Introduction
The organizations that have the tendency and ability to expand their operations with a positive attitude and mindset are the one who can initiate something extremely positive for their future concerns and productivity. International expansion can be extremely fruitful and effective for the sake of an organization; however there are some prerequisite which organizations have to understand before physically entering in a new location or region (Djarova, p.34).
Organizations analyze economic and political viability before physically entering in a new region for their expansion, and both of these elements deem necessary for them. Cross Border operations always been a challenge for the organizations because it has number of issues and challenges lie in it. Those organizations which positively enter in a region for the economic expansion and prosperity are the one which have the chance to enhance their productivity accordingly (Djarova, p.44). There are number of strategies that used specifically by the companies to validate this activity.
In this assignment, it is required to select a real company, and then select a country in which the company is strategizing to enter. Nestle is the company which has been chosen for the assignment, while the country for expansion is Singapore. There are certain points that needed to complete in this particular assignment.
Analysis and Findings
There are certain sections that needed to be complete in this assignment, as each of the section is important
Overview of the Company and Current Operating Position
Nestle is a Swiss multinational food and beverage company with its headquartering located in Vevey, Switzerland. According to revenue, Nestle is known as the largest company of the world. The product line of Nestle includes bottled water, breakfast baby cereals, confectionary and different products. The brands of Nestle are highly effective and powerful as twenty nine of the brands of the company have annual sales of US$ 1.1 billion.
The company grew tremendously well during the First World War and again it increased in the Second World War. There were certain acquisitions which have experienced by the company to make it one of the largest companies of the world (Emmerich and Pries, p.09). Nestle itself was a merger of Anglo Swiss Milk Company that was established in the year 1866. The financial competitiveness of the company is perfect and well organized, and there are six different exchanges on which the company is listing. According to the analysis of Forbes, Nestle is the largest company of the world in terms of revenue, and known as world’s most profitable corporation. The market capitalization of Nestle is very high, along with the shares provision of the company. Market Capitalization of Nestle is US$ 233 billion. The shares of the company are high profitable, and investors all over the world is experiencing effectiveness for the company.
The company reported net revenue and net income of CHF 92.16 billion and 13.07 billion in the year 2013, which is showing that the power of the company in terms of generating revenue is perfect and organized. Currently, there are more than 300,000 employees are working with the company with total asset provision of CHF 10.02 billion (Emmerich and Pries, p.20).
Nestle is one of those companies of the world which least affected from the current economic crisis, and still the company is delivering effectiveness to its customers as well to its investors. The current financial and strategic position of Nestle is powerful. There are more than 90 countries of the world, in which the company has its recognition. Revenue and net income recognition of the company increased with regular intervals for Nestle, and it is one of the most important aspects for the company and its shareholders (Emmerich and Pries, p.09).
Both internal and external shareholders of the company are having a great time with the operations of the company, as all the shareholders are familiar with the financial position and strategic competitiveness of the company. With this new expansion in the region of Singapore, the company will certainly get certain added advantage because Singapore is one of the leading economies of the world. The Purchasing Power Parity (PPP) and buying power of the consumers in Singaporean region is high and powerful, which is a positive sign for the company as far as expanding their operations in the respective region is concerned.
Company’s International Competitive Strategy
Being or Going Global is one of the most important strategies for an organization to become economically active and prosper, and organizations always try to have competed internationally through effective expansion strategies. Nestle, which is one of largest companies of the world has a wonderful competitive strategy. The company has numerous international operations and expansions are there, and they are doing with exception (Folkerts-Landau and Lindgren, p.45).
The competitive strategy of Nestle includes regulations and its compliance is exceptional, and the company is striving hard for their economic expansion. The management officials of the company are highly effective and essential in terms of having international expansion. Nestle is one of those companies of the world that would initiate effective regulatory authorities with the international expansion, with analyzing the core strategies of product and pricing of the company (Herrmann and Lipsey, p.56).
The company has a clear cut pricing strategy to enter in the region with competitive pricing to compete with other organizations which are operating in the same line of business. Though, Nestle is the largest company of the world, but still the company has leniency towards their consumers, and want to get in the market through Competitive pricing strategy rather than entering with Premium pricing strategy. Singapore, which is one of the economically powerful countries of the world, would be a great choice for Nestle for the expansion. Apart from the pricing strategy, place and promotional strategies are some of the essential one for the organizations as far as initiating the international expansion is concerned. Place strategy of the company is offline in the current situation, but it will be more worthwhile if Nestle would come across with online strategy as well from which the company can deliver the things with more effectiveness in the market of the Singapore.
Organizational Structure and Control issue
Organizational are made to increase the financial belongings and strategic expansion. The strategies that will deliver effectiveness for the company would be essential for them accordingly. The structure of an organization usually comprises on three different levels, which are employee’s level, subordinate level and managerial level. Every organization of the world would work accordingly, and it would be effective for them. The structure of the organization is effective, and it is equally applicable on the Nestle as well. Nestle is planning to have the same organizational structure in the Singaporean region as well, because the organizational structure is effective and well planned as well (Herrmann and Lipsey, p.56).
In order to come up with better control over the operations and on the organizational structure, the company is planning to supervise the things accordingly. The decision making in the Singaporean region would be centralized in which the manager of a respective department would be in charge of taking timely decisions for the sake of the company. Nestle has to empower their managers to take decision and participate in different things without any prior approval of the management to have improvement and betterment in the process.
Entry Strategies
For the entrance strategy, organizations have to use the 4Ps of marketing, which is one of the most important strategies of marketing and strategic management. The 4ps of marketing are product, price, place and promotion (Herrmann and Lipsey, p.76).
In terms of Product Strategy, Nestle has the option to have Analyzer entry strategy in which the company has the option to enter in the region after analyzing the existing products in the market. This particular strategy will enable the organization to further enhance their operational process with positive mean
In terms of pricing strategy, Nestle should use the Competitive Pricing Strategy, in which the pricing would have been associated like the other products found in the market. Nestle has a great goodwill, that is why the company has the option and opportunity to enter in the region with this particular pricing strategy
For the place strategy, Nestle has to think twice to enter with offline and online options. Nestle can give an option to Singaporean people to do online shopping with the consumers, and it will certainly be effective for the company in the future.
In terms of promotional strategy, the most effective strategy is to use both electronic and paper medium for the expansion. Nestle don’t have any shortage of money and for entrance purpose, the company has to emphasize on the electronic mediums, like television and internet.
Operational Control/production and Supply Chain
Nestle is the largest organization of the world in terms of revenue and in terms of different brands as well. The production department of Nestle is quite big and it has their functionality in Switzerland. The company should not move their manufacturing plant to Singapore from their origin country, as it will cost a lot to them (Venzin, p.45). It would be more worthwhile to manufacture the things in their origin plant and then supply the products to the Singaporean market through logistics and effective supply chain functions. The production function and operation would remain in the same situation after the expansion in Singaporean region, and it will be a great sign for the company as far as increasing the financial belongings are concerned. However, the company has to enhance and strengthen their current supply chain and logistic function, because their all of the operations in Singapore will be based upon the same aspect.
Management of Human Resources across orders
Human resources management (HRM) is known as one of the most integral and important departments from the viewpoint of an entity. Though, it doesn’t have a direct linkage with the financial position of the company, but it can provide effective workers and labors to the company which will be effective for the company in the near future.
Nestle has a huge workforce in 90 different countries of the world, and the company has the chance to manage their HR functions accordingly in the Singaporean region as well. In order to effectively comply with the HR base function and regulations, the company has to hire the workforce from the Singaporean region with immense care. In order to effective manage the human resources department and workforce of Singapore, Nestle has to comply with the rules and regulations pertain to the HR function of Singapore. The company has the option to introduce one of the most important functions of the HR system, which is Management Bi Objective (MBO). With the help of an effective MBO, the employees can be a part of the decision making process of Nestle, and can share their issues and problems with the management of the company. This is one of the most important methods to enhance the level of satisfaction and motivation among the employees, and Nestle has to use the same to become economically active and ethically active. It will certainly be an effective sign for Nestle to remain in the same jurisdiction for a certain time period, and it will be effective in the Singaporean region.
Identify the Key issues and Opportunities
Cross border expansion is not an easy thing to do for an organization, as there are number of issues related to the same. Some of the major issues that may be ineffective for Nestle are high competition and low recognition of brands in the market. Both of these problems should be overcome as soon as possible for the company.
High competition is a real challenge for an organization, and it is equally applicable for Nestle as well, while they are trying to enter in the Singapore region. Apart from this, Singaporean people don’t have any idea regarding the products and brands of Nestle, but they can be effective in the future. There are certain opportunities of growth for the company, which are escalating market and increasing economy of Singapore. The company will get an added advantage while entering in this particular region because the country has amazing financial health, and all of the companies which are operating in the region are having a great time. Apart from this opportunity, there is an important opportunity that associated with the country which is the effective government. Singapore has an elected democratic government which intervenes positively in almost every problem for the companies which are in need of them, and it will be effective for Nestle as well.
Recommendations to overcome problems
There are two important problems that needed to be resolved for the company as far as entering in the Singaporean region is concerned
High competition is the first problem, and it is a common problem that associated with almost every company of the world that intends to initiate a cross border expansion. Nestle has a great name in the market, therefore the stance of competition would not be a big problem for them. The company should enter aggressively in the market, and should have effective pricing strategy and product strategy from which they can attract number of consumers in a limited time frame.
The second issue that associated with the company is low brand recognition in the Singaporean region. This particular problem would be resolved, if the company would market their product according through electronic or paper medium of marketing. Operating in this particular aspect would certainly give immense strength to the company to further expand their operations and strengthen their economic power.
Both of these recommendations could be effective for the company in the near future while entering in the region of Singapore.
Conclusion
Expansion and development are some of the important aspects relate to an organization, and it is equally beneficial for the companies which are initiating a cross border expansion. Cross Border expansion is an important strategy for an organization as it will have a direct impact over the financial and strategic position of the company. Strategies lie at the heart of an organization, and organizations would get certain added advantage with the help of these aspects. It is required in this particular assignment to analyze the aspect of operations in a cross border and international market. Nestle is the company which has taken into consideration for this assignment, and the country in which the company is intending to expand their network is Singapore. From this entire analysis, it is found that the financial position of the company is effective and powerful and the company has the chance to expand their network in the given country in particular. There are two issues which may hamper the company in their financial growth while entering in the region of Singapore, but the company can overcome on these issues with the help of effective remedies mentioned above.
Work Cited
Djarova, Julia. Cross-Border Investing. 1st ed. Boston: Kluwer Academic, 2004. Print.
Emmerich, Gustavo Ernesto, and Ludger Pries. La Transnacionalizacion. 1st ed. México, D.F.: Universidad Autónoma Metropolitana, Unidad Iztapalapa, Departamento de Sociología, 2011. Print.
Folkerts-Landau, D. F. I, and Carl-Johan Lindgren. Toward A Framework For Financial Stability. 1st ed. Washington, DC: International Monetary Fund, 1998. Print.
Herrmann, Heinz, and Robert E Lipsey. Foreign Direct Investment In The Real And Financial Sector Of Industrial Countries. 1st ed. Frankfurt am Main, Germany: Springer, 2003. Print.
Venzin, Markus. Building An International Financial Services Firm. 1st ed. Oxford: Oxford University Press, 2009. Print.
