Strategic Planning for Results - Case Study Example

Running Head:Strategic International Business Introduction Predominant factors have to be established before the introduction of a new business in a new country. There are policies and procedures to follow in the globalization of a company. For example, market assessment and consumer watch. This paper describes Santander; an international banking and retailing company to depict strategies in the international business. Potential Target Market for Santander IMF reports stipulate that there are immerging markets every day in the world. Santander has not effectively established itself in the Asia, Africa and the Middle East. These parts of the world are characterized by leading oil producers and natural resources richness thus they are termed as the peak of any business organization. With its concentration mainly underlying major markets in the world like; Europe, the UK, USA and South America its indulgence in small markets like The Middle East, Africa and Asia will be very important. However, in this paper, I tend to forecast the future market of Santander bank will be in the Asian continent and more specifically the Indian market. India is a store of all valuables ranging from minerals, agricultural products and trade. This region remains unexploited so far by major companies in the world. It is basically a country full of promises as it depicts an ever increasing economy trends. India remains open to any upcoming company as long as the benefits are mutual not exploitative (Sanyal 2001). By Santander, establishing in the more developed nations it leaves a lot of room unexploited. There are major continents which hold key and valuable products hence making the right market composition. For example, in India, tourism thrives better than any other region of Europe. This makes India an ideal location for trade, which is further compounded by its high population rates. It is these huge numbers which will offer demand for the banking services. Market is normally associated with the number of buyers and sellers willing to transact. Thus, by concentrating more on the developed markets the next potential target market of Santander will obviously be the developing regions in the world. India is one of the upcoming countries in the world with diverse population links. This makes India the next hot spot of trade for Santander in its quest to spread its wings further. To be among the leading retail banks in the world Santander needs to open up and compete favorably. It is important to note that among the major retail banker who has invested in India is Barclay’s group. This banking group has established in the Indian market for a long time and Santander’s next alternative move will basically be to lay a strong foundation in India. The table depicts India’s economy in from the year 2001-2009 Item 2001-2003 2003-2005 2005-2007 2007-2009 Agriculture, forestry & fishing 2.7 1.4 2.9 3.2 Mining & quarrying -2.8 -3.1 0.4 0.6 Manufacturing -1.2 2.6 -1.0 3.0 Electricity, gas and water supply 3.7 2.8 6.2 6.0 Construction 2.8 4.4 7.0 7.5 Trade, hotels, transport & comm. 3.9 6.2 6.1 6.5 Financing, insurance, real estate 8.9 9.1 9.3 9.5 Community, social & personal service 9.4 4.0 8.4 9.0 GDP at factor cost 4.4 4.8 5.4 6.0 Source: (Singh 2010) The chart below depicts the economic transformation in India from 2001-2009 Macro-environmental Characteristics of the Indian Market These are external factors which are beyond a business’ control and affect the operations of the business in question. To tackle such issues the company has to instill changes in operations, management, production and marketing. These factors can be grouped into political, economic, social, technological, environmental and legal factors. Political India is the largest democracy in the world with a population of approximately one billion. Since its independence in 1947, the country has enacted numerous workable means of ensuring that failure is no part of the country. The lessons learnt from the cases of Pakistan and Bangladesh have strengthened the political system in the country Political factors include such things as tax, safety regulations, trade agreements, party leadership and even government control. India is a country which has recorded a higher rate of transition over time to accommodate changes in the market. Since independence the country has experienced shifts in leadership from one party to another. India has rarely experienced political hiccups in the recent past. It is the conducive political system in the area which will be a major pushing factor for the installation of Santander in the region (Perkins, Shortland& Perkins 2006). Economic India has one of the fastest growing economies in the world however the fact that it has a huge population drags it to a third world country. The Indian government has made tremendous steps to improve the economical platform in the country. However, the dragging factors in its improvement are that, there exists both the traditional and modern means of production in the country. These characteristics tend to drag the country’s agendas. Indian economy will be a boosting factor for this giant’s growth in the region. It has always been a bone of contention to the management. The question has always been how important is it to invest in India which is poverty stricken? The answer stands to be answered by the company itself, it is for the company to adopt its own approach but in line with the rules of the countries in question and tailors them to its advantage (Bryson 2011). Social The demographics of a country galvanized by its mood make up the social aspects of that particular country. There has been an increasing demand for the banking sector in India. People are becoming more enlightened than they did before hence they have developed desires to save at the same time borrow. According to statistics, approximately 50% of the entire populations in India have accounts in commercial banks and the remaining 50% share on SACCOS and insurance companies. It is a trend which keeps on changing as the daily demand of money changes (Parboteeah& Cullen 2011) A clear study of the Indian market it is encompassed majorly of the young and least occupied by the elderly. This market framework is the best for any successful company as the youth will mostly spur development ones given the resources to do so. Unlike the elderly who rely on their pension instead of sloughing money back. Demographics statistics in India depict that the region is generally experiencing an upsurge in its population. This is according to the annual population growth rate of approximately 5% per annum (Little&Marandi 2003). Technological Technology is a changing trend all over the world. Creativity keeps changing each day to keep abreast of the changes experienced. Indian market is very adaptive to the changing trends in technology; this can be authenticated by branches of major technological companies established in the country. For example Google and Microsoft have offices in the country; these are some of the major technology related companies in the world (Glowik&Smyczek 2011). Majorly technology in India keeps changing with the rest of the world. This is a clear sign that Indian market is continuously updated like its other competitive markets. For example in the introduction of smart phones, Indian market recorded a significant figure of purchases like any other regions in the world. India is one of the countries which head the IBM products. It is believed that this country brings a bumper income in technology. Communication trends in India have taken another step all. There has been a significant rise in the number of communication companies in the country. For example, Anco communications and Nelco communication companies, this communication companies have developed gadgets that aid mobile money transfer which is a common phenomenon in the region. By adopting these frameworks a banking company will definitely penetrate the vast market. The graph below portrays an interchange between modern methods and ancient methods in India Environmental concerns India is almost free of environmental challenges. The only challenges experienced in the country are as a result of the developed countries that are more industrialized. This gives birth to floods, drought, desert fires and general climatic variations in the country. Challenges faced by India environmentally are not quite profound as with right measures globally India will experience a serine climatically. Taking care of forest covers, the sea waters and the entire climatic conditions is very important. Thus, for Santander to be socially responsible it has to track these issues (Howes& Tan 2003). Legal Factors India is a democratic society; it is obvious that a democratic society will be the best for any commercial business. Thus, Santander will be in a good position to trade in India since the country fits the needed description. A friendly society will best be determined by its legal framework. This incorporates the rules stipulated on investors and the ownership rights. India allows for foreigners to own properties as long as they pay the required fees. This society is definitely investor friendly (Brown&Gutterman 2003). Key strategic issues the firm faces in expanding into this market SWOT analysis is an important tool that can be used by Santander to assess its strengths in the various aspects of the economies it wants to indulge in. Santander has several strengths in the banking and retail industry. One of the strongest aspects about this company is that it is among the leading companies in the world. This is portrayed by the numerous prices the company has won over time (Kotler& Keller 2012). Santander’s pace of growth is phenomenon and it has outdone many companies across the world. This is also one of its strengths it deems to exhibit out in the market. In addition Santander is also financially sound this aspect was proved in the recent euro crisis when the company stood strong throughout the entire rough economical times. It is also a positively related company in that it has managed to attract the attention and confidence of its customers. With a satisfied lot of customers the company will definitely trudge on new grounds without any difficulties (Zentes, Morschett&Schramm-Klein 2011). On the other hand, Santander has its weaknesses; one of its weaknesses is its costs of banking. This bank charges a higher amount of fee on its services as compared to its competitors. This makes the bank attract a specific class of people in the society; the rich. Comparing its different markets will be a problem because the same rate of fee cannot be transferable from one region to another. For example the cost of services in Spain cannot be the same as the cost in South Africa. However, in general the weaknesses of Santander cannot outweigh its strengths. The international market is the source of opportunities for Santander. It is from this very community that the expansion plans are determined. In growing economies especially in India there are people who want to enjoy the banking services be it loans or saving. Indian economy is expanding yearly and the banking sector being overstretched, it is the initiation of such giant banks that the sector can stabilize with the increase in demand of the services. With the initiation of the company in India, Santander is likely to open up the Asian region which is greatly in demand of effective and efficient banking services. Economic success being experienced in the region with discovery of minerals in many Asian countries will definitely push for the demand of the banking services. Companies operating in this country will require huge loans to purchase equipments or buy government license. This means that the banking services are in demand in the region. With a projection of a stable India Santander will be in a better position to grow with the demand (Ahlstrom&Bruton 2010). With the initiation of regional balance and the coherence between Asia and the west which has on several occasions been called on to assist on developments, Santander will have a viable opportunity as the gateway for huge transfers of money from the western and eastern channels. Being a huge company and recognizable world wide it will be the portrait of other small operating companies in the region who will look up to it for decision making (Nelson 2008) It is important to note that India is transitioning from an era without banks to a fully banking regime. It is such factors which will place Santander in a good place to gunner customers. As a central figure in the sector for a long time it will tend to attract more people than its newer counterparts in the sector. This means that the bank has a higher chance of expanding in the region more than its smaller relations. Santander has growth potential over the years to come; this is depicted by the statistics on the increasing popularity of banking services. Another issue that needs to be focused on is the likely threats Santander is expected or likely to face. The biggest threat Santander is likely to face is competition. The major competitors in the world include; Barclays bank, Lloyds Banks and Retail Corporation and The Royal Group of Banks of Scotland. These top banking companies especially the Lloyds banking and retailing group has an upper hand when it comes to Asia. It has already opened up branches in approximately 20 countries in Asia as compared to Santander which has only managed a limited number. However, with Santander controlling a huge junk of the developed countries it gives it an advantage over the other banks because of the financial base it has. Running operations in more developed countries will likely bring more income to a company. It is through this income that Santander will be able to penetrate the other market. Often customers will tend to look at more stabilized bank before making a deposit. This will thus give Santander an upper hand in the field. Concentration of banks in six major countries based on asset value Country Values(HH1) Rankings(CR3) No. of Banks Spain 0.08 12 140 France 0.05 16 336 UK 0.06 15 186 Germany 0.03 18 1803 US 0.02 20 717 Denmark 0.17 16 91 A keen observation of Santander, one will formulate that it has more opportunities as compared to threats. Over years the company has developed a unique customer-service approach in its practice. With well laid policies the company will be able to take advantage of its stand in the market to its expansion globally. This company has always been facing threats and will always overcome them whether in Asia, Africa or Middle East. The company has a strong qualitative and quantitative strategy. The SWOT analysis depicted that Santander is a company which is both internally and externally strong (Jansson 2007). Expansion and market scope is one of the imperative actions of a company. Gaining a larger market share is the main motivation which is pushing Santander to expand its market. As depicted in the Middle East Santander has used numerous approaches to expand beyond its borders this involves coming up with joint ventures and forming alliances in the different countries. With people associating Santander as their own local firm it helps the company to establish in that particular market better (Lorange&Contractor 2002). Like any other company striving to grow and expand, Santander has the same goal. However, there is a keen intertwining of its goals to the standards of its products. The moral aspects of its service delivery are not just thrown to the trash rather clearly upheld. It observes its moral obligations in the society trying to make the world a better place. Santander takes care of its social responsibilities by offering scholarships to the unprivileged in the society and organizing trade fairs as a means of supporting its customers. Another strategic imperative is the understanding of the international market. Santander was to expand its market globally so as to grow proportionately with the market. By expanding to another markets there develops economies of scale which are fundamental to the functionality and growth of the company. Santander’s move to globalize the company was a brilliant idea to adopt global recognition and service delivery (Morschett, Schramm-Klein&Zentes2010). The final strategic imperative was achieving a worldwide competitive advantage. At some instance risks do occur. With the onset of the euro crisis it was clear that multinational flexibility was important to cushion the risks that occurred. In accordance to stretching out to the global market Santander aims at standardizing its services across board so as to achieve equalizing standards by aiming the social, cultural and the environment of its operations. Strategy &implementation recommendations Santander needs to put more effort in its expansion strategies. Gaggling up less than one market is detrimental to the functionality of the company this is because when crisis strikes the whole company will either collapse or experience huge losses from which it may never recover from. However, expansion should be carefully done taking into considerations the cultural and social differences in the international companies (International Business Publications 2012). In broadening its market Santander should invest on research to clearly analyze the expectations from that particular market. By ensuring that it strikes a balance between the different markets the company will not be worried about the imbalance in outcomes or the loss of services in a particular region. Another very important approach which will help Santander will be the diversification of its services. The company at some instance should introduce consultation services to its clients than just granting them loans and claiming it back. Santander as an organization should geographically fit itself. This way the company will be able to position itself in a globally recognized position. With geographical diversifications, the company will be able to attract economies of scale which is an important part of any successful company. The company should be innovative and making sure that it allows or advances with the technological advancements. These aspects will on most occasions depict the face of the company (Ahlstrom&Bruton 2010). Conclusion Santander is a strong company with a prospective growth capacity over time. The transition in the company is a major step to achieve the company’s objectives of becoming an international company. These frameworks are in the right direction and correctly applied. In the next five years, Santander would have recorded an immense increase in its growth or market size. Santander has a transnational product that can actually be modeled to meet each society’s expectations and demands. References AHLSTROM, D., & BRUTON, G. D. (2010),International management: strategy and culture in the emerging world. Australia, South-Western Cengage Learning. BROWN, R., & GUTTERMAN, A. S. (2003),A Short course in international business plans: charting a strategy for success in global commerce. Novato, Calif, World Trade Press. BRYSON, J. M. (2011),Strategic planning for public and nonprofit organizations a guide to strengthening and sustaining organizational achievement. San Francisco, CA, Jossey- Bass. http://site.ebrary.com/id/10483249. GLOWIK, M., & SMYCZEK, S. (2011),International marketing management strategies, concepts and cases in Europe. München, Oldenbourg. HOWES, R., & TAN, J. H. M. (2003),Strategic management applied to international construction. London, Telford. INTERNATIONAL BUSINESS PUBLICATIONS, USA. (2012),Cambodia Business Law Handbook Strategic Information and Laws. Intl Business Pubns USA. JANSSON, H. (2007),International business strategy in emerging country markets: the institutional network approach. Cheltenham [u.a.], Edward Elgar. KOTLER, P., & KELLER, K. L. (2012),Marketing management. Harlow, Pearson Education. LITTLE, E., & MARANDI, E. (2003), Relationship marketing management. London [u.a.], Thomson Learning. LORANGE, P., & CONTRACTOR, F. J. (2002),Cooperative strategies in international business: joint ventures and technology partnerships between firms. Amsterdam, Pergamon. MORSCHETT, D., SCHRAMM-KLEIN, H., & ZENTES, J. (2010),Strategic international management text and cases. Wiesbaden, Gabler. http://dx.doi.org/10.1007/978-3-8349- 6331-4. NELSON, S. S., & NELSON, S. S. (2008),Strategic planning for results. Chicago, American Library Association. PARBOTEEAH, P., & CULLEN, J. B. (2011),Strategic international management. Australia, South-Western Cengage Learning. PERKINS, S. J., SHORTLAND, S. M., & PERKINS, S. J. (2006),Strategic international human resource management: choices and consequences in multinational people management. London, Kogan Page. SANYAL, R. N. (2001),International management: a strategic perspective. Upper Saddle River, N.J, Prentice Hall. ZENTES, J., MORSCHETT, D., & SCHRAMM-KLEIN, H. (2011),Strategic retail management text and international cases.Wiesbaden, Gabler. Available at: http://dx.doi.org/10.1007/978-3-8349-6740-4. Read More