International business is regarded as the practice of conducting all the commercial transaction of the firm on global platform. At present, whole world has become one single market and thus many firms are taking steps for expanding their operation in other countries in an effectual manner. Hence, through this way companies are performing significant improvement in their sales and profitability related condition. For the present report, example of Natura is taken into consideration. Natura is the Brazilian cosmetic company which offers different types of products to its customers. The firm was found in the year 1969 and it has it’s headquarter in Brazil. Furthermore, the organization has its operation present in number of countries such as Colombia, France, Mexico, Peru and Paris etc. Furthermore, in Brazil market the firm faces intense competition from other organizations such as Avon, Jequiti and O Botic&a
This essay will give description about the opportunities and threats that globalization will create for decision makers of the firm. Furthermore, the study will also depict about main lessons which business managers of cited company should learn on assessing the difference between home and host country.
Analyzing the opportunities and threats which globalization creates for the decision-makers
Globalization is being considered as the activity of performing the operation of enterprise in in global platform. Running the operation of firm in home market is an easier task. This is because, here the manager have thorough information about the market. Furthermore, the manager has detailed knowledge about the customers which it wants to target through its product. But, complication for the manager of the firm will increase if they make the decision to expand their operation in some new market (Meyer and Thein, 2014). In accordance with the given context, there are some opportunities and threats examined which are associated with globalization and these all things needs to be considered by the decision maker of Natura. The detailed explanation about the same is depicted in below:
Opportunities created through globalization
Low cost operation
It is being considered as one of the most significant opportunity which can be created through globalization. In this context, it has been analyzed that there are many firms which are more interested in selling their product at the low prices. Hence, such firms want to expand their operation in the country which does not increase their cost. In this regard, globalization presents many options of the countries which help in reducing the overall cost of the firm (Peng, 2010). For example, manager of Natura has decided to reduce the cost of its operation. Thus, it has taken decision to expand its operation in different developing countries such as India and China etc. Hence, globalization eases the functions of company and hence it guides the manager of enterprise towards the correct path. Thus, it is through this way only an effective decision can be taken by the decision-makers of Natura.
Development of new product
The decision makers of the firm also have to make several decisions about maintaining needs and demands of the buyers. Here, it is through this way only the company will be able to attract large number of customers towards the enterprise in an effectual way. Thus, in the given task the concept such as globalization tends to play a very critical role. This is because; it gives opportunity to the manager of firm like Natura to gather the information about the trends which are occurring in the global cosmetic industry. For instance, manager of cited firm has examined that nowadays majority of buyers prefer to use natural or organic cosmetic product. Hence, on gathering the given type of information, manager of Natura can also develop such types of goods in Brazil and other international market. Hence, through this way the company can develop complete new base of target customer who like to purchase the products. Furthermore, with this, the organization can maintain satisfaction level of its buyers which is usually hindered when they will not get the product as per their own needs and desire. Therefore, by complying with the given type of activity, overall benefit can be gained by enterprise in the form of increased profit and sales. However, it has been evaluated that it is not necessary that the cosmetic industry trends which are followed in one country can be applied to other nations too. This is because, needs and preferences of each customer vary and it is highly influenced through the culture from where they belong.
Help in giving information about the emerging market where firm can expand its operation
It is considered as another most significant advantage which is associated with the concept of globalization. Herein, when making decision for expansion, manager of the firm like Natura will also have to assemble information about different market from where it can expand its operation. In the given task also, globalisation tends to play a very significant role (Wu, 2014). Here, due to the presence of given concept, manager of Natura can get information about different markets which are proving as beneficial for the cosmetic enterprise. Thus, decision maker of firm can make evaluation between gathered list of markets. However, by selecting one particular market cited firm manager can impose positive effect on the firm's profit.
Availability of skilled labour
The success of the organization totally depends upon its employee. This is because; it is with the help of workers only high quality services will be delivered by the company to its respective buyers. Thus, due to globalisation Natura can avail skilled and talented employees from some other countries. Hence, with the help of this, they can perform significant improvement in its existing operation. It is by complying with given type of activity only; the organization can improve its efficiency of delivering high and best quality services to its customers in an effective manner. Overall, it can be said that the concept such as globalisation helps Natura decision-makers in grabbing all opportunities which are prevailing in firm's business environment.
Threats is created through globalization
Each aspects has both positive and negative points, thus the same thing is also associated with globalisation. In simple words, it can be said that although the globalisation provides number of opportunities to the firm, but it also represent number of threats which may or may not affect the operation of company Thus, in this regard the threats which are related with globalisation are depicted in below:
Presence of intense competition
It can be considered as one of the most crucial threat which is related with the concept of globalisation. On operating the operation of firm in home market, it is evident that the company will face competition from the local companies only. But, the implication of the concept such as globalisation will lead to develop number of hurdles in front of Natura (Threat of globalisation, 2016). Here, in global platform Natura will have to compete with different famous cosmetic firms which have established their unique and distinctive brand image in the global market. Furthermore, in order to compete with these firms, decision maker of Natura will have to develop an effective business tactic. This is because; if it is not prepared then in the given situation it will become difficult for the cited organization to achieve success in market in an effectual way.
It can be considered as another threat which is associated with the concept of globalisation. In this context, it can be said that there is a drastic difference between the cultures of two countries. Thus, for the manager of Natura, it is very essential that it should mould its services as per the needs and demands of different customers who belong to varied culture. In addition to this, it can also be said that it is important for the manager while entering into the international market it should gather the detailed information about culture which is followed in the specific country. Thus, accordingly manager of Natura should transform its operation. Hence, by complying with given type of activity, overall benefit can be gained by cited firm in the form of increased profit and sales.
Changing government policy
It has been assessed that each and every country has their own way to operate their function. Hence, the government of nation also perform significant changes in their policy which lead to provide positive benefit to the enterprise. But, sometimes changing government policy will prove as a major threat for the company like Natura. For example, manager of Natura has decided to sell its product at low price in the country where it is planning for expansion. However, this approach will not be practically implemented by the cited firm if government of nation has taken decision for increasing taxation upon cosmetic firms (Forsgren and Johanson, 2014). In given circumstance, manager of company will have to sale its product at high prices. Thus, it can be said that the concept of globalisation will also hamper the plan of the company.
There are several aspects which international business manager can learn while performing organizational activities in both home and host country. Moreover, host and home countries highly differ in terms of market condition, trend, customer taste and preferences etc. In the context of Ntaura, manager is required to assess the target market or group. Along with this, he is also assigned with the responsibility to analyze the customer taste and preferences in an appropriate manner. Moreover, company can attain success in both home and host country only when it offers products or services according to the demand of the customer. In this way, when manager performs at both national and international level then he gets opportunity in getting information about the varied needs of customers.
Further, manager also learns about cultural differences which take place between the two countries. Moreover, people live in different countries have varied cultural needs and preferences. For instance: People of Brazil prefer to make use of organic beauty products. On the other hand, people of Mexico prefer to use of herbal beauty products . People of Mexico like to use the beauty products with different flavours. Along with this, manager also gets chance to learn about customer preferences and purchasing behaviour or attitude towards the beauty products offered by Natura. For instance: individuals of Mexico are highly price conscious in nature. Thus, it can be stated that customers prefer to purchase product which have lower price. In contrast to this, customers of Brazil place more emphasis on quality aspect rather than price.. Due to this, customers consider quality factor while purchasing the product rather than price level (Maertens, Colen and Swinnen, 2011). This aspect clearly shows that purchasing attitude and behaviour of customers differ from country to country. In this way, manager can learn about the habits and attitude of individuals living in different parts of the world. In addition to this, political, economical, social, technological, legal and environmental factors of different countries highly vary to the significant level. Thus, by evaluating such aspects of both home and host country, managers of Natura can widened their knowledge to the significant level. For instance: High level of political instability takes place in Brazil. In such country, one cannot predict about the moves which will be undertaken by the political authority. On the other hand, political conditions of Mexico are stable and maintain the price level. This in turn provides information to the manager about how they should deal or perform activities in the different market.
Moreover, in this context it is also examined that the gap which takes place between the rich and poor Brazil people is not much. In this, by taking into account such information manager of Natura can offer suitable products which satisfy the need of citizens. In addition to this, economic condition of Mexico presents that manager of Natura can enhance customer level by offering the effectual beauty products. Further, people of Mexico are highly aware from technological aspects in compare to Brazil. In this way, by generating information about these entire aspects manager of Natura can frame competent strategic and policy framework which aid in the growth and profitability aspect of the firm. Hence, all the above mentioned areas clearly present that manager learns learn from several aspects at the time of performing business activities in both home and host country.
In addition to this, on operating the operation of Natura in both home and host market, manager of cited firm can gain knowledge about different legal aspects which is followed by them. For example, the laws and regulations which are followed by the cosmetic industry of Brazil completely vary from other country. This is because, the provisions which is imposed by by regularities of one country differs from another. Thus, it is due to the presence of given aspect it is essential for the manager of cited firm to know the difference and thus it should transform its operation on the basis of given aspect (Levene and Conversi, 2014). Furthermore, another lesson which manager of Natura can learn about the interplay between home and host county difference is of to examine the manner which is varied countries are using for the purpose to manage their operation. In this context, it is examined that employees of the firm prefer to work in various types of organisational environment. Their preference is highly influenced with the culture from where they belong. For example, Brazillian prefer to work in the hierarchical structure firm (Ambos and Håkanson, 2014). This is because; such type of structure tends to give clear information about e roles and responsibilities which is followed by the employees of company. However, people of US prefer to work in the flat organisational structure. This is because; they like to work in more open environment which does not have any restrictions. Thus, by operating the activities of Natura in number of nations, business manager can get the information about different ways which can be followed by diverse countries to manage people of the organisation.
From the whole report, it can be depicted that it is essential for the manager to take decision after considering different factors. Here, through this way right and effective decision will be taken by company. Furthermore, the given thing will also enable the organization in making necessary improvement in their sales and profits in an effectual way. In addition to this, there is a significant difference between domestic and international firms. Thus, for the manager it is essential that he should consider the given difference and should make their decision accordingly.
- Meyer, K. E. and Thein, H. H., 2014. Business under adverse home country institutions: The case of international sanctions against Myanmar. Journal of World Business.
- Ambos, B. and Håkanson, L., 2014. The Concept of Distance in International Management Research. Journal of International Management. 20(1). pp.1-7.
- Fainshmidt, S., White III, G. O. and Cangioni, C., 2014. Legal Distance, Cognitive Distance, and Conflict Resolution in International Business Intellectual Property Disputes. Journal of International Management.
- Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
- Kaynak, E. and Hassan, S., 2014. Globalization of consumer markets: structures and strategies. Routledge.
- KneÅ¾eviÄ‡, B. and Wach, K., 2014. International Business from the Central European Perspective. Routledge.
- Levene, M. and Conversi, D., 2014. Subsistence societies, globalisation, climate change and genocide: discourses of vulnerability and resilience. The International Journal of Human Rights.