Introduction
Internationalization is one of the strategies that businesses use for their growth. The strategy entails expansion into other markets and regions through various entry methods. In that view, the strategy entails various factors consideration as well as a change in organization structure. In that respect an organization that considers internationalization must consider the suitable structure as well as the environment of the new market as a means of enhancing its fit for the market. Thus, this report presents a summary of Blackberry’s considerations in the internationalization through the FDI method. The report presents considerations for aspects and the business fit to them as well as their benefits. In addition, the report provides an explanation of the possible challenges to the process as well as the suitable ways of addressing them and achieving the process objectives.
Internationalization Considerations for strategy and structure fit
Considering that, Blackberry’s popularity is limited by its market share; the share plummet’s as highlighted by Krugman (2011), was due to Android-based smartphones’ significance popularity. While Blackberry stuck to their Blackberry OS, most of the customers opted for Android. In that respect, the entry into the foreign market will require actions to increase market share by addressing competition through extensive marketing promotion. Market entry strategies are dependent on various factors including the nature of the new market as well as an organization’s structure. In that respect, Blackberry’s structure and operations will need o be adjusted for the new international markets in line with the FDI approach.
The foreign direct investment has a company’s 100% participation and is the most extensive form of ownership and requires the greatest commitment of managerial effort and capital. The ability to control and communicate outweighs the benefits of the other strategies, and its effectiveness will be dependent on a number of aspects and approaches that the company could apply.
Thus, given that market share increase is the internationalization’s main motive, it will require more market research, expanding trade channels as well as establishing supporting distribution systems. That will entail approaches such as technology and knowledge transfer, outsourcing, adapting global manufacturer, as well as supply chain networks. In that view, the internationalization process success will depend on the extent of the created synergy for the group as a whole through the outward FDI activities (Killing 2012).
Technology and Knowledge Transfer
Blackberry's fitness for transfer will be based on its cost characteristics, Flexibility, delivery performance as well as Capital intensity and Labour Intensity. Thus, considering that the model of involvement in the international market will be full ownership of the operations in the new market where it will have proximity to the market and access to local technological resources as well as to low cost production factors, it can modify its technology by changing and altering some aspects of its processes. That will be suitable to adopting its processes and technology to the market (Arnold, 2013)
That could involve Blackberry adapting technological aspects that can be effective in achieving more value for the local markets. Thus, the strategy should fit the local preference for the product’s feature. That can be achieved by the company borrowing technology from the region for enhancing its products to address he local needs. However, that could be faced by the challenge of having to alter the company’s standardized and global technology process that defines its brands (Hisrich, 2009)
Thus, blackberry would build is knowledge stock by sharing the industry knowledge with functional units of the partnering companies The transfer, however, needs organizational networks that are characterized by separation through space, language, as well as culture. Further, the transfers in the industry would be more considering the ease of communication using them, modern technology. Further, the internationalization through the FDI reduces the distance between blackberry and the partnering companies hence reducing the barriers to technology transfer (Szulanski & Jensen, 2006).
Absorptive Capacity
Given the emerging markets capabilities and opportunities, Blackberry success will depend on its ability to identify as well as assimilate in addition to exploiting the new knowledge available in the emerging markets and adopt to their scale and cost. Thus, it will require assessing the use of available knowledge and relevance of its product and brand development. In that view, internalization will be achieved with employees giving symbolic meaning as well as a value to the business practice in the new market. That means internalization will be highly dependent on practice commitment, employee psychological ownership as well as satisfaction. However, the business could face a challenge in the transfer of its practices as it may face different institutional environments (Arnold, 2013)
Further, blackberry’s ability to assimilate the new knowledge from the market as well as understand for advancing commercial interest will require a transfer of organizational practices among the organizations that will be partnered with. That will help blackberry integrate with its operations, the efficiencies of the other business partners enhancing own efficiencies in production and market operations. The involvement of Blackberry’s employees with the other partnering companies will have a positive impact on the organization's practices as they will enhance the new effective practices absorption (Lane, Salk, Lyles, 2001).
Outsourcing
The outsourcing will also have the motivation of providing flexible control for the business’ operations. Such outsourcing for blackberry will entail the production of non-core software that will help take advantage of the low-cost producers’ operations while increasing the ability to meet market demand. That will have an implication in Blackberry, as it will be possible to sell its products at low price hence ability to compete with the low-cost producers. With that, the business can easily capture market share that is one of the key objectives for its internationalization process (Linder, 2004).
Other secondary functions that can be outsourced include blackberry’s help desk, back office, and telemarketing operations. That will help managers provide conditions that will enhance focusing on higher value-added operations. That safety is crucial as the essential sources of the company’s competitive advantage is not its products themselves rather, the management capabilities to enhance as well as combine technology and skills into competencies needed for adaptation to the changing environment (Kedia & Lahiri, 2007).
Global Manufacturing Networks
China has experienced a rapid integration into global production networks hence becoming a premier assembly for production operations. In that respect and considering China as one of the key markets for Blackberry expansion, the company have an opportunity of partnering with manufacturers who will enhance its cost, as well as production efficiency (Athukorala, 2011)
Global Supply Chains
Comparing the tech companies inventory management in 2011 shows Apple had a better performance than Dell, Blackberry, Motorola, and HP. The comparison used the Inventory Turnover formula that indicates the number of times the company’s inventory are sold as well as replaced over a period. Thus, choosing a suitable supply channel in the market would enhance the inventory turnover for blackberry hence enhancing its performance and competitiveness as had been achieved by Apple. That would also help the company in cost cutting as it would enhance holding inventory close to the market demand hence reducing the supply constraints on the company. With that, blackberry would be able to meet effectively the new market’s demand (Arnold, 2013)
Achieving the recommendations
Given the various considerations for the business fit in the new market, Blackberry should have a good market understanding of the factors relevant for each as a means of effectively implementing the internationalization process. That includes understanding of the entry aspects and approaches requirements, processes as well as effectiveness in the new market. In that respect, the following is a summary of the suitable measures for each aspect.
The recommendations for enterprise set up in foreign markets, as well as increased marketing promotions, will entail addressing difficulties in complex regulations and understanding of policies in host countries. Further, Blackberry will achieve the recommendations by addressing the lack of information challenge. There is a lack of in-depth information by many foreign investors on host country markets, which could result in delay and reluctance in making decisions on outward FDI. Further, it will require addressing lack of government guidance and coherent institutional support also plays a role (Kotler and Keller 2006).
Finally, it will achieve the internationalization objective through increased marketing- a promotion that will be enhanced by the application of advanced technology and adopting promotion strategies. That will appeal to the growing youthful segments, as well as the emerging economic markets. That could entail the use of channels such as the social media given that the markets are increasingly becoming technologically savvy, and adoption of technology is increasing (Sengupta 2005).
Challenges and possible solutions
The new approaches in the internationalization process present challenges for businesses. That results from the new requirements as well as an environment that need to be addressed. In that respect, the company’s expansion will be subject to factors that will challenge its strategy, as well as its operations.
With over a decade of helping foreign companies, especially the small and medium size enterprises, market and also sell their products, services and technologies in China, US-Pacific Rim International, Inc. has come to recognize what the core problems are for foreign companies when growing or operating their businesses in external markets. Below are the five biggest practical problems for foreign companies that blackberry is likely to face with the five discussed approaches regarding outsourcing, technological transfer, global manufacturing as well as supply chain and how they can be addressed.
Red Tape: In markets such as China, many bureaucratic and administrative tasks that have been made much simpler in the West can still are very time-consuming. Everything from opening of a bank account to the registration of a company, to getting product approval, can take even months. Lack of rule of law strong and application inconsistent with regulations means that such processes are not usually designed for the convenience of foreign companies hence could affect the business in seeking to partner with others for manufacturing, logistics, supply chain and outsourcing.
Additionally, many procedures that can be electronically handled in the West needs reams of paperwork that requires filling and stamping by hand in emerging markets thus time required to complete the efforts can be lengthy. Several foreign firms that hire 1-2 full-time staffers in China, with a hope that they will lead their sales and marketing efforts, only to realize that their workers spend more than half of their time while completing administrative tasks. To be successful as a company in China, it will also require a full-time administrative team of employees in place that can handle all of the paperwork of your company. That will help sales staff to focus exclusively on promoting the company’s products, without spending much time getting approvals (Hill 2014).
Communications: Miscommunication could cause cultural misunderstandings to arise and is one of the biggest challenges which foreign companies’ faces in emerging markets such as China. Despite the fact that there are an increasing number of Chinese people who are highly proficient in English, it is unusual to find a person who understands the language sub-ties and possesses an understanding of Western as well as Chinese culture to navigate delicate negotiations for business. USPRI has witnessed several instances where the heads of foreign firms make a trip to China, have many productive meetings, and return home with very strong business prospects. While the communication between the Chinese and the Foreign companies goes very smoothly at first, things begins to break down as issues of business get more complicated and the Chinese side has a difficult explaining to the foreign firms the practices that are unique to China in a manner that the western audience can understand. What began as a promising prospect for both sides could break down because of misunderstandings. To address such problems, it will require blackberry to have an international team that can bridge western and the Chinese cultural differences hence enhance its ability to partner with the outsourcing businesses, manufacturing and supply chain networks as well as logistics providers. (Cateora, Graham and Gilly 2012).
Human Resources: Western companies rate human resources as one of the biggest challenges of running a business in Asian and most emerging markets. While the western employees usually delegate responsibility and have lines of authority that are flexible, Asians such as Chinese people are used to a more hierarchical structure in which every person has a very clearly defined role. Differences like these can could lead to tensions between the western managers who are used to workers who take their personal initiative, and the Chinese staff who are trained from a tender age to always listen instructions from the top (Daniels, Radebaugh and Sullivan 2014).
It will be significant for Blackberry to have a set of procedures that are clear regarding incentives for the outstanding work and also the punitive measures for substandard performance. Additionally, despite the size of the company, employees should be divided into small teams with a clear leader who oversees each group and directly reports to his or her superior. To motivate the Asian market employees, it will be important to monitor their work as well as encourage them to take risks and be creative (Hill 2014).
Business Culture: To succeed in China, he firm must realize that it cannot take a business model that is similar to which may have served it well in mother country, and just apply it to the Chinese market. It will require been flexible and fit to the countries that practice business as per their cultures deeply related to its traditions. Because of the differences, several business practices in China do not always conform to the usually accepted international standards. Without a close and presence supervision in China, it will be difficult for the firm to ensure its best interests are well advanced by its employees and agents. To change to these cultural differences, it is significant to learn the new culture (Arnold 2013)
Conclusion
In view of the analysis, Blackberry's market expansion will be through foreign direct investments in markets mainly including China. Thus, the strategy will require a change in the company’s structure depending on the nature of management required for the foreign operations. In addition, various challenges have been identified including the challenge of addressing the varying legal requirements and policies, different cultures as well as market needs. Further, the two of the company’s goals of increasing market share and through increased FDI and marketing promotion will be achieved by addressing the market environment as well as applying advanced technology to reach the market.
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