can initiate its business activities in both the countries. Various entry modes are used by the company to enter in the foreign market. It has been analyzed from the above study that Croatia will provide more advantages as compared to Vietnam. The report also explains the external environment, risks and challenges of both the countries. There are various reasons why Billabong should select Croatia country to expand business in the market which has been detailed below.
References
Andreja.2017. The Croatian political system [Online]. Available from https://croatianattractions.com/the-croatian-political-system/ [Accessed as on 27th August 2018].
Brauch, H.G., Spring, Ú.O., Mesjasz, C., Grin, J., Kameri-Mbote, P., Chourou, B., Dunay, P. and Birkmann, J. eds., 2011. Coping with global environmental change, disasters and security: threats, challenges, vulnerabilities and risks (Vol. 5). Springer Science & Business Media.
Croucher, R. and Cotton, E., 2011. Global unions, global business: global union federations and international business. Libri Publishing.
Dixon, J., Scura, L., Carpenter, R. and Sherman, P., 2013.Economic analysis of environmental impacts. Routledge.
Export.gov.2018. Doing business isssn Vietnam [Online]. Available from https://2016.export.gov/Vietnam/doingbusinessinvietnam/index.asp [Accessed as on 27th August 2018].
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective application of new and classic methods. FT Press.
Franzen, A. and Vogl, D., 2013. Two decades of measuring environmental attitudes: A comparative analysis of 33 countries. Global Environmental Change, 23(5), pp.1001-1008.
Gov.UK.2015. Doing business in Croatia: Croatia trade and export guide [Online]. Available from https://www.gov.uk/government/publications/exporting-to-croatia/doing-business-in-croatia-croatia-trade-and-export-guide [Accessed as on 27th August 2018].
Hill, C., 2008. International business: Competing in the global market place. Strategic Direction, 24(9).
Lee, K. and Carter, S., 2011. Global marketing management.Strategic Direction, 27(1).
Lirette.C.2018. How to do business in Vietnam [Online]. Available from https://www.veem.com/vietnam/how-to-do-business-in-vietnam/ [Accessed as on 26th August 2018].
Referenceforbusiness.2018. Billabong international Ltd.-Company Profile, Information, Business description, History, Background information on Billabong international Ltd. [Online]. Available from https://www.referenceforbusiness.com/history2/89/Billabong-International-Ltd.html [Accessed as on 28th August 2018].
Srinivasan, M.S., 2015. Integrating Workforce Diversity in Global Business: A Psycho-spiritual Perspective. Journal of Human Values, 21(1), pp.1-10.
Tradingeconomics.2018. Croatia GDP [Online]. Available from https://tradingeconomics.com/croatia/gdp [Accessed as on 27th August 2018].
Tradingeconomics.2018. Vietnam GDP Growth Rate [Online]. Available from https://tradingeconomics.com/vietnam/gdp-growth [Accessed as on 27th August 2018].
Wood, V.R. and Wilberger, J.S., 2015. Globalization, cultural diversity and organizational commitment: Theoretical underpinnings. World, 6(2), pp.154-171.
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