International business has been obtaining formidable impetus in the recent times with the inclinations of enterprises to accomplish strategic advantage in the global business environment. The last two decades have witnessed the rapid and sustainable growth of international business. Markets have evolved into global entities for majority of services and goods as well as a wide assortment of financial instruments.
The case of Royal Mail also presents a lucid interpretation of an enterprise engaging in international business action. The illustration of the literature pertaining to international business such as concepts and models would be helpful in drawing critical inferences into the international business action of Royal Mail (Ahammad, et al., 2016).
Royal Mail to Engage in International Business
The event can be illustrated as the recent implications for the Royal Mail to engage in international business are reflective of the reduction in the number of letters it delivers in UK. The characteristics of Royal mail could be prominently observed in its reputation as the designated Universal Postal Service Providers of UK as well as the plausible implications for supporting customers, communities all over the country and the businesses in UK (Bury, 2017). The engagement of the company in one of the profound transformations in the industry of delivery services in British history is reflective of the barriers for the vision of the organization to realize its position as the best delivery company in UK and Europe (Cheng, et al., 2014).
As per Darendeli & Hill, the notable characteristics which can be perceived in the existing market scenario in the UK reflects on the declining share of letter volumes in delivery service and the profound implications for the growth of the parcel business through involvement of online retailers such as Amazon (Darendeli & Hill, 2016). On the contrary, the GLS or General Logistics Systems, which is the international delivery arm of Royal Mail, has depicted considerable improvements in business performance which depicted growth by 9% as compared to the domestic business which depicted a slight reduction of 2%.
The declining share of letters delivered by Royal Mail by 6% over the course of the last year creates potential implications for the organization to consider international business action. Furthermore, the increasing popularity of online shopping has provided a promising impetus to the volumes of parcel deliveries which increased by 3% in the recent year. Therefore, Royal Mail has to consider emphasizing on the international business arm, GLS, and embark on overseas acquisitions that can expand the GLS in varying geographies.
As per Helm & Gritsch, despite the risks of losing revenue to the dedicated parcel delivery companies such as Amazon, Royal Mail can leverage the international business volumes generated by GLS to address the setbacks faced by the organization in domestic business performance. Therefore the validity of reflecting on relevant literature pertaining to international business could be realized effectively in case of Royal Mail to predict distinct inferences for the international business action of the organization (Helm & Gritsch, 2014).
The essential elements in literature pertaining to the international business that can be considered with respect to the observed event in case of Royal mail would refer to the competitive advantage and strategic direction of an enterprise in the international business environment, frameworks for analyzing the international business environment as well as the challenges and opportunities that can be vested in the method of acquisitions to expand international trade.
The reflection on literature pertaining to international business would provide a notable contribution to the determination of strategic approaches for business organizations in foreign business environments. According to Jia, et al, prior to the illustration of theoretical models, it is imperative to consider the generic definitions of international business which rely on the expansion of business activities beyond the national boundaries of the organization. Therefore organizations which engage in the transaction of goods and services across national boundaries with the location of central management in a single country could be encompassed in the definitions of international business (Jia, et al., 2014).
According to Leung & Morris, the other dimensions of international business are profoundly indicative of the equation of international business with the big enterprises that have established operating units in the external jurisdictions. Furthermore, international business has also been associated with the institutional arrangements that engage in direction of economic activity towards managerial applications in foreign jurisdictions without formal depiction of ownership control. Such examples can be perceived in the joint ventures of organizations with locally owned businesses as well as with the governments in international jurisdictions (Leung & Morris, 2015).
International business activities are associated with a broader scope that reflects on the challenges as well as opportunities in the international business environment. Some of the cognizable factors that could be accounted as major influences on the international business initiatives of an organization include cultural differences, foreign exchange markets, and legal infrastructures in the foreign jurisdictions and the variations in inflation rates. International business has formidable implications towards the evolving changes in the international business environment as compared to the domestic environment which are often associated with traits of contradiction and ambiguity. Managers with the skills for identification of potential pitfalls in the international business environment could be able to cater the changes in priorities of the business environment thereby obtaining feasible competitive advantage over the peers in the industry which are unable to cope with the changing priorities of international business environments (Lord, 2014).
Prior to the evaluation of opportunities that can be accessed from the international business actions of an enterprise the estimation of the setbacks could provide a critical perspective. The identification of the setbacks that can be associated with the domain of international business would help in providing viable improvements in the strategic direction of an enterprise in the foreign market environment. An organization faces political and legal conflicts in international business with the notable implications towards disparities in the domestic and international political structure and the implications of legal regulations.
The complexities of managing political and legal setbacks in business environment could be increased with the involvement of the company in various international business jurisdictions. Furthermore, the disparities in the political and legal environments of the provinces could also be accounted as notable influences on the strategic direction in international jurisdictions. As per Oparaocha, cultural differences could be observed as the next formidable impact on international business actions since cultural diversity is an imperative requirement for addressing the evolving trends in international markets (Oparaocha, 2015).
The limitations on international barriers and the increasing movement of people across international boundaries have led to the concerns for increasing variability of different cultural and ethnic sections in the demographics of various geographical jurisdictions. Therefore, organizations which prefer engagement in international trade are required to tailor their strategies and business operations especially marketing to the cultural framework profoundly observed in the international market environment. The analysis of the demographics as well as reflection on cultural dimensions such as long term orientation could be helpful for drawing valid implications pertaining to the strategic approach for international business (Peng, et al., 2017).
Economic conflicts also serve as profound impacts on international business actions since they could impinge detrimental outcomes on the financial returns acquired by the organization from international business operations. The prominent factors that can be associated with the economic aspects of international business relate to the fluctuations in exchange rates as well as inflation rates.
Variability of currency exchange rates creates potential setbacks for conversion of currency leading to potential ambiguities in the financial standing of an organization in the international business environment. As per Sandberg, marketing infrastructure variation in international business environments leads to cognizable setbacks for marketing activities of an organization. Marketing infrastructure refers to the accessibility and nature of marketing facilities in a particular country which direct towards the varying efficiencies of marketing media in different market environments (Sandberg, 2014).
It has been observed that the negative implications pertaining to international trade have a considerable impact on international business action of an organization. The use of specific models such as PESTEL analysis could be considered as viable additions to improve the outcomes of market research and plausible identification of the issues.
On the contrary, observation of the viable opportunities that can be accessed from the international business actions could also be assumed as driving forces for organizations to engage in international trade. As per Young & Makhija, international trade provides the foremost promising outcome of sustainability since the access to foreign markets allows organization to acquire feasible outcomes such as substantial improvement in the market share of the organization as well as the expansion of the scope of international experience (Young & Makhija, 2014).
The observable growth in international markets of developing countries could be perceived as a viable opportunity for neglecting economic and marketing problems and entering the markets to obtain competitive advantage. Diversification has become an imperative constituent of the domain of international trade implying profound indications towards the consideration of foreign markets as a viable solution for mitigating the risks for an organization through the concerns of variable demand. The beneficial aspects of diversification lead to acquisition of comprehensive insights into the variability of production processes and other business operations.
Another cognizable element that should be included in the discussion pertaining to efficient perspectives for international business is the acquisition of competitive advantage and precise identification of strategies. Competitive advantage can be illustrated as the edge obtained by organizations over competitors which is generally acquired through the provision of higher value on the products to customers either through lower prices or provision of sophisticated services that can validated the higher pricing of products and services (Zhang, van Doorn & Leeflang, 2014).
The implications of competitive advantage can be realized by a comprehensive interpretation of the core competencies, strategy and business level strategy alongside the apprehension of the interdependencies among them. The core competences could be implemented for obtaining promising outcomes from a strategy through the provision of viable inputs into the strategy design. Core competencies could be identified as the unique traits, capabilities and resources of an organization that facilitate competitive advantage over rivals.
The strategy implications are largely dependent on the core competency in order to obtain integration and coordination among the various sets of actions that can be implemented in various functional domains of an organization’s business framework. The subsequent element which contributes to the competitive advantage of an organization reflects on the business level strategy that is specifically directed towards the particular business functions. The business level strategy is associated with the initiatives for providing value to customers through exploitation of core competences in particular product markets (Young & Makhija, 2014).
The global strategy can be observed from a distinct perspective which classifies specific planned actions as well as contingency measures which largely reflect on the necessity to evaluate the dynamics of internal and external changes as well as obligations of organizations to learn consistently. Therefore the relation between competitive advantage and the learning process of an organization could be perceived as a profound highlight in the domain of international business management. The acquisition of competitive advantage can be validated through the competitive positioning, core competences and global strategy which allow distinct opportunities in international market environments. Competitive positioning is defined on the grounds of configuration of core competences specific to the industry to the maximum possible value for accomplishing competitive advantage. The value of core competences in an organization could be realized efficiently in international business initiatives through maintaining an open system with specific implications towards cooperation with environment and the utilization of core competences (Peng, et al., 2017).
The impact of global strategy can be observed in the promising outcomes such as accomplishment of a global scale and the flexible configuration and the coordination of international business activities. Therefore the provision of international strategy opportunities could be realized through the identification of international opportunities, exploring the capabilities and resources and utilization of core competences in order obtain feasible outcomes related to strategic competitiveness (Young & Makhija, 2014).
Critique of the Event:
As observed in the case of Royal Mail, the organization is considering the methods of acquisition to enter foreign markets. The rationale for engaging in international business could be perceived in case of Royal Mail as the organization is not capable of sustaining its conventional business opportunities in the industry of delivery services. As per Zhang, van Doorn & Leeflang, the senior management of the organization is inclined towards the realization of strategic approaches to improve the investments in overseas acquisitions prudently. Therefore a critical evaluation of the organization’s international business action should be obtained in order to propose feasible recommendations for improving competence in international business assignment. The market entry modes are also associated with the strategic direction of an organization in international business assignments (Zhang, van Doorn & Leeflang, 2014).
Acquisitions and mergers as well as joint ventures have proved to be legible approaches for entering foreign markets. Therefore literature pertaining to international business management has included acquisitions as a flexible option for international market entry as well as referring to the potential advantages and disadvantages that are associated with the market entry mode of acquisition. The foremost advantage that can be drawn from acquisitions is the flexible distribution of financial resources and skill competences. The benefits of acquisition in different industries are also accountable for the diversity implications since the fall in sales in a particular industry would not affect the performance of the other partners in different industries.
The acquisition of companies in similar industry is also profoundly indicative of the reduction in competition as well as reduction in costs of publicity and advertisement. On the contrary, acquisitions can also be critically associated with setbacks that could lead to long term consequences for Royal Mail in its international market expansion initiatives through acquisitions (Sandberg, 2014).
The difference in objectives of acquisitions among the acquired companies could lead to potential conflicts that would require strategic management thereby reflecting on the mandatory requirement of resources and costs. The lack of precise standards for pricing of the acquisitions could lead to ambiguities pertaining to the investments made by Royal Mail in its overseas acquisition approach that lead to profound implications towards overpricing of specific acquisitions by the enterprise. The integration of employees of the Royal Mail and the acquired firms could be assumed as a formidable limitation of acquisitions that lead to conflicts pertaining to the adaptability to new cultures, management and employees (Leung & Morris, 2015).
In case of Royal Mail, the proposed initiatives for acquisition of overseas firms by GSL, the company’s international arm, could be critiqued on the grounds of the numerous acquisitions that could lead to variable concerns for management and the improvement in uncertainty in the moderation of business activities of the organization due to absence of integration. Furthermore, the variability of the financial consequences obtained from the acquisitions could also imply critical gaps in the preferences for acquisition.
The foremost pitfall that can be perceived in the case of Royal Mail’s expansion in international markets through acquisitions is reflective of the excessive managerial focus on acquisition. The comprehensive direction of Royal Mail’s management towards acquisitions could lead to inhibitions pertaining to internal development and negligence for the slump in letter delivery volumes in the domestic market. Furthermore, the recommendations for improved strategic approach in case of international business action of Royal Mail would have to be dependent on the analysis of international business environment which is characterized by profound competition from dedicated parcel service providers such as Amazon (Helm & Gritsch, 2014).
The report presented a cognizable illustration of concepts pertaining to international business actions by referring to the recent instance of international business acquisitions by Royal Mail, the dedicated Universal Parcel Service Provider in UK.
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