BUMGT 5920 International Challenges For Managers in Global Environment Assessment task 1 Answer
INDIVIDUAL RESEARCH ESSAY
(ASSESSMENT TASK 1)
International challenges and possible opportunities for the managers that operate in the global environment:
In this present era, almost every organisation focuses on international expansion so that they can achieve development in their market. For reaching new clients and increasing profitability, domestic organisations mainly expand their business. The global business environment helps international businesses gain development in the market size, achieving better economies of scale and gaining more ROI. Despite the advantages provided by global businesses, management of the global businesses is highly difficult. Managers face huge challenges in operating international businesses. These challenges mainly include the currency-related issues, language-related issues, differences in the regulation and laws and the differences in the culture.
Along with that, at the initial level of internationalisation, an organisation faces vast issues due to the competition. For a demonstration of the challenges that are faced by the international organisation, Qantas organisation has been selected. By considering the Qantas organisation, international challenges and possible opportunities for the managers of a global organisation is intended to discuss in this essay.
Global challenges in the global environment:
International businesses are those businesses that encompass cross-border resources, services and goods exchanges. International companies conduct this exchange of goods, services and the resources so that they can expand their market and earn more profits. Internationalisation of a company is one of the exciting prospects, but the multitude of challenges can be developed to operate a business in a completely different business environment. For developing business in a foreign country, an organisation must cope up with the external environmental factors (political, social, economic, technological, legal and environmental) of the country. Every country has differences in their competitive environments and macro-environmental factors. This difference sometimes creates enormous issues for the international business in operating their business when they face insufficient support from the government of the foreign country, economic downturn condition and problems in attracting customers due to cultural differences. For example, the support of the Australian government towards the foreign business organisation is different than the support provided by the African government towards foreign business organisations. This is because; the Australian government is more supportive than the African government. Along with that, the nature of competition is also different in various countries. This is because, in some countries, people prefer standard services or products. On the other hand, in some states, people want a low-cost substitute for particular products and services.
For international business, the language barrier is one of the most common barriers (Neeley & Dumas, 2016). Communication is the key factor of every business; therefore, if an international business face language barrier after their international expansion, then the business might face issues in maintaining business. This is because the communication barrier obstructs an organisation in identifying the need and requirements of customers of a foreign country that can distract customers from the organisation.Differences in the rate of currencies are one of the biggest issues for the international organisation. This is because of disagreements in the currencies sometimes creating incorrect calculations that can create problems in developing proper strategic direction for the organisation (George et al. 2016). For international business, cultural difference related issues are one of the more significant issues. Every country has some unique culture which develops perception, attitude and behaviour among the people who live in that country.Therefore, if a foreign organisation starts operating its business in other countries withouthaving proper knowledge about the culture of that country, then miscommunication can be created. This miscommunication can develop negative perception among people about the foreign company that can distract people in buying products or services from the international organisation (Parida et al. 2015). Every country has some unique set of tax laws, controls of the government, standards about health and safety. For this reason, conduction of active research on the foreign market (where the organisations want to operate their business) is essential so that proper organisational policies can be developed as per the regulations of the country.
For explaining the issues faced by an organisation and the strategies to mitigate those issues, Qantas airline of Australia has been selected. From the last few years, Qantas is facing enormous challenges due to massive competition from several middle-east carriers such as Etihad and the emirates (Quora, 2019). The main reason behind the success of these Middle East airline carrier organisations is utilising the locations that are geographically excellent and offer one-stop services to South-east Asia, New Zealand, Australia and Africa from different areas of Europe (Quora, 2019). As an example of the efficiencies of these Etihad and Emirates airlines, the route from Australia to Ireland can be explained. There are now three flights of Etihad and Emirates that connects Abu Dhabi along with Dubai with other locations (Quora, 2019). Moreover, this organisation offers its services in faster and cheaper ways. Qantas has not achieved benefits from codeshare with the Emirates. Qantas mainly offers traditional, high standards, a better and full-service airline which has a properly unionised workforce. The Australian and other people like these strategies, but when it comes to purchasing a ticket for conducting a journey, then customers always select the cheapest options. Thisisbecause every people tend to buy those products and services that are cheaper and standard. In that case, the theory of absolute advantage is applicable. According to the theory, if any foreign organisationcan supply products or services cheaper than the domestic organisation, then customers always prefer the international organisation. In that case, Etihad and Emirates offer their services less expensive than the services provided by the Qantas for which Australian customers preferthose foreign organisations, not Qantas (Press, 2019). Along with the Etihad and Emirates, Qantas is also facing competition-related challenges from the Virgin Australia airlines. Due to these three different airline brands, Qantas is not only facing a loss in the domestic market, but they are also facing failure in the international market due to the higher costs and amid competition. In the last financial year, Qantas has faced a loss of 216 million AUD in the global market.
Qantas has faced this issue because they have become insufficient in understanding the actual need of the customers in the overseas countries that have made them unacceptable among customers. For these purposes, theorganisationhave faced a considerable loss.According to the theory of competitive advantage, an organisationachievesa competitive edge if they can develop or acquires attributes which canouter perform the domestic and international competitors (Dunning, 2015). Therefore, according to the theory, Qantas is facing issues to achieve competitive advantage because they have become insufficient in offering their standard services in the lowest possible costs. This fact creates difficulties for them especially in the overseas business where there is a number of airline businesses that are successful in offering their services in lowest possible costs to the customers (Stone&Deadrick, 2015). Moreover, these airline businesses offer standards and very good services to the customers that havealso created difficulties for Qantas in maintaining their business in overseas countries.
Qantas is facing issues in the overseas market due to their ineffective knowledge about the need of thecustomers. Qantas has faced this issue because they do not have an effective knowledge about the culture of those overseas countries. For this reason, theorganisation has faced issues in assessing the actual need of the customers. Before developing the pricing strategy of theorganisation, Qantas has not considered the impact of the culture on strategic development (Kolk, 2016). Theorganisation has not conducted a proper research on the customers.
For this reason, Qantas has become unsuccessful in understanding the need of customers. Customers mainly wanted to get standard services in the lowest possible costs. Qantas has not consideredthe proper need of the customers during forming pricing strategy. For this reason, they have set a high pricing strategy that has distracted the customers from their organisation. For this reason, they have faced a massive loss in their organisation. Additionally, the organisation has not developed long route travel for the customers (Cascio& Boudreau, 2016). For this reason, long route customers have to divide the entire path into different part to reach the destination. This fact has created a distraction among the customers.
Possible opportunities for managers in operating in a global environment:
For maintaining a business in the worldwide environment and resolving the issues faced by Qantas, it is highly essential for the Qantas in organising the talent of their organisation for theachievement of the sustainable competitive advantage. For expanding businesses in the overseas countries, Qantas may face communication difficulties and cultural differences relatedissues that can cause problems for them in identifying the actual need of the customers. For resolving the issue and attracting customers, it is essential for Qantas in hiring staff from diverse backgrounds so that with the help of these employees, the managers can understand the need of customers and satisfy it (Choet al. 2015).Hiring diversified employee base is also helpful for an organisation in identifying the behaviour, attitude and etiquette of the people of different marker that can help theorganisationin forming a close relationship with the customers.However, it is not enough for Qantas to achieve competitive advantage by organising people. For making a competitive advantage, managers should identify ways to hire the diversified workforce so that innovative ideas can be developed to attract customers from different countries towards Qantas. Moreover, managers of Qantas should improve global collaboration by breaking down their entire international operations into different geographical boundaries (Jones, 2016). After that, they must develop strategic direction for each of the geographic areas as per the needs of the customers in that location so that it can be helpful for Qantas in improving their overseas businesses and achieving competitive advantage.
Setting an ineffective price for products and services can create challenges to do business in the overseas marketplace. Therefore, price is one of the major considerations of the international strategy of an organisation (Adams, 2015). For achieving a sustainable competitive advantage, it would be better for the Qantas in developing a pricing strategy that is competitive in the market for drawing the attention of the customers. For the development of an effective pricing strategy to drawthe attention of the customers, Qantas should conduct good research on the market to identify the pricing strategy followed by both the domestic and the international organisation. After that, Qantas needs to develop a pricing strategy that is competitive and beneficial for their organisation. For developing a pricing strategy Qantas should consider the cost of production, employee-related costs, marketing costs, operational costs and the profit margin of the organisation so that it can help Qantas in developing a pricing strategy that is beneficial for theorganisation (van Hoorn&Maseland, 2016). It has been observed that big international airlineorganisation such as Emirates and Etihad offers their services in the lowest possible costs to drawthe customer's attention, which creates a higher level of competition forQantas. Inthat consequence, it would be better for Qantas in conducting detailed research on thepricing strategy of the two different airline companies and the strategy of those organisations to develop that competitive pricing strategy. After that, Qantas should develop their pricing strategy (Buckley, Doh&Benischke, 2017). Therefore, from the discussion, it can be said that for securing global competitive advantage cost calculation and attractive pricing strategy is everything. Along with that, Qantas needs to develop long route airlines so that they can satisfy the need of customers.
From the above discussion, it can be concluded that for achieving profitability in the international market, it is essential for an organisation in assessing the need of the customers.After that, it is highly essential to satisfythe need of the customers. International expansion always creates some challenges for an organisation which is related to the competition, language and cultural barrier. For meeting the need of customers, an organisationmust overcome these challenges with the help of proper research. Active research on the foreign market is highly essential for an organisation so that the organisation can identify appropriate culture and the preferable method of communication to communicate the customers.