Global business environment Assignment
Get free written samples by our Top-Notch subject experts and Assignment Help Service team.
A worldwide endeavour alludes to getting entry of a home-grown business into the worldwide commercial centre. Although an organization might go it single-handedly while entering a worldwide business sector, many regularly structure joint endeavours and team up with other home-grown organizations or organizations in the unfamiliar market. So, it can be clear from the discussion that the main base of the study is depending on the notion of venturing into a global business (Onyusheva, 2018). In order to explain the whole concept, a USA-based manufacturing company has been selected namely Lincoln which is planning to further expand its manufacturing and marketing set up in China and Korea. The entire study will be discussing the different cultural and comparative factors needed to ensure while setting up a business within an international location.
About the company
Lincoln is officially known as The Lincoln Motor Company is the luxury transport segment of American vehicle producer Ford. Advertised amongst the top extravagance vehicle brands in the United States, Lincoln was situated intently against its General Motors partner Cadillac. The segment assisted with laying out the individual extravagance vehicle section with the 1940 Lincoln Continental. The company was founded by Henry M. Leland, naming it after Abraham Lincoln in the year 1917. The present item scope of Lincoln comprises extravagance hybrids and gaming utility vehicles (Company,Ford Motor , 2022).
About the selected countries
China, formally the People's Republic of China, is a nation in East Asia. China is considered as the globe's most crowded nation, with a populace of an excess of 1.4 billion. Chinese business culture is generally affected by Confucianism.(Santander,Banco , 2020). However, South Korea, formally the Republic of Korea (ROK), is a nation in East Asia, comprising the southern piece of the Korean Peninsula as well as distribution a landline with North Korea (incluude, 2022).
Major cultural risks and process to deal with it
Whenever a company decides to expand their business in some other foreign countries apart from the home ground they have to come across various major cultural risks. Cultural risk in this can be defined as the prospective for a firm’s functions within a nation to fight due to the reason of disparities in mother tongue, ethnicity, and standards as well as client choices (Tang, 2009 ). Some of the major cultural risks which have to be faced by Lincoln in China and Korea are discussed below.
Cultural risks in both China and Korea
- Failing to understand the local Language: The first cultural risks that has to be faced by the US automobile sector for starting its manufacturing and marketing of automobile within China and Korea is the language barrier. Most of the people know English and as we all know USA is an English speaking country. Considering the local language both the countries are very much stringent in maintaining their mother tongue. They usually do not entertain any foreign language over their language as a result it will be very much important for the company to hire only those people for the new set up those who are aware with both Chinese and Korean language.
- Failing to understand Employee behavior: It is a true fact that when Lincoln will start its manufacturing and marketing department in both China and Korea they have to hire majority of the employees from China. As a result they have to deal with the employee behavior from both the nations which are very different from other countries. Usually both the countries workers are very much serious in their work and they do not like any sort of ambiguity within the work.
- Failing to adjust international business models to the home-based business sector: Shopper perspectives and ways of behaving are profoundly affected by Chinese and Korean culture. At the point when an organization like Lincoln moves into another market like China and Korea, plans of action ought to be changed to reflect neighborhood inclinations, customs, and propensities.
- Failing to comprehend home-grown business practices: Social hindrances don't just happen at the client interface. Worldwide business achievement additionally requires a top to bottom comprehension of neighborhood business customs (Hong, 2019).
Now in order to deal with the above mentioned cultural risks below are given some of the recommendations to deal with it.
- In order to deal with the issues of language barrier the best thing that Lincoln can do is that they can hire experience people from China and Korea to join there company. Also the people who will be shifting from USA to China and Korea must be well versed with the local language so that they don’t feel left alone.
- To deal with the cultural risk of employee behavior the company will need to provide special attention on employee induction and orientation program so that all the employees can gel with each other and they also understand their behavior.
- To deal with the issue of business model implementation it will be important for the Lincoln to implement both the nation’s business model with amalgamation of USA business model so that all the countries can gain profit.
- Lastly to deal with the issue of comprehending home-grown business model of China and Korea the company need to focus on doing additional market research so that they can understand what sort of business model both the countries prefer to establish business over there that will help in smooth running too.
Role of comparative and competitive advantage
The relative benefit is a financial ability's to deliver a specific decent or administration at a lower occasions expense than its exchanging accomplices. The hypothesis of comparative benefit presents opportunity cost as an element for investigation in picking between various choices for creation. Below mentioned are some of the roles of comparative advantage in facilitating success for Lincoln.
- Lower occasion expenses and higher net revenues: Using the concept of comparative advantage Lincoln will be able to provides its focal point on the labor force of both China and Korea along with their fund and assets on manufacturing of cars which will need lesser occasions expense as a result it will help the company in attaining maximum revenue margins.
- Augmented efficacy: By using comparative advantage model Lincoln Company will be able to involve to expertise their car manufacturing in China and Korea which they might create additionally efficiently. The use if the comparative advantage will directly help in identifying the best talent across both the countries who will contribute to increase the efficacy of the company in a better manner.
- Helps in beating its rivalries: Comparative advantage is the trait of a business that permits it to beat its rivals. It might incorporate admittance to normal assets, minimal expense energy, profoundly gifted work, geographic area, new innovation, etc.
On the other hand, competitive advantage can be defined as the aspects which permit a firm to manufacture product and amenities better or additionally reasonable as compared to its competitions. These aspects permit the effective bodies to create additional deals or better margins as compared to the business sector competition. Below mentioned are few of the points that will help Lincoln in achieving success by using the competitive advantage.
- Cost Leadership: In an expense initiative procedure, the goal is to turn into the most reduced cost maker. This is accomplished by means of large scope creation, where organizations can take advantage of economies of scale. Though companies like Lincoln produce only luxury cars but in markets like China and Korea where already there is a mass production of luxury cars it will be an advantage for the company if they use cost leadership technique. If Lincoln is capable enough to make use of the economies of scale as well as manufacture the cars at minimum cost as compared to other competitors then it will be competent enough to set up a dealing expense which is incapable to be showcased by other luxury car companies there.
- Differentiation: Using the differentiation strategy as a role of competitive advantage Lincoln’s luxury cars will be differentiated from its rivalries within China and Korea. This might be conducted by means of supplying a well as maintain the luxury quotient. This strategy will also play the role keeping the company ahead of the competition and this can be done through using market research.
- Focus: The role of this segment of competitive advantage will help Lincoln in providing its focal point on a restricted targeted market portion. This technique is fruitful assuming the organization can effectively make items/benefits that can take care of these clients(Gupta, 2019).
The support of industrial policy and factor condition
Being a luxury automobile brand of America, Lincoln has implemented the government policies in its workplace that makes an influence on its performance and growth. There are various policies and macro-environmental factors like social, economical and technological factors that determine the growth and success rate of Lincoln’s business in the marketplace.
Industry Policies: Nowadays the increasing environmental regulations and policies throughout the world are acting as a threatening factor for the automobile companies Lincoln. The quality issues and the public safety of the cars are now thoroughly examined to find out its impact on the environment from the emission of its harmful gasses. Lincoln needed to obey the Automotive Environmental Regulations for effectively carrying out its production and sales. Moreover, the Global Safety Regulations in this industry advises the companies to equip preventable gears, wheels, tires and brakes in the cars to prevent any accident. Proper adoption of this policy by Lincoln will provide satisfaction to the customers about their safety resulting in their incensed sales rate (Pearson, no date).
Factors condition: The various economic factors of the country like the interest rates, GDP rates, exchanges rates and inflation largely affects the growth of automobile organisations like Lincoln. Moreover, the increase in the average household incomes among the citizens will eventually grow the business of Lincoln as the financial capacity of the people will increase to purchase luxurious cars. Social factors like the increase in the country’s population and demand for people to use luxurious goods are eventually increasing the sales of the company. Alongside all these, another major factor that is increasing the sales of Lincoln is the implementation of various technologies in their cars. With the advancement in technologies, the company is also creating new car models with advanced technologies that will provide more safety to car riders (DeskLib, 2019). The technologies related to navigation and others are also the reason why Lincoln attracts more potential customers for buying their cars.
Internal industry rivalry: Being a part of the most renowned automobile brand, Ford, Lincoln never had to face many difficulties in its expansion with its luxurious cars. During the 1975s, Cadillac was the only competitive brand of Lincoln in the American automobile industry. At present, companies like Jaguar, Maserati and Infiniti have a good market position and value which gives a tough competition to Lincoln (Great Lakes Lincoln, 2022). However, the brand loyalty and the brand heritage of Ford allows Lincoln to enjoy a good market position. The global recognition of the brand along with the name of Ford, allows the company to enjoy a constant increase in their sales
Supporters: The vastness of the company allows it to have ample numbers of dealers and distributors for supplying the raw materials for the parts of the cars by the suppliers and for the proper distribution of the cars to the marketplace by the distributors. Moreover, the company has a global network of 10,170 dealers who also invest a large amount in the fuel sources of the company (Parker, 2019).
So, it can be concluded from the overall study that setting up of a business within China and Korea is not an easy task to do. Both the countries maintain a very tight decorum which limits the scope of international companies to flourish there. But also from the study it has been identified that with help of proper strategy and finance it can be a achieving one for the big companies like Lincoln too.
Company,Ford Motor , 2022. Introducing the New 2022 Lincoln Navigator. [Online] Available at: https://www.lincoln.com/ [Accessed 14 March 2022].
Gupta, S.D., 2019. Comparative Advantage and Competitive Advantage: An Economics Perspective and a Synthesis. Athens Journal of Business and Economics , 1(1), pp.9-22.
Hong, S., 2019. The Impact of Cultural Exchange between China and South Korea on the Relations between theTwo Countries in the Internet Era. IOP Conference Series: Materials Science and Engineering.
incluude, 2022. South Korean Culture. [Online] Available at: https://culturalatlas.sbs.com.au/south-korean-culture/south-korean-culture-business-culture [Accessed 14 March 2022].
Onyusheva, I., 2018. KEY REASONS WHY ORGANIZATIONS ENTER FOREIGN MARKETS. The EUrASEANs: journal on global socio-economic dynamics, 5(12), pp.1-13.
Santander,Banco , 2020. CHINA: BUSINESS PRACTICES. [Online] Available at: https://santandertrade.com/en/portal/establish-overseas/china/business-practices [Accessed 14 March 2022].
Tang, R., 2009. The Rise of China’s Auto Industry and Its Impact on the U.S. Motor Vehicle Industry. Congressional Research Service.
Parker, B. (2019) Ford SWOT Analysis 2022 | SWOT Analysis of Ford. Available at: https://bstrategyhub.com/swot-analysis-of-ford-2019-ford-swot-analysis/ [Accessed: 16 March 2022]
DeskLib (2019) Business Environment Assignment | PESTLE Analysis. Available at: https://desklib.com/document/introduction-this-article-is-going-to-d-egle/ [Accessed: 16 March 2022]
Pearson, L. (no date) The Impact of Often-Changing Rules and Legislation on Auto Manufacturers. Available at: https://www.reportlinker.com/automotive/trends/production/environmental-and-safety-regulations.html#:~:text=Automotive%20Environmental%20Regulations&text=By%202021%2C%20manufacturers%20must%20produce [Accessed: 16 March 2022]
Great Lakes Lincoln (2022) 2019 LINCOLN MKZ VS 5 KEY COMPETITORS. Available at: https://www.greatlakeslincoln.net/lincoln-mkz-vs-competitors.htm [Accessed: 16 March 2022]