Sample Report On Political System
Report of International business
Within the United Kingdom, the consulting sector started growing speedily during the period of 1950s. This was augmented through the introduction of US consulting companies, trend of latest technology and management approaches, together with rising demand from customers for greatly specialised abilities. During 2010, the UK consulting sector was worth more than £8 billion, offering employment prospects to about 40,000 individuals and only under £1 billion additional work was carried out through the UK consulting sector overseas. At present UK consulting sector is around £9 billion and offers employment to over 80,000 consultants. The sector spans a huge range of companies, few of which just take on ‘pure’ management consulting task, few of which are fraction of bigger companies that also take on development of IT systems, outsourcing, as well as other practices. Consulting companies offer a huge array of services ranging from assistance in outlining strategies to executing large-scale IT along with change programmes, and from coaching people and teams to offering expert assistance within specialised spheres. Further, taking the above discussion into consideration this particular paper attempts to examine the scope for ABC Consultancy Company from Kuwait (Middle East country) to enter the UK market and the strategies they need to use for doing so.
The UK is a constitutional monarchy. However, it is just representative in nature. There is a parliamentary democracy within the nation, with Prime Minister being the leader (Bartlett & Ghoshal, 2003). The UK has at all times been a champ of free market economy. In the latest four years, beginning from the year 2007 till 2011, UK has proved to be the highly lucrative business place for overseas investors. Even though, there are several large American companies functioning within the United Kingdom, there are several prospects for non-U.S. companies also. Once the corporation has become functional, the government is accountable for protecting the rights of domestic or overseas employees operating within a specific corporation. The latest banking segment reforms have made possible for UK to catch the attention of around £23 billion within FDI (foreign direct investment). Therefore, the nation has come forward like the renowned business player. All the corporations, whether domestic or overseas, are taxed similarly at the same rate. The economic and political stability is regarded as being the hallmark of British culture of investment. UK provides sound opportunities for investing in the production segment. The pound sterling is considered as being a free-floating currency and is effortlessly translatable with other worldwide currencies.
The pattern of inward investment has significantly assisted local companies to safeguard their financial and labour resources. Because of existing political constancy, investors are motivated to put forward innovative ideas for boosting FDI. During the latest financial calamity, the entire British economy suffered great turmoil. However, because of some vibrant and result-directed initiatives undertaken by the government officials, the economic situation is getting better gradually. During latest years, the British economy has faced an extraordinary growth in foreign FDI. However the growth in GDP has suddenly declined. The incessantly rising rate of unemployment is a big challenge for the government of UK.
Trade is regarded as being an important source of income and revenue for the UK economy (Calori et. al., 2000). Trade is prevalent throughout the economy and involves all sectors including retail, IT, entertainment, electronics and others. The country has also set particular tariffs and quotas varying greatly from segment to segment and company to company. Additionally, when it comes to corruption, it can be stated that the level of corruption in the UK is reasonable low. This is chiefly due to strict government regulations directing the business world and high dedication of companies towards their compliance. At every level companies need to follow rules and regulations regulating a particular segment and set out by government officials in order to ensure long-term existence and sustainability. Moving ahead, the UK government has devised policies and rules that safeguard the interest of employees and general public. The country has shown high discontent against the issues of human rights violation and child labour issues. In the UK it is made sure that both male and female employees are offered equal job opportunities and salaries. It is considered as being the responsibility of the UK to ensure safe working environment for its employees. Then, bribes and unauthorized payments are regarded as being unethical at the UK. The companies practicing all these are seen as conducting ethical practices.
Strategies for Entering the Foreign Market and Opportunity Assessment
The incrementing level of business globalization, the altering face of worldwide political arena, augmented diffusion of political limits and the altering patterns of governance frameworks for global companies call for an incessant evaluation and examination of forces that have impact on entry mode decisions within any foreign marketplace (Doerrenbaecher, 2000). While several concepts related to the choice of entry mode have been progressed through previous researchers, the suppositions of few of the theories might be conflicting with the manner in which global business surroundings impacts international companies in the UK. The UK has exceptional social cultural surroundings, physical forces and political legal atmosphere, which makes the nation highly attractive to overseas investors. Literature and theories on foreign market entry approaches provide basis for increasing knowledge on several international business problems. There are several foreign market entry modes available for companies including Exporting; Foreign Direct Investment (FDI) and collaborative ventures; strategic alliance; Licensing; Franchising and other Contractual Strategies and Global sourcing.
Of the several options available to ABC Consultancy Company a strategic alliance appears sensible. A Strategic Alliance is basically an agreement formed amid two or more parties for pursuing particular agreed upon goals required while being independent companies (Lunnan & Haugland, 2008). This type of cooperation exists between acquisitions and mergers and organic progress. Partner firms might offer the strategic alliance with the required resources like distribution channels, products, manufacturing ability, project funding, knowledge, capital equipment, skills or intellectual property (Priscilla et. al., 2005). Moreover, the strategic alliance is collaboration or cooperation that intends for a synergy where every partner wishes that the advantages from the alliance would be higher as compared to ones from individual endeavours. The alliance frequently takes in technology transfer (admittance to expertise and knowledge), shared expenses and risk and lastly, economic specialization (Priscilla et. al., 2005). A strategic alliance would prove to be a low-risk entry approach, which could minimize ABC’s equity investment. Such option appears highly prudent from ABC’s point of view, chiefly within the present political atmosphere. It would also allow the company to properly understand the UK industry for determining the complete potential of the UK marketplace prior to actually committing equity capital to the proposal. Not just this strategy help in mitigating a high level of political risk, but it also enables both parties to share expenses, establishing a great pool of joint skills and resources, and creating functional synergies.
Corporation go international for several reasons however the usual objective is corporate growth or progress. Same is the case of ABC Consultancy firm that is based in Kuwait and thinking of entering foreign market i.e. the UK. At the time when a corporation like ABC appoints international staff members or looks for new marketplaces overseas, a global approach could help in diversifying and expanding a business. Additionally, economic globalization is the procedure in which companies speedily grow their markets for including worldwide clients (Peng, 2006). Such progress is doable in part due to the reason that technological breakthroughs all through the 20th century have made worldwide communication quite simpler. Email networks and air travel have made it possible for managing a business from even a far-off area. Now companies frequently hold the choice of going international, they evaluate several factors prior starting such progress. The consulting industry of the United Kingdom (UK) that takes in England, Wales, Scotland, Northern-Ireland and lastly, Ireland – is at present guesstimated to be around $19.4 billion that amounts to around a quarter of European consulting segment.
During the period of last 5 years the United Kingdom consulting segment has expended with a CAGR (Compound Annual Growth Rate) of 1.7% percent, from around $18.1 billion during the year 2010 to the present $19.4 billion. The rate of growth although has decreased, from 3.8 percent during the year 2010 to a likely 1.6 percent this year. Taking into consideration the industry size per marketplace segment, it has been observed that Financial Advisory is the leading area within the United Kingdom with a share of around 32 percent, chiefly because of the extremely financialised economy of the United Kingdom and the function of London like a financial capital. Operations consulting from point of view of Europe the biggest industry sector; holds a 26 percent share. IT Consulting signifies 19 percent of the UK consulting sector, whereas HR Consulting and Strategy Consulting both hold a marketplace share of around 12 percent.
As the corporations operate within their home marketplaces, the majority of their staff members come from regions holding the common culture (Andersen, 1997). Their home marketplace consumers share the ethical and social standards of corporate employees and management to a great level. This is particularly right for companies, which frequently function from just one region. At the time when these corporations step into a foreign marketplace, the majority of their clients come from a culture, which might hold completely diverse values (Osegowitsch & Sammartino, 2008). The corporation frequently must decide the level to which it would respect foreign marketplace practices while maintaining a standard of social and ethical values on which it refutes to settle. Further, the below sections highlight the challenges that ABC Company would experience when entering the UK Consultancy Market.
Corporations stepping into an international marketplace usually develop some local operations over there (Gupta & Westney, 2003). Usual practices within the foreign marketplace might take in activities, which would be regarded illegal or immoral at home. As a result, ABC Company must make a decision whether to offer secure working atmosphere, pay living wages, restrict environmental affects and follow contractual conditions at the time when local corporations might not maintain these standards. The company might struggle with compromising these problems at the cost of their overseas operations.
Communication and Language Barriers
Within several foreign marketplaces, corporations must deal with communication and language problems with respect to their freedom of expression, that of their staff members and potential clients (Gupta & Westney, 2003). Terms, logos and language considered good in Kuwait might be seen as being illegal or principally wrong in the UK. Thus, ABC needs to carry out proper research for understanding the environment of the UK economy before actually entering it.
Within several cultures, taking gifts, favors or commissions for offering contacts or business benefits is considered normal and expected. Officers within few nations might request greater sums for impacting decisions or enabling illegal practices. In case of ABC Company, the UK law does not permit the corporations to pay bribes. Firms must set detailed policies related to what is allowable and enforcing their guidelines for avoiding unlawful actions. Thus, ABC should not engage in any kind of illegal acts like bribe or commission.
Corporations have a particular level of control for influencing customers by way of advertising, and they hold societal and ethical responsibilities for using these marketing powers in a constructive manner (Gupta & Westney, 2003). As a result, ABC Company needs to have in effective and reasonable marketing strategies that can attract maximum customers and do not misguide them in any manner.
Since the consultancy industry is seen as being highly lucrative one the number companies operating within this industry is continuously rising. The level of competition is quite high due to lack of product differentiation and several companies offering similar products. In such a situation ABC Company must adopt strategies that can help in gaining sound market position and customers.
Andersen, O. (1997). Internationalization and market entry mode: a review of theories and conceptual frameworks. Management International Review, 36(2), pp. 27- 42
Bartlett, C. & Ghoshal, S. (2003). Managing across borders: New organizational responses. San Francisco, Jossey-Bass.
Calori, R., Melin, L., Atamer, T. and Gustavsson, P. (2000). Innovative international strategies. Journal of World Business, 35(4), pp. 333-354.
Doerrenbaecher, C. (2000). Measuring corporate internationalization. Intereconomics, 15(3), pp. 119-126.
Dunning, J. (1994). Re-evaluating the benefits of foreign direct investment. Transnational Corporations, 3(1), pp. 23-52.
Gupta, A. & Westney, E. (2003). Smart globalization: Designing global strategies, creating global networks. San Francisco, Jossey-Bass.
Lunnan, R. & Haugland, S. (2008). Predicting and measuring alliance performance: A multidimensional analysis. Strategic Management Journal, 29(5), pp. 545-556.
Osegowitsch, T. & Sammartino, A. (2008). Reassessing (home-regionalisation). Journal of International Business Studies, 39(2).
Peng, M. W. (2006). Global Strategy. Cincinnati: South-Western Thomson.
Priscilla, W., Smith, J. and Malloy, C. L. (2005). Strategic Alliances in Action: Toward a Theory of Evolution. The Policy of Study Journals, 3(33), pp. 12-25.
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