Managing in a global environment term project section 4

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Question Description

Section Four; Setting Up Shop:

Setting Up Shop:

Assume your organization is going forward with entering into the country you discussed in your country study. They are now in the process of determining the more specific details of setting up business in that country.

They have asked you to write a report on your recommendations as to how they should enter the country, staff the operation, the type of international strategy they should use, and the marketing and distribution strategy.

You are to use at least three additional sources to complete this assignment. PLEASE remember to cite all your sources; proper citation of your sources is a requirement for this course. This assignment is to be a minimum of 2 - 4 pages typed, font 12, double-spaced.

Please support all recommendations with sound reasoning and research.

You report must cover but not limited the following areas:

  • Mode of Entry
    • Pick the most appropriate mode of entry
    • Discuss the pros and cons
    • Support your decision with research
  • Human Resources
    • Staffing Needs
      • Management
      • Lower-Level employees
    • Staffing Approach
      • Ethnocentric, Polycentric, or Geocentric
    • Pay and Compensation
    • Training and Development
    • Union Concerns
  • Marketing
    • Target Market & Market Segmentation
    • Pricing
    • Advertising
      • Cultural Concerns & Barriers
      • How will you address them
    • Competitor Marketing Analysis
  • Distribution
    • Distribution Strategy
    • Suppliers
      • Use local, home country or a mix?
    • Production facilities (if needed)
    • Will you use outsourcing

Cite all your sources using APA style. See External Links for guidance in using APA style citations.

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Running head: MANAGING IN GLOBAL ENVIRONMENT 1 Managing in Global Environment Country Study 8/27/2017 Lei Zhang Introduction The decision for any business to expand internationally should be handled carefully. Before deciding on the country to expand to, the business needs to conduct a research in order to ensure that they benefit from the expansion while safeguarding its investment. The business should also ensure that it has built a solid foundation in its home country before expanding to any other country (Verbeke, 2013). The timing for the expansion is also very key in ensuring the success of the expansion exercise. Macy's is one of the world's leading store that sells fashion clothing and accessories for both men and women and is looking to expand internationally. Economic The company has been having plans of expanding to the African market and the country suggested is South Africa. The GDP Per capita for the country in the year 2016 was estimated to be $13, 500 while the GDP for the real growth rate was estimated to be 0.5% in the year 2016. The unemployment rate is estimated to be 26%. The labor force of the country by occupation is estimated to be 71.9% for the service sector as per the year 2014 (CIA, 2014). South Africa also had commodities imports estimated to be $85.03 billion while those of partners were for the US was 7.1%. The country also had exports of $83.16 billion for the US partners the export was 7.6%. Industries within the country have been growing at a rate of 1% per year (Baker & Phillips, 2014). MANAGING IN GLOBAL ENVIRONMENT 2 Geographic The country is full of natural resources like gold, gem diamonds and copper among others. It is also easy to access raw materials within the country or import from neighboring countries at affordable rates. The climate is mostly semi-arid with sunny days and cool nights. The land is the country is mostly agricultural with very little forest cover (CIA, 2014). Natural hazards within the country are prolonged droughts and volcanism. The current environmental issues facing the country relate to the lack of arterial rivers leading to water shortages due to limited supply and pollution. Political- Legal South Africa is a parliamentary type of republic whose leaders are chosen in elections held after five years. The country has been stable politically although there have been controversies linked to the current president. A foreign company that wants to invest in the country should be registered in the country within 21 days and it should also register at the tax office. The company must also acquire approval under the exchange control regulations. Labor and employment law must be adhered to by any foreign company that invests in the country. Foreign companies within the country get support from the Department of Trade and Industry that has various incentives. The payment of tax is determined by whether the company is regarded as a resident or non-resident. Summary Since South Africa is one of the most developed countries in the African continent, the choice by Macy's to expand in this country will benefit it greatly. The country alone accounts for close to 49% of the entire continents industrial output and close to 25% of the continents GDP. Based on this, the business will be able to break even and make profits should it expand to the country (Baker & Phillips, 2014). The country’s economy has also been growing steadily in the recent years and it has also been strengthened by improved MANAGING IN GLOBAL ENVIRONMENT 3 domestic expenditure. The country also has one of the most modern and extensive transport infrastructure which makes transportation easy. Some of the challenges that the business might experience when it expands to South Africa is one to do cases of political instability and strikes. Even though these have reduced in the recent past, it is important for the company to be prepared. There are also a number of regulatory factors that affect foreign companies negatively (Baker & Phillips, 2014). The company will also need to come up with ways of dealing with a mature and competitive market. Water scarcity also remains to be one of the challenges that most businesses face due to insufficient water supply. When all factors have been considered I would recommend that the expansion is to be done in South Africa. MANAGING IN GLOBAL ENVIRONMENT 4 References Baker, L., Newell, P., & Phillips, J. (2014). The political economy of energy transitions: The case of South Africa. New Political Economy, 19(6), 791-818. CIA, C. (2014). CIA World Factbook. Washington, DC: United States Central Intelligence Agency (CIA). Verbeke, A. (2013). International business strategy. Cambridge University Press. Running head: INTERNATIONAL STRATEGY 1 Managing in a global environment 9/24/2017 Introduction Macy’s is seeking to venture into a new country and thus should come up with a good international strategy and organizational structure. These will be the key determinants of Macy’s success as it ventures into South Africa. It is worth noting that Macy’s has also taken a wise step to research on South Africa before it expands to the country. With information from this research, it is going to be easier to come up with an international strategy as well as an organizational structure for Macy’s. The strategy and structure should be those that will ensure that Macy’s gets optimum results in its venture but also secure its investments at the same time. International Strategy Currently, Macy's has a store in the United States, Hawaii and Puerto Rico. It is therefore not the first time for the company to expand. Macy’s also has a very reliable supply and distribution chain that ensures all its store are constantly well stocked with the required men and women’s clothing depending on the country. The international strategy used for expansion can however not be the same as each country has different cultures, policies, and preferences (Hitt, Li & Xu, 2016). There are three types of international strategies that can be available to Macy's as it expands. The first is multi-domestic. Using this international strategy will mean that Macy's will have to forego efficiency and instead focus on the consumers and their specific needs (Hitt, Li & Xu, 2016). The second is a global strategy whereby Macy’s will disregard the unique needs of the South Africans and instead focus on distributing the same products it provides in other countries (Collis, 2014). INTERNATIONAL STRATEGY 2 The final strategy and the one I strongly feel that Macy's should take up is the transnational strategy. This is because Macy's will be able to combine the benefits of global and multi-domestic strategies. With the transnational strategy, Macy's will be able to make available the clothes it sells to other people in the world to South Africans and at the same time, make available clothes that South African people prefer (Collis, 2014). This strategy will make Macy’s venture successful for many reasons. The first is that the consumers’ needs will be addressed. Since Macy’s will make available both customized and also the general clothes, then they will accommodate a larger number of consumers and in turn earn more (Collis, 2014). The consumers will also become repeat customers since they can find what they like in the store. Organizational Structure The current organizational structure used by Macy's is the hierarchical structure. In this case, it means that instructions always comes from the top to bottom and employees have superiors. Macy's also uses the departmental structure because it has several divisions such as the sales, marketing, and human resource department. The organizational structure that I would recommend for Macy's to take up is the flatter organizational structure. This structure lies between the hierarchical structure and the flat organizational structure (Ashkenas, Ulrich, Jick & Kerr, 2015). In the flatter structure, as much as there is still a hierarchy, there are fewer levels (Ashkenas, Ulrich, Jick & Kerr, 2015). Employees can also communicate with their bosses as well as collaborate with them (Ashkenas, Ulrich, Jick & Kerr, 2015). This increases the chances of innovation and employee satisfaction. The flatter organizational structure will be good for Macy's in its new venture because there is a need for innovation and optimum productivity that will come from employee satisfaction. In terms of their organizational INTERNATIONAL STRATEGY 3 culture, Macy's has an annual Thanksgiving day parade in New York. Macy's also sponsors the annual 4th of July fireworks display. Conclusion Macy’s international expansion venture is most likely to be successful. This is because of adequate preplanning in terms of research. The transnational strategy and the flatter organizational structure will suit Macy’s goal to achieve optimum results. The two will ensure that Macy’s get a huge customer base, be more innovative, increase productivity and ultimately make a lot of profits. Macy will thus be able to have a smooth transition into South Africa. INTERNATIONAL STRATEGY 4 References Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking the chains of organizational structure. John Wiley & Sons. Collis, D. (2014). International strategy: Context, concepts, and implications. John Wiley & Sons. Hitt, M. A., Li, D., & Xu, K. (2016). International strategy: From local to global and beyond. Journal of World Business, 51(1), 58-73. Running head: MANAGING IN A GLOBAL ENVIRONMENT 1 Managing in a Global Environment Socio-cultural Analysis 9/10/2017 Introduction Expanding business to international countries can be quite challenging and eventually unsuccessful if adequate research is not conducted (Dunning, 2013). Doing business in one’s home country is definitely easier than in a foreign country. Some of the challenges that businesses can face are language barriers, different business practices and organizational structure and cultural differences (Dunning, 2013). Adequate research goes a long way in helping to discover these challenges and addressing them. The transition will, in turn, be a smooth one. Research provides in depth knowledge of customer preferences, regulations that should be followed, potential markets and suppliers (Dunning, 2013). The decision of Macy’s to expand into South Africa is a smart one. This paper outlines some of the factors that Macy’s will need to be aware of as they set up in South Africa. Demographic Trends The annual population growth rate in South Africa is 1.6%. Majority of the people in this country are below the age of 65 and the median age is 26.8 years. The life expectancy is 57 years. More than half of the population in this country have not acquired the required education levels. The government and UNICEF have however set up programs to make education accessible to both children and adults (Bond, 2014). Cultural Analysis MANAGING IN A GLOBAL ENVIRONMENT 2 The main business language in this country is English despite there being 11 official languages. South Africans have a rich cultural heritage. Colonization by the British, however, caused some of these cultures to diminish and some of the British customs adopted (Comaroff, 2013). These customs include taking tea in the afternoon and using forks and knives while eating. There are however some communities that have retained their traditions like the Zulu who are well known for their beadwork (Comaroff, 2013). South Africans also believe that not finishing served food is not good manners (Comaroff, 2013). They also believe in carrying gifts when visiting each other’s homes. These gifts include wine and chocolates. Social Institutions According to Hofstede’s dimension, South Africa scores differently in various categories. In power distance, it scores 49. This shows that a majority of people that power has been distributed equally among the people. When it comes to individualism, South Africans mainly believe in only being concerned about their personal welfare and that of their families. It is thus a highly individualized country and scores 65. Competitiveness and being the best in their fields of work is what mainly motivates South Africans as opposed to the quality of life. The country thus scores 65 in the masculinity category (Bond, 2014). In terms of uncertainty and avoidance, South Africans are not keen to control the future. They are more inclined to let things just happen and the country scores 49. With regards to long-term orientation, the country has a high preference to keep practicing their traditions and norms. Here South Africa scores 34. Indulgence is the final category. South Africans are very indulgent and have minimal restraint upon them. They advocate for optimism and value leisure time. The country thus scores a 63. MANAGING IN A GLOBAL ENVIRONMENT 3 The family structure of this country consists of two parents and children. Polygamy is legal but rarely practiced due to poverty. A majority of the country's population are Christians. The minority religions are Muslim and Hindu. The country also legalized trade unions and employees have the right to be unionized and to participate in industrial actions. The International Labour Organization also advocates for fair employment practices in the country. Informal Trade Barriers There are minimum informal trade barriers in South Africa. This is because most South Africans adopted the customs of the British. They are therefore more liberal especially in the big cities such as Cape Town, to the extent that gay marriages have been legalized (Bond, 2014). Communication should not pose a challenge since English is the main business language. In terms of negotiations, they are usually done in a relaxed manner. South African's prefer to be addressed by their surnames. They also shake foreigners, hands. One is expected to be punctual and to maintain eye contact throughout the negotiations. South African's do not like bargaining thus they usually reach decisions that are mutually favorable. During negotiations, one should avoid raising their voices as this shows disrespect. Marketing in South Africa is mainly done via social media in order to reach a big number of potential customers. There is no limited time for one to be an employee in this country. Employees’ rights are protected in the Employment act. The employees are entitled to benefits and fair working conditions. They also have a right to a good working environment. This means that their human rights are protected. Any violation of these rights leads to a breach of the law. The South Africans also value friendliness when it comes to business practices. This is because MANAGING IN A GLOBAL ENVIRONMENT 4 forming a good rapport establishes trust among people. Score cards are also used to rate the performance of businesses. Failure to meet the required threshold ultimately attracts penalties. Conclusion South Africa is a good country to set up business in, especially because the natives are very friendly. They also encourage foreigners to be exuberant. A research on demographic trends, cultural analysis, social institutions, and informal trade barriers give Macy’s a better view of South Africa. With this information, what to do and what not to do becomes clearer. Macy’s is thus likely to have a smooth transition into South Africa. The difficulties that were likely to be experienced have been greatly reduced. MANAGING IN A GLOBAL ENVIRONMENT References Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge. Comaroff, J. (2013). The body of power, the spirit of resistance: The culture and history of a South African people. University of Chicago Press. Bond, P. (2014). Elite transition: From apartheid to neo-liberalism in South Africa. 5 Running head: MANAGING IN A GLOBAL ENVIRONMENT 1 Managing in a Global Environment Socio-cultural Analysis 9/10/2017 Introduction Expanding business to international countries can be quite challenging and eventually unsuccessful if adequate research is not conducted (Dunning, 2013). Doing business in one’s home country is definitely easier than in a foreign country. Some of the challenges that businesses can face are language barriers, different business practices and organizational structure and cultural differences (Dunning, 2013). Adequate research goes a long way in helping to discover these challenges and addressing them. The transition will, in turn, be a smooth one. Research provides in depth knowledge of customer preferences, regulations that should be followed, potential markets and suppliers (Dunning, 2013). The decision of Macy’s to expand into South Africa is a smart one. This paper outlines some of the factors that Macy’s will need to be aware of as they set up in South Africa. Demographic Trends The annual population growth rate in South Africa is 1.6%. Majority of the people in this country are below the age of 65 and the median age is 26.8 years. The life expectancy is 57 years. More than half of the population in this country have not acquired the required education levels. The government and UNICEF have however set up programs to make education accessible to both children and adults (Bond, 2014). Cultural Analysis MANAGING IN A GLOBAL ENVIRONMENT 2 The main business language in this country is English despite there being 11 official languages. South Africans have a rich cultural heritage. Colonization by the British, however, caused some of these cultures to diminish and some of the British customs adopted (Comaroff, 2013). These customs include taking tea in the afternoon and using forks and knives while eating. There are however some communities that have retained their traditions like the Zulu who are well known for their beadwork (Comaroff, 2013). South Africans also believe that not finishing served food is not good manners (Comaroff, 2013). They also believe in carrying gifts when visiting each other’s homes. These gifts include wine and chocolates. Social Institutions According to Hofstede’s dimension, South Africa scores differently in various categories. In power distance, it scores 49. This shows that a majority of people that power has been distributed equally among the people. When it comes to individualism, South Africans mainly believe in only being concerned about their personal welfare and that of their families. It is thus a highly individualized country and scores 65. Competitiveness and being the best in their fields of work is what mainly motivates South Africans as opposed to the quality of life. The country thus scores 65 in the masculinity category (Bond, 2014). In terms of uncertainty and avoidance, South Africans are not keen to control the future. They are more inclined to let things just happen and the country scores 49. With regards to long-term orientation, the country has a high preference to keep practicing their traditions and norms. Here South Africa scores 34. Indulgence is the final category. South Africans are very indulgent and have minimal restraint upon them. They advocate for optimism and value leisure time. The country thus scores a 63. MANAGING IN A GLOBAL ENVIRONMENT 3 The family structure of this country consists of two parents and children. Polygamy is legal but rarely practiced due to poverty. A majority of the country's population are Christians. The minority religions are Muslim and Hindu. The country also legalized trade unions and employees have the right to be unionized and to participate in industrial actions. The International Labour Organization also advocates for fair employment practices in the country. Informal Trade Barriers There are minimum informal trade barriers in South Africa. This is because most South Afr ...
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agneta
School: New York University

Attached.

Running head: SECTION FOUR: SETTING UP SHOP

Section Four: Setting up Shop
Institution Affiliation
Date

1

SECTION FOUR: SETTING UP SHOP

Introduction
Macy’s is now in the process of implementing its plan to expand into South Africa.
Having done a thorough research on the country, Macy’s is taking the next step which entails
setting up shop. In order for Macy’s to do this successfully, they will have to come up with a
plan. The plan will comprise their preferred mode of entry, the human resource needs,
marketing as well as distribution strategies. A comprehensive plan that covers the above
aspects in detail will enable Macy’s to set up shop successfully in South Africa.
Mode of Entry
The mode of entry that I would recommend for Macy’s is for them to acquire a
wholly owned subsidiary using the Greenfield investment method. Macy’s will thus have to
set up a new company in South Africa from scratch. This mode of entry has both advantages
and disadvantages. Some of the advantages are that Macy’s will have full control of its
subsidiary and thus issues of disagreements on how to operate as well as integration issues
will be avoided (Laufs & Schwens, 2014). Macy’s will also be able to fully gain from the
subsidiary The disadvantages include the fact that it wi...

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awesome work thanks

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