Research Topics: International Strategy

Ryan Air’s Ansoff’s Matrix, Strategy Clock & Porter’s Generic Strategies

Introduction   The omnipresence of global trends and innovations debunk the idea of business monopoly and empire states. Today, the trends are set to maximize the potential of human powers by trivializing simple phenomena in order to fashion complex and subtle effects. In the minds of prominent sociologists and philosophers these trivialization of occurrences brought about by man’s deepest desire of uncovering the truth and meaning of life. However, our correspondence and connection with the truth is indirect and diluted which can only be accessible via representations and constructs. Hence, the necessity, though, not necessarily is, of excavating the truth embedded on phenomena became an ordinary human laborious pursuit.             Moreover, due to rapid changes on various aspects of human life our reactions vary depending on the way we perceive it, while forming effective and efficient mechanisms become a mechanical elocutionary act. This fact is paralleled with the nature and condition of business operations wherein technology dictates in setting the trends and innovations. Moreover, such despotic nature of technology invigorates the force and power of globalization to deeply penetrate all human spheres of interaction. Strategy Clock             The strategy clock is based on the work of Cliff Bowman. This strategy is a suitable method to analyze company’s competitive position in contrast with competitors’ ways of competitive positioning. Using this model we can therefore examine the competitive advantage of Ryanair amidst the difficulties and problems it had in 2004. Like Porter’s Generic strategies, Bowman’s strategy clock offers effective framework to evaluate and determine the company’s competitive status by means of using various options. These options are classified into eight parts namely: low added value, low price, hybrid, differentiation, focused differentiation, increased price/standard, increased price/low value and low value/standard price.             Now, using this strategy let us examine the business environment of Ryanair Airlines in relation to its problem in 2004. The dramatic changes happening within Ryanair Airlines is due to executive strategic management planning. These dramatic changes flabbergasted Ryanair’s competitors. One of which changes was the rise of profitability within a short period of time. The effective implementation of low-fares strategy, no frills and punctuality in flight service brought a significant value on the growth of Ryanair Airlines and challenged its competitors.             The high level of competition between industries needs efficient strategic option in order to advance and at the same time generate higher profit and income. In particular, Ryanair utilized various options in Bowman’s strategy clock in order to maintain its business productivity and profitability. Options one to five in strategy clock were evident Ryanair business strategy wherein the emphasis on implementing low price value, low cost base products, and reinvestment in low price and differentiation. Porter’s Generic Strategy             If the principal element of a company’s profitability is the magnetism of the industry in which it operates, an essential secondary determinant is its location within that industry. However, even an industry may have below average productivity a company that is optimally positioned can generate greater returns. Porter argued that a company’s strengths eventually plunge into one of two factors: cost advantage and differentiation. By applying these strengths three generic strategies produced: cost leadership, differentiation, and focus.             Low cost leadership strategy does not necessarily mean a low selling price for products and services. Since the pricing environment deteriorated, Ryanair has clearly prioritized the strengthening of its strategic location in the market over interim profit maximization. Ryanair is using its cost leadership position to push prices even lower so as to amplify the fiscal pain on higher cost competitors and most likely for as long as it takes to push a market streamlining that would facilitate a return to a more normal pricing environment.             The supply chain and changing decision frames of customers has a significant role in improving strategies with regards to differentiation. Each company within an industry applies and implements various ways of product differentiation. Ryanair breads the trend in the business. It makes price the big differentiator and it compensates for the fact that it flies from secondary airports to secondary airports that may be slightly further from main centers that the major airlines and major airports. It supports its price differential by chartering rather than owning its whole fleet, outsourcing many operational services and by being 100 % upfront with regards to customer services. This illustrates the significance of understanding the supply chain and the potential that can be ajar by looking at the supply chain in a different way. Moreover, Ryanair understood that there is a point at which travelers will trade off benefits for price. Given Ryanair’s seat-price, the lack of an assigned seat became a non-issue for the customer. Ansoff Matrix             Igor Ansoff presented a matrix that focused on the firm’s present and potential products and markets. By considering ways to grow via existing products and new products, and existing markets and new markets, four possible product-market combinations can be used: market penetration, product development, market development, and diversification.             Borrowing these combinations, Ryanair seems to successfully attract and penetrate the markets by offering its products in a most affordable and reasoning price. The product here refers to its services offered in flights and the most significant of them offering a low-fare scheme. Since, Ryanair became the leading carrier across Europe, it forces itself to define further its development and its expansion made them known internationally, required divergence of employees and culture. Ryanair with its operations in various locations and destinations have diversified people and management in which they operate and the success of making them unite and one is a great factor to further penetrate and develop their products to existing and new markets.               Credit:ivythesis.typepad.com

Ryan Air’s Ansoff’s Matrix, Strategy Clock & Porter’s Generic Strategies

Introduction The omnipresence of global trends and innovations debunk the idea of business monopoly and empire states. Today, the tren...

PESTLE Analysis to explain company’s International Strategy for McDonald’s

PESTLE analysis   to explain company’s international strategy for   McDonald   TABLE OF CONTENT                                                                                                                                                    Page   I.     INTRODUCTION                                                                                                                3   II    BACKGROUND                                                                                                                  3   III   PESTLE ANALYSIS A.       POLITICAL FACTORS                                                                                               4 B.        ECONOMIC FACTORS                                                                                              4 C.        SOCIAL-CULTURAL FACTORS                                                                              5 D.       TECHNOLOGY FACTORS                                                                                        5 E.        LEGAL FACTORS                                                                                                       6 F.         ENVIRONMENTAL FACTORS                                                                                 6   IV   CONCLUSTION                                                                                                                  7   V    RECOMMENDATION                                                                                                        8   VI   REFERENCE                                                                                                                        9       I.                  INTRODUCTION     Globalisation has made the globe considerably smaller.  States lines have turned into practically a divider separating certain regions of a massive unitary community.  Businesses are the one that are highly affected by this occurrence. The discussions in this paper shall involve an analysis of the international expansion strategy utilised by a multinational company.  In this case, the situation surrounding McDonald’s will be taken into consideration.  The following annotations and propositions employed in the following discussions are to be supported by claims on journals and academic pieces that address international expansion strategies and international marketing theories.       II.               BACKGROUND     The modest beginnings of McDonald’s in Illinois turned out to be among the main brand names in the international scene.  It has been synonymous to what is widely-accepted the fast-food concept. The company operates over thirty one thousand stores all over the world to date. It was one of the first to perfect the concept of fast service in the food industry in its early days of operations in 1955. Given that the products of the company are mainly western in character, its operations has also expanded to the Asian region.  In the rest of the globe, it operates thousands of store franchises that functions autonomously.   III.            PESTLE ANALYSIS   Pestle is an analysis of the external macro environment in which a business operates. According to RapidBi (2008), pestle stands for political, economic, social, technology, and environmental factors.     A.       Political Factors   The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government. (Oxley and Yeung 2001, 705) For instance, there are certain groups in Europe and the United States that clamour for state actions pertaining to the health implications of eating fast food. (Fearn and Graham, 2005, 305) They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonald’s franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies that points to the infringement of McDonald’s Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonald’s stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market.        B.       Economic Factors   Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors.  Branches and franchises of fast food chains like McDonald’s has the tendency to experience hardship in instances where the economy of the respective states is hit by inflation and changes in the exchange rates.  The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains. (Hsieh and Chang 2004, 282) As stated in the paragraph above, McDonald stores have to take a great deal of consideration with reference to their macroenvironment. The company’s international supply as well as the existing exchange rates is merely a part of the overall components needed to guarantee success for the foreign operations of McDonald’s. Moreover, it is imperative that the company be cognizant of the existing tax requirements needed by the individual governments on which they operate. This basically ensures the smooth operations of the McDonald’s franchises. In the same regard, the company will also have to consider the economic standing of the state on which they operate on. The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak state, hence their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale.   C.       Socio-Cultural Factors   Articles on the international strategies of McDonald’s seem to function on several fields to guarantee lucrative returns for the organisation.  To illustrate, the organisation improves on establishing a positive mind-set from their core consumers.  McDonald’s indulge a particular variety of consumers with definite types of personalities. (Shank and Langmeyer 1994, 162) It has also been noted that the company have given the markets such as the United Kingdom, an option with regards to their dining needs.  Debres (2005, 115) pointed out that McDonald’s has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates.  Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonald’s franchises. (Debres 2005, 115)   D.    Technological Factors   McDonald’s generates a demand for their own products. (Ramsey 2006, 361) The company’s key tool for marketing is by means of television advertisements.  There are similarly some claims that McDonald’s are inclined to interest the younger populations more. (Salva-Martinez 1995, 30)  Moreover, the operations of McDonald’s have significantly been infused with new technology.  Elements like the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with. The integration of technology in the operations of McDonalds tend to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context.   E.        Legal Factors   On the whole, this addressed the need of the company to form its corporate reputation to a more positive one and a more socially responsible company. (Fearn and Graham, 2005, 305) The reputation of McDonald’s is apparently a huge matter.  Seen on the website of the company, it seems that they have acquired strides to take in hand the key social censures that they have been berating them in the past decades.  The company has provided their customers the relevant data that they need with reference to the nutritional substances of their products.   This is tied up with the socio-cultural attributes of the market on which they operate. For instance, operations in predominantly Muslim countries require their meat to conform to the Halal requirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.     F.        Environment   The social responsibilities of McDonald’s on the state are influential to the operations of the company.  These entail accusations of environmental damage.  Among the reasons why they are charged with such claims is the employ of non-biodegradable substances for their drinks glasses and Styrofoam coffers for the meals. (Watson 1997, 74)     IV.       CONCLUSION   Debatably, the most significant contribution of this generation is the combination of globalisation and internationalisation in the businesses sector.  Developments in the international setting have an effect on the more particular factors in the operations in individual organisations. Alterations could take place and require intense modifications to the operations such that it could have an adverse effect on the entire structure of the company.  However, as indicated in the arguments and comments in this paper, this could be acquired by setting a certain level of flexibility in the organisation.  This level of flexibility is basically acquired through the acquaintance of both the internal and external environment of the company. Even though McDonald’s may have been deemed as demigod in the fast food business in the international scene, what it preserves as revealed in its processes is the need for flexibility.  The slight changes that take place in the market have an effect on the operations of the business in any case.       V.        RECOMMENDATION   The following recommendations shall be based on the conclusions and arguments above.    l   Political Factors   Since it is apparent that the company is expanding continuously, it is wise to deal directly with the proper authorities in the respective markets that they intend to operate in. This way, a good way of establishes good relationship with the government. It is advisable that the company rests on the good graces of the government on which they will be penetrating. To do this, all they have to do is accomplish all the prescribed acts and satisfy all the prerequisites for doing business. The company must also be acquainted with the law in order to know what their responsibilities and their possible liabilities.   l   Economic Factors   Before penetrating the market, the company must carry out a well conducted market research, especially in the movements in the economic environment. The frequency of the shifts in the inflation rate as well as the fluctuations in the exchange rate affects the operations of the company.   l   Socio-cultural Factors   Obtain the relevant information from the target market in addition to the individual customers of the organisation. It is imperative that before a franchise is granted to a particular market, a well drafted and comprehensive market research should be conducted initially so as to establish the acts that would conform to good customs, public policies, and morals of the said state. Simiallry, the company should find out the shifts in areas like the consumer behaviour and purchasing patterns of the market. Fundamentally, this is the key condition for executing a suitable customer relationship management system.   l   Technological Factors   Use the internet to their advantage. The cost-effectiveness, interactivity and real-time effects of the communications are a good way to find suppliers. It is also a good way to correspond with the respective McDonald’s headquarters in every state. The company must also look into the use of IT to enhance their inventory operations. As the operations in its inbound and outbound logistics improve, the company will expect significant savings and reduction of costs in the operations.     l   Environmental Factors   Find out the environmental regime that governs the operations in every market. Monitor the waste disposal of the company. Minimise the use of Styrofoam materials and plastic cups. Constant updating of the social corporate responsibility is imperative. This should also entail that the headquarters should take in hand a manner of internal control of those that would infringe upon this company objective. Sanctions such as revoking of the franchise license or a particularly high fine should be installed to serve as a deterrent to infringement.      l   Legal Factors   Hire local counsels to deal with the legal conflicts in individual markets on which the company may encounter. This is shall ensure the company that the lawyers that will handle their legal affairs are more versed with the legal regime that would iron out certain creases on their operations.   VI.       REFERENCE   l   Debres, K. (2005) “Burgers for Britain: A Cultural Geography of McDonald’s UK.” Journal of Cultural Geography. 22(2), 115.   l   Fearn, H., Graham, H. (2005) “Corporate Reputation: What Do Consumers Really Care About?”. Journal of Advertising Research. 45(3)305   l   Hsieh, A and Chang, W. (2004) “The Effect of Consumer Participation on Price Sensitivity.” Journal of Consumer Affairs. 38(2), 282.   l   Jacoby, J., Johar, G., Morrins, M., (1998) “Consumer Behavior: A Quandrennium.” Annual Review of Psychology. 49(1), 319.   l   Katz, J., Zarzeski, M., and Hall, J. (2000) “The Impact of Strategy, Industry and Culture on Forecasting the Performance of Global Competitors: A Strategic Perspective.” Journal of Business Strategies. 17(2), 119.   l   Kim, C., and Chung, J. (1997) “Brand Popularity, Country Image and Market Share: An Empirical Study.” Journal of International Business Studies. 28(2), 361.   l   McDonald’s Corporation. (2006) Available in: http://www.mcdonalds.com/corp/invest/pub/2006_Interactive_Charts.html [Accessed 20 November, 2008]   l   Oxley, J. and Yeung, B. (2001) “E-Commerce Readiness: Institutional Environment and International Competitiveness.” Journal of International Business Studies. 32(4), 705.   l   Ramsey, W. (2006) “Rethinking Regulation of Advertising Aimed at Children.” Federal Communications Law Journal. 58(2)361   l   Salya-Ramirez, M. (1995) “McDonald’s: A Prime Example of Corporate Culture.” Public Relations Quarterly. 40(4)30   l   Shank, M. and Langmeyer, L. (1994) “Does Personality Influence Brand Image?.” Journal of Psychology. 128(2), 157.   l   Watson, J. (1997) Golden Arches East: McDonald’s in East Asia. Stanford California: Stanford University.       Credit:ivythesis.typepad.com

PESTLE Analysis to explain company’s International Strategy for McDonald’s

PESTLE analysis to explain company’s international strategy for McDonald TABLE OF CONTENT ...

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