Strategy Recommendation to the Woolworths - Myassignmenthelp.Com

Question: Discuss About the Strategy Recommendation to the Woolworths? Answer: Introduction Woolworths Group has opted to seek opportunities in the international marketing. This is because; the domestic market is becoming saturated and the need to beat fierce competition in the region. India offers the best destination for investors because the Indian government has emphasized on the significance of investing in its domestic market (Indian Brand Equity Foundation, 2017). With globalization taking the centre stage, expanding the business operations into India is no longer optional. Woolworths Group has discovered that by invading the Indian market, it will improve its competitive edge. As explained by Peng, Wang, and Jiang (2008), the new environment will help the organization to improve its organizational culture by incorporating the new values and ideas as practiced in India. Based on the issues at hand, the article provides the strategic recommendation that the company should employ to succeed in the Indian market. Indeed, the direct foreign investment should be the best strategy to enter the market because the Indian market has promoted it. As a tradition in the international business, the investors have to comply with the established government policies, regulations, and rules. The strategic recommendation, therefore, forms the basis of this paper. Background The Woolworths Limited Woolworths Group is a publicly traded Australian company that has established extensive retail interest beyond the Australian market. Since its inception in 1924, this company has dominated the Australian and New Zealander retail industry. Hatch (2016) and NZPA (2007) reported that it is among the largest companies in New Zealand and Australia based on revenues. The company operates in the liquor retail, gaming poker machine operator and hotel retail businesses (Moore, 2006). By 2008, the Woolworths Limited was among the 20th largest retailers globally. The company has incessantly operated supermarkets, pubs, discount department stores, umbrella, and hotels. In 2016, the company had posted $1.235 billion in revenue. The company has recognized that its operations should never compromise the social welfare and the economy. To this effect, it has remained committed to serving the Australian communities responsibly. For instance, the company had donated $31.3 million worth of meals to the needy in form of relief food (Woolworths Group, 2017). Woolworths Group values its people who define its business. For example, it depends on them to operate its distribution centres, stores, and support offices so that it offers consumers exceptional services, prices, and products. To this effect, it is making the environment the best place to work. Despite its strength in the region, the need to expand into the emerging markets has become eminent. This is because; the emerging markets offer new opportunities for the organization. Although opportunities were inevitable in many countries, India provides the best destination for now. The move will see the company maximizing the opportunity available in the Indian ma rket. As reported by Daniels, Radebaugh, Sullivan, and Salwan, 2009), the Indian market offers cheap capital and labour thus becomes beneficial to the firm in increasing its profit. India The rise of India as an economic powerhouse has attracted attention of many foreign investors who are expressing their willingness to unearth the mystery. The intrigue at the centre of the attraction is the availability of consumer market. The demographics of the country are also favourable thus making the global corporations to view this destination as the best market offering the growth of the market (Bennett Joshi, 2014). It is thus evident that India is among the leading country in terms of industrial production. For instance, it boasts of being the country with the fastest growing automobile industry worldwide. This is evident its 35 percent expansion rate as reported in the first quarter of 2010 financial year. The recent findings by Bennett and Joshi (2014) showed that the countrys market growth rate is twice the global average. Indeed, the impulse food industry seems to grow faster in this country than any other country. Many companies are at their pace to expand their distribution networks to cover the retail outlets across India (Dunning, 2012). The Salted Snacks, for instance, is growing at about 30 percent relating to the modern trade format (Bennett Joshi, 2014). Woolworths Group has realized that there is need to benefit from the emerging nation whose economic growth rate is projected at 7.7% in 2017 due to the high rate of private consumption. With the Indian government favouring foreign direct investment, Woolworths Group benefit significantly. The country has also adopted favourable domestic policies that support the growth. Economic Analysis Rising disposable incomes and economic growth In the last five years, India has reported a 7.7 percent of its average annual growth rate (Bennett Joshi, 2014). The economists have projected the growth to be faster than the current state. With the current rapid growth rate, the country is enhancing business and employment opportunities thus improve the disposable incomes. Indisputably, the trickling effect of the economic growth is felt on the ground thus guaranteeing many Indians to improve economically by joining the middle class. Therefore, the middle-class forms the largest market segment in India due to improved incomes and employment rate. It is also believable that the affluent group will increase is size and value. Bennett and Joshi (2014) have reported that MGI predicted that the by 2025, the middle class population will reach 583 million thus form about 41 percent of the Indian population. The middle class, in the Indian context enjoys a disposable income of about Rs 200,000-1,000,000. Currently, 70 million of Indians are within the middle class bracket. Unfortunately, the country continues to struggle with the high poverty indices. By 2025, Bennett and Joshi (2014) projected that the countrys extreme rural poverty will reduce to 26 percent up 61 percent in 2005. By 2025, the affluent class will increase their disposable income by two percent. These indications are positive to any country or investor willing to enter the Indian market. For instance, the Woolworths Group will benefit from the households whose disposable income is high. In fact, it is projected that the national private consumption rate will increase to 20 percent by 2025. Hence, investing in Indian would be the best opportunity for it. Social Analysis Demographics Since 1970s, the Indian government had adopted an improved birth control and medical care services to reduce its birth rates. The government feared the swelling population that would become unsustainable. With improved healthcare services, the majority of the population have managed to live beyond their retirement age. This has affected many countries where the baby boomer population is threatening the future as they stare at the worst shortage of workforce. The working age is also falling slowly thus making it possible to predict the growth in the labour force. Interestingly, the country population is most youthful, with fifty percent proportion. With the increasing productive population, the personal consumption rate has increased. According to Dastoor (2008), an empowered and young population would increase consumer demand and value-conscious demand. The pro-growth demographics continue to expand the Indian consumer market. Woolworths Group stands a greater chance to benefit from the increased consumption rate in the Indian market. Indian consumer The current consumer market in India has attracted investors beyond the borders. Indeed, with globalization, many foreign investors are been drawn to the Indian market. The tectonic shifts experienced in the demand forces have become the attraction point for the investors like Woolworths Group. The market is being reshaped by the improvements experienced in the lower economic strata. Nobody can avoid the rising inspirations related to better life, increasing incomes and urbanization to be driving the consumer market. The modern Indian customers are ready to spend money on convenient and quality brand operating in an organized retail market. Aspiration for a better life Many Indians are still stuck in the lower strata and they can rarely afford quality products. With the growing demand and supply in the market, these economically deprived individuals can now improve their lifestyles because of the increasing penetration of various companies. The intense competition among the companies dealing in consumer goods has exposed the Indian rural thus improving the living standards. The likelihood of pushing the demand is high when both the rural and urban consumers join hands. Political Legal Analysis Political factors In business, the political factors are the defining factors in the market. These factors determine the decision that an organization takes before entering the new market. Czinkota, Ronkainen, Moffett, Marinova, and Marinov (2009) affirmed that political factors have disrupted the business operations. Nevertheless, the ideological factors embraced by the government define the business environment. For instance, the government sets economic policies that any investor must adopt when making any investment decision. Without a doubt, political stability is the best factor that defines the business environment. Such an environment is favourable for investment thus attracts the international companies. Countries facing conflicts and turmoil have found it impossible to attract foreign investors. The situation in India is attractive to the foreign investors because of its political stability aspects. Additionally, the government has taken the initiative to market Indian as the best investment destination in the region. The government believe that such investments expands its economy thus creates employment opportunities. The geopolitical factor has also favoured Indian because it is at peace with nearly every nation. For instance, the relationship between India and Australia is cordial thus gives an opportunity for the investors from both countries to do business. Kolk and Van Tulder (2010) maintained that investors, like Woolworths Group would find it easy to invade the Indian market. The new relationship will ensure the company establishes its business unit in the country without difficulties. Legal factors The Indian government has formulated various legislations and Acts to guide the investors in the market. With these legislations, the government has ensured it reduces any illegal business activities that can jeopardize its economy. For instance, the country embraces the FEMA (Foreign Exchange Management Act) to facilitate the foreign exchange activities (Ramola Bhasin, 2014). It has also adopted the policy on Foreign Direct Investment that has guided the foreign investors entering the country. In 2002, Indian adopted the Competition Act that saw it promote fair business environment where the businesses avoided underhand dealings. It has easily regulated the foreign trade based on its regulations and policies. The country has also established various regulatory agencies to handle the foreign investment issues. Therefore, Woolworths Limited must completely value comply with these provisions. Culture and Ethics Culture Woolworths Group must also consider the culture and ethics as embraced in the Indian market. These two factors have incessantly affected the operations of the foreign investors. According to Wild, Wild, and Han (2014), many Indian customers continue to embrace traditional lifestyle. The Australian retailer must value the Indian tradition and culture as practiced in India (Johnson, Lenartowicz, Apud, 2006). This will guarantee it successful operations because it shall have accommodated the interests of the local customers. As a multi-ethnic country, the foreign investors have found it knotty to meet their expectations. Nonetheless, an organization willing to enter this unique market must consider these unique elements. By launching products based on the market needs, the company will have the potential of succeeding. Ethics Business activities depend on the ethical principles as applied by the companies involved. In fact, in the international business, fair play is guaranteed and respected at all costs. However, each country operates on socio-cultural conditions and responsibilities. To this effect, the investors must analyse these factors before making an entry. Regarding the Indian market, the cultural issues are essential for the investors (Rugman, Collinson, 2009). Woolworths Group must consider these issues before venturing into the Indian market. For instance, the company stands to benefit upon accommodating the tastes and preferences of consumers thus get assured of customer loyalty. Woolworths Group is also known for its corporate responsibilities. It must be ready to replicate this policy in India so that it can gain the required citizenship (Audi, 2009). Competition is also an ethical issue that Woolworths Group must consider when making the decision to invade the Indian market. To this effec t, the organization should avoid engaging in an illegal or underhand dealing to gain unfair advantage in the Indian market. Therefore, the policies the policies that the firm intends to adopt should be based on ethical practices. Foreign Direct Investment Foreign direct investment (FDI) is a critical driver of the Indian economy. In fact, the Indian government view FDI as the primary non-debt financial resource that has boosted its economic growth and development (Rugman Collinson, 2009). Many foreign investors have taken advantage of the countrys tax exemptions, special investment privileges, and cheap labour to invest in India directly. With the huge FDI, the country has managed to achieve technical innovation and employment. The policy regime that the government favours has helped in the creation of a robust business environment through steady flow of foreign capital. Recently, the Indian government introduced new policies that have realized the FDI norms in many sectors of the economy, such as power exchanges, telecom, consumer goods, retailing, and stock exchange among others. Routes The Indian government has recognized two major routes that the investors have used to enter its market. For instance, through the automatic route, the foreign investors can enter the Indian market without seeking the permission of the relevant authorities including Reserve Bank of India (Ramola Bhasin, 2014). The other strategy is the government route, where an investor is compelled to seek the approval of the Indian government before entering the country. According to the Indian Reserve Bank (Ramola Bhasin, 2014), the government had established the Foreign Investment Promotion Board that has the powers to oversee the government route. Government initiatives The government of India has taken positive steps to support the FDI policy. It recognizes the significance of the policy in improving the economy. To this effect, it had opted to amend the policy to increase the inflow. For example, the government increased the upper limit of foreign investment to 49 percent, notably for insurance industry. The Make in India policy also liberalized the economy beyond the reproach (Gupta Bhaskar, 2016). With the Make India Initiative, the country reported an increased flow of FDI by 48 percent (Gupta Bhaskar, 2016). In 2014, the country was in ninth position based on the FDI inflow as reported by Gupta and Bhaskar (2016). By 2015, the country emerged the best destination for the foreign investors (Gupta Bhaskar, 2016). Conclusion Doing business in India offers numerous opportunities for many foreign companies. Without a doubt, many multinational corporations are rushing into India to expand their market share and benefit from the government incentives. Woolworths Group has an opportunity to increase its revenues by expanding into the Indian market. However, the company must understand the context and the customer behaviours in this new environment. Given that India is a multi-ethnic society, conducting proper research and development will be critical. Based on this article, it is important to note that the FDI would be the best bet for the organization. The paper has thus highlighted the most important factors that Woolworths Limited must consider before entering the Indian market. References Audi, R. (2009).Business Ethics and Ethical Business. New York: Oxford University Press. Ball, D., Geringer, M., Minor, M., McNett, J. (2012).International Business. New York: McGraw-Hill Higher Education. Bennett, I. Joshi, S.P. (2014). Indian Consumer Market. Retrieved 17 May 2017, from https://www.australianbusiness.com.au/international-trade/export-markets/india/indian-consumer-market Czinkota, M. R., Ronkainen, I., Moffett, M. 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