Global strategy development and implementation Assignment Sample

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Global strategy, development and implementation

Introduction of Global strategy, development and implementation Assignment Sample

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Establishing a subsidiary or a parent company in some other international location usually denotes to offer the same company with explicit interactions for example augmented excise advantages, varied threats as well as resources in the form of profits, tools as well as possessions. Setting up a parent company in any other location apart from its home ground is not an easy job. The company needs to look for certain things to make it successful in the other international location too. So, based on this discussion it can be clear that one of the main notions behind conducting this study is to demonstrate opening up for a subsidiary in another global location as well as what the consequences the company might face are. Intending to further discuss the study the company which has been selected to open up its subsidiary in India is Commercial Bank of Dubai. There will be three main segments of the study in which analysis will be done on how the company will enter the Indian market in addition to what consequences they might face. Along with the prospective corporal and decision-making issues will also be discussed and also based on the issues identified recommendations will also be provided to deal with the issues.

Brief about the selected company and the location

Commercial Bank of Dubai is a UAE based financial institution whose main office is located in Deira, Dubai. The total worth of the company is around US$23 billion as well as is considered to be as one of the top leadings banks in UAE. COMMERCIAL BANK OF DUBAI was established in the year 1969 by an Amiri Decree which is published by the late Rashid Bin Saeed Al Maktoum. The company initiated its journey as a joint venture with Commerzbank, Chase Manhattan Bank and Commercial Bank of Kuwait, in addition to came up as a National Public shareholding firm by the year 1982. As per reports COMMERCIAL BANK OF DUBAI accounted for gross earnings of AED 1400 million which shows a profit of 20.5% as compared to the previous year and overall resource of AED 88.1 billion. COMMERCIAL BANK OF DUBAI deals into various finance related products which includes customer banking, corporal banking, fund in addition to indemnity, international money exchange, wealth administration, client credits, trade credits, as well as loan cards. The competitive position of COMMERCIAL BANK OF DUBAI is quite strong in the UAE as it comes under the 7th position as well as due to a good hold of market a lot of other financial institutions faces a tough competition from BD (COMMERCIAL BANK OF DUBAI , 2020).

The location which has been selected to open its international subsidiary is India. Indian which is formally known as the Republic of India is a nation within South Asia. It is considered to be as the 7th biggest nation by area and the 2nd most populated nation in the entire globe. The business environment of India is also quite strong as it allows various international companies to open their subsidiaries there. In addition to this the country has various benefits of initiating a trade there since a foreigner in context for entry to a massive working populace, inclusive tax structure as well as regimental efforts supports a lot of companies (Garg, 2018).

Reasons for choice of location for the subsidiary

It has been already discussed above that the location which has been selected by the Commercial Bank of Dubai to open its subsidiary is India. The banking structure of India supports a lot of other international parent companies like ANZ and HDFC. In addition to this the baking culture of India is also quite smooth which helps the subsidiaries to get proper response from the customer too. Also if we look into the relationship among the two countries it can be seen that both UAE and India shares a good bond which allows many companies to open subsidiaries in both the countries. It has been also seen that lot of Indian people are staying in Dubai for work purpose which again allows Dubai to open subsidiaries in India with an open hand. Also the money exchange between the two countries is also very smooth which will help both the nations to share the profits without any hassle (Rienda, 2011).

Strategic activities and decisions of the company

Strategic activities can be defined as the kind of works which specially comprises of performance, ventures as well as other works which are planned to attain the explicit results in addition to purposes. Some of the top strategic activities rendered by the Commercial Bank of Dubai are discussed in detail below.

  1. The first and most important strategic activities of COMMERCIAL BANK OF DUBAI are related to improving the digitalised client experience. In this contemporary world client usually look for those kinds of services which will not only provide fast help but also digital help too. As a result COMMERCIAL BANK OF DUBAI has transformed most of the products and services in digital which help their clients in getting additional support with fast and easy process.
  2. The second strategic activities included in COMMERCIAL BANK OF DUBAI are enhancing the data analytics abilities. The current world has entirely changed into digital world where only that company survive that takes data analytics and digitalization seriously. In case of COMMERCIAL BANK OF DUBAI it has been seen that company is rendering additional from their end to use data analytics to serve their customer. They are creating their website in a new form where with the help of data analytics they can keep track of all the clients who are associated with the Commercial Bank of Dubai.
  3. The third strategic activities done by Commercial Bank of Dubai is recruiting and retaining the talent. Getting talented employee in this tough competition is one of the toughest jobs and retaining them is even tougher. Thus COMMERCIAL BANK OF DUBAI is using various renowned job portals to identify the best talent and recruit them and also they are implementing various bonuses and perks to retain them for the longer period of time.
  4. The fourth strategic activities are related to reducing the functional expenses. Because of cut small loan fees and working edges, a huge amount of time along with exertion has been spent by monetary associations to reduce expenses at every possible opportunity. Once in a while, these endeavours they affect the client experience or without fixing basic interaction defects.
  5. The fifth and the most important strategic activities are increasing the savings in innovative items. The segments where Commercial Bank of Dubai is investing in innovation are client amenities 84%, networks 82% which is following by technique 67% along with items 63% and dealings and advertising 56% (Marous, ,Jim , 2019).

Now in this segment of the study a brief about the strategic decision taken by Commercial Bank of Dubai will be discussed in detail.

Usually a strategic decision is those kinds of decisions which are focussed on with the entire ecology within which the company functions, the overall assets and the populace who create the firm as well as the connection among them. Considering the strategic activities of Commercial Bank of Dubai which is already discussed in the above segment some of important strategic decision acknowledged by Commercial Bank of Dubai is opening up of a new subsidiary in India. The main reason behind taking this strategic decision is because marking their name in the banking industry in the world and also to get additional clients from all across the world. Also considering the digital era, Customers all over the planet are rapidly embracing computerized banking. Occupants just have a brief period to change in accordance with this new reality or hazard becoming out dated. Keeping this scenario in mind Commercial Bank of Dubai is focussing more on transforming their entire operation into digital where people will get instant transfer of money, instant cash receivable and instant credit approvals.

So, from the overall discussion on the topic of strategic activities and strategic decision of Commercial Bank of Dubai it can be said that they are focussing on digital transformation rather than using traditional approach.

Strategic methods of entry and the possible consequences

Market entry strategies are very crucial because it is important to precisely plan and maintain the processes a company is considering to sell a product in the international markets. Commercial bank of Dubai has chosen two strategic methods of entry which includes franchising and green investment.

A franchise can be defined as a chain of retail companies where a group of wires or an individual is allowed to pay for the rights for all the management of company branches on the behalf of the company. Franchisees exist on a global platform and help the business in providing them with opportunities to expand their branches overseas (Harms and Méon, 2018). In order to consider franchise, commercial banks of Dubai need to have a strong recognition of the brand as the consumers they have targeted in the international market should be aware of the various products and services they are willing to offer to them (Lojacono et al., 2017). For companies that already have an established brand value, franchising will be helpful in offering those companies a way to earn profitability while opting for an approach which considers indirect management. Opting for franchising can be beneficial for the organisation in terms of receiving business assistance that they will be receiving from franchisors. It is also an option that will provide the company with a lower failure rate along with providing them with the opportunity of developing the sheer size of the network. Another reason, Commercial bank of Dubai can opt for franchise as the owners of the company face lower rest than the independent business owners (Jalal, 2018). A major factor that should be considered by the business before establishing themselves in the foreign market is that they would not be entirely in control of their business in terms of making decisions which might be difficult for them to operate. Opting for franchise can also create a lot of conflict within the business operations. Another disadvantage of franchise is the lack of privacy.

On the other hand, Greenfield investment involves the process of buying land in the international markets along with the resources for the company to build the facility internationally along with hiring different skilled employees to operate within them (Dinu, 2018). The commercial bank of Dubai is looking forward to building a subsidiary in the Indian market for which considering Greenfield investment can be one of the most effective approaches they might want to consider. Although it can be stated that green field investments are subjected to a higher risk where the company might incur significant costs. It is also helpful for the company in terms of running in the management of the company with various government regulations in a new market. The organisation initially has to invest a sum amount of money which will help them in benefiting a large scale. Investment can facilitate the investor with various facilitation of advertisement tailoring and marketing efforts (Lee and Ries, 2016).

Potential organisational and managerial problems for the subsidiary operating in the new international environment

It is very essential for all the subsidiaries of the same business to act in a coordinated manner. If the business acts in an uncoordinated manner, the controlling of the operational aspects and management becomes much more complex. One of the major problems faced by the managers of the company is that they need to count on an integrated system that will allow the company as well as the management to have real time access to all the activities and progress that is happening in other places (Meyer et al., 2020). The managers of the subsidiary might find it difficult to adapt to the mission statement of the parent company which will reflect the values, goals and vision of the company. By extension, a subsidiary is required to share the same mission statement that has been established by the parent company but with added caveats. The challenge that is faced by the manager is to make sure that the employees of the company have a better understanding of the goals and objectives established by the company and follow it without waving from their corporate mission statement (Moore, 2015). Another challenging situation for the managers within the subsidiary is financial reporting. Most of the parent companies use their subsidiaries to hide their expenses which would appear on their balance sheet on a normal basis. This might not be illegal but it might sometimes lead to a catastrophic result. The employees working for a subsidiary may often feel overshadowed by their counterparts (Ambos et al., 2020). Depending on the involvement of the parent company, the employees of the subsidiary might feel that they are left out of work given to the working employees for a parent company. This can cause a feeling of disgruntlement among the workers which the managers have the responsibility to contend with. The challenge faced by the managers in this context is to help the employees have a better understanding of the fact that while they are a part of the parent company’s overall organisation, they are still a business entity that are separate which means that they necessarily do not need to privy to the rewards of the parental company (Meyer et al., 2020). This also might affect the productivity of the employees as they would not feel encouraged attain the goals of the subsidiary. It would also impact the organisational profitability and revenue generation.

These factors can also lead to a poor process management within the operational aspects of the subsidiary of the Commercial bank of Dubai. Another major issue that the organisation can encounter is a lack of quality role specifications which can lead to disrupting the workflow of the company along with reducing the efficiency of the workers and decreasing communication between all the members of the team (Tippmann et al., 2018). Lack of process management can also lead to decline in the innovative aspects of the company. This might result in the organisation experiencing low innovation and stagnant growth due to the fact that all these aspects might stifle the creativity of the employees.

Strategic advice for the subsidiary to overcome the problems highlighted

The initial and the most crucial step are to optimise and empower the management of the subsidiary. This can be done by monitoring the performances of the company in a periodic manner so that they are aware of the action and the activities that are happening in the parent company. This management does not need to be done in person, but the crucial aspect is that it can be done through a remote system where the managers of the subsidiary are aware of what is happening within the operational areas of the headquarters (Hu et al., 2021). They can keep themselves updated with all the relevant data that has been used by the company on expenses along with the billings generated and performances of the professionals. They are required to seek meetings on a periodic basis with the leadership team of their remote company. They need to focus on all the major aspects such as controlling the business activities to strengthen the team.

In order to operate in a coordinated manner with the new subsidiary they are planning to establish, it is important for the Commercial bank of Dubai to adopt a standard format of action which will be ranging from the attendance of clients to small business management. The leaders of the company should be charged in a way so that all the objectives and functional areas of the company are being managed in an efficient way and are in alignment to the DNA of the parent company (Tippmann et al., 2018). It is very essential for them to inform the team about the significance of the same business in different places where they will be able to comply with the regulations of the local market and consolidate with the company. In order to count on an integrated system approach where the management of the company have a real time access to all the happenings and data from the headquarter, it requires them to have online access to those platforms that helps them in controlling and delegating all the required tasks. It is very important to understand whether the team is ready or not when it comes to opening a new subsidiary (Kamelman, 2016). They are required to constantly train the personnel and employees of the company and facilitate information exchange between the subsidiary and the parent company which can be helpful for them in maintaining the standards of the parent company by complying with the regulations of the local market. It can be stated that one of the most effective and most appropriate approaches to managing the operational aspects of the subsidiary is by opting the Shared Services. This can be a helpful platform where the director of the subsidiary will be responsible for aligning the processes that require an electronic approval from the managers of the headquarter to be executed (Eckford, 2015). This will help in transferring and implanting the mature processes in the subsidiaries without any investment or difficulties just so that the management of the subsidiary can have full control over all the operational areas and maintaining security within the subsidiary.

Conclusion

So, from the complete debate it can be said that the choice of county that is India is proved to be a good option for Commercial Bank of Dubai as they will be getting a positive response from the country to accept the business there. In addition to this Commercial Bank of Dubai will also face some of the issues which have been described in this study and as per the recommendation provided if they follow the same they will easily overcome with those issues. The selection of the entry mode will also help Commercial Bank of Dubai to smoothly open the subsidiary in India.

References

CBD, 2020. Trusted Bank in UAE - Commercial Bank of Dubai. [Online] Available at: https://www.cbd.ae/ [Accessed 26 March 2020].

Garg, N., 2018. DOING BUSINESS IN INDIA: ISSUES & CHALLENGES. Asian Business School.

Marous, ,Jim , 2019. Top 10 Strategic Priorities for Banking in 2017. [Online] Available at: https://thefinancialbrand.com/62711/top-10-strategic-priorities-for-banking-in-2017/ [Accessed 26 March 2020].

Rienda, L., 2011. Doing business in India: A review of research in leading international journals. Journal of Indian Business Research, 3(3), pp.192-216.

Hu, K.H., Hsu, M.F., Chen, F.H. and Liu, M.Z., (2021). Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment. Financial Innovation, 7(1), pp.1-27.

Tippmann, E., Scott, P.S. and Mangematin, V., (2018). Problem solving in MNCs: How local and global solutions are (and are not) created. Journal of International Business Studies, 43(8), pp.746-771.

Kamelman, K., (2016). A Walk Around International Subsidiary Management Processes. Int'l. In-House Counsel J., 10, p.1.

Meyer, K.E., Li, C. and Schotter, A.P., (2020). Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda. Journal of International Business Studies, 51(4), pp.538-576.

Eckford, M., (2015). Global Subsidiary Compliance: Where are the Efficiencies?. Int'l. In-House Counsel J., 9, p.1.

Kostova, T., Nell, P.C. and Hoenen, A.K., 2018. Understanding agency problems in headquarters-subsidiary relationships in multinational corporations: A contextualized model. Journal of Management, 44(7), pp.2611-2637.

Moore, A., (2015). The growing importance of subsidiary governance for compliance, business strategy and profitability. Governance Directions, 67(1), pp.42-43.

Ambos, T.C., Fuchs, S.H. and Zimmermann, A., (2020). Managing interrelated tensions in headquarters–subsidiary relationships: The case of a multinational hybrid organization. Journal of International Business Studies, 51(6), pp.906-932.

Lojacono, G., Misani, N. and Tallman, S., (2017). Offshoring, local market entry, and the strategic context of cross-border alliances: The impact on the governance mode. International Business Review, 26(3), pp.435-447.

Jalal, A., (2018). Strategic Decision Making: External Factors Influencing Foreign Market Entry. Journal of Higher Education Service Science and Management (JoHESSM), 1(1).

Dinu, A.M., (2018). International market entry strategies. Academic Journal of Economic Studies, 4(2), pp.20-25.

Lee, H.H. and Ries, J., (2016). Aid for trade and greenfield investment. World Development, 84, pp.206-218.

Harms, P. and Méon, P.G., (2018). Good and useless FDI: The growth effects of greenfield investment and mergers and acquisitions. Review of International Economics, 26(1), pp.37-59.

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