International Business - Essay Example

?International Business Strategy – British Airways British Airways is one of the world’s leading airlines and it has been on an apparent roller coaster with highs and lows since its privation in 1987. The airline has always been a strong supporter of the process of globalization and has tried to exploit the opportunities. British Airway, being a brand in world aviation industry should formulate its strategy based on global integration as it aims to serve not only Indian passengers but the major share of passengers travelling through air. India being home to population of over billion population and diverse economy and it is reported that the Indian aviation industry has witnessed an impressive growth during past few years with major contribution from the civil aviation segment and is expected to be the fastest civil aviation market in the world by 2020. The Indian FDI policy allows 100 percent under the automatic route for Greenfield projects. British Airways, due to the options available for investment in India, aims to devise strategic framework to enter the Indian market. Introduction International business is different from domestic or national business operations and management. Conducting business in different countries requires strategic thinking from the management of the company. There is a greater difficulty in performing the functions effectively and integrating them to serve organizational objectives (Aswathappa, 2010). According to Johnson and Turner (2009) the essence of international business is based on the firm undertaking and dealing with the consequences of international diversity which is mainly driven by globalization of markets, firms following customers, the desire to overcome limitations of the home market, exploitation of differences between countries and regions based on culture, regulation and specific economic factors. Katsioloudes and Hadjidakis (2007) mention that laws, cultures and economic conditions differ within countries which are usually less marked that those among various countries. It is further stated that polices in most of the countries vary altering the decision of the company to operate in a particular country. Internationalization of business has benefited many organizations like TCS, Asian Paints, GE, Hewlett Packard and many more (Aswathappa, 2010). Moreover globalization has also led to the internationalization of business breaking the national boundaries allowing foreign companies to operate in their backyard. Underpinning the importance expanding its business operations, British Airways (BA) is planning to initiate business operations in India and other Far East countries in view of the increasing traffic, population and FDI policies. This paper analyses the opportunities and examine other factors for expansion strategy of British Airways. British Airways British Airways is one of the world’s leading airlines and it has been on an apparent roller coaster with highs and lows since its privation in 1987. The airline has always been a strong supporter of the process of globalization and has tried to exploit the opportunities (Homer and Swarbrooke, 2004). BA aims to serve existing routes and markets, to identify new opportunities for branded services and products and to ensure its freedom to compete in world markets, all being undertaken in such a manner as to meet the paramount and subsidiary objectives (www.britishairways.com). British Airways operates a fleet of over 243 aircraft to around 140 destinations in 75 countries catering over 35 million passengers in 2006 (National Audit Office, Great Britain, 2007). Since its merger with Iberia, Willie Walsh, CEO of British Airways declared of examining the possibility of entering the Indian and Far Eastern markets. Therefore the paper examines the internationalization strategies by evaluating the cultural and sociological impact on the staff in context of India. Internationalization Strategies Jansson (2008) mentions that multinational corporation’s face three major problems in internationalization of their business which are geographic spread which is concerned with strategic issues related to the internationalization process of the firm such as various modes of entry; local adaptation is concerned about how much knowledge is needed about the local market environment to be able to make the right adaptation and global integration relates to an issue about to what extent the business integrates its business operations between different national markets to better leverage its locally based resources. British Airway, being a brand in world aviation industry should formulate its strategy based on global integration as it aims to serve not only Indian passengers but the major share of passengers travelling through air. India – Overview India is the largest functioning democracy in the world with over 126 billion population and diversified cultural, sociological background (www.census.gov.in). Business environment in India has changed rapidly in recent year and Indian companies are embracing new opportunities and challenges with booming demand in middle class population. Technology has improved dramatically and some of the world’s advanced technologies and skills are available in the country with investment opportunities for international companies to conduct business in India with option to outsource opportunity, acquisition and merging opportunity (Hill and Jain, 2008). India is a complex mosaic of history, culture and politics with democratic tradition and a mixed economy where free market traditions coexist with the heavy visible hand of the government that has swathed the economy in red tape. It has the entrepreneurial energy to drive the business forward on a modern trajectory. The culture and tradition on one hand condemn materialistic values as alien to the ascetic spiritual tradition of a country soaked in values of non violence and non material interests. In contrast, the country has burgeoning middle class that is as materialistic as its counterpart in other consumer based economies (Chandra, Rau and Ryans, 2002). Geographical consideration India is an attractive country riddled with several limitations which needs to be effectively managed for success. The booming spending capacity among the middle class, the population which is over 300 million makes it an attractive market for foreign companies (Halepete, Iyer and Park, 1973). This could create a problem for British Airways in formulating its expansion strategy in India because BA offers only international travels and to increase its brand in India, it has something to offer to this booming middle class population. BA has to formulate and devise a strategy that suffice the needs of domestic customers as well as to increase their brand awareness in India affordable by the pockets of middle class population Cultural and Sociological Considerations Expatriate success and failure can be attributed to performance based on ability and adjustment measured as ‘fit’ of an individual to the new cultural environment (Becker, 2000). Though India is a large country with huge population, the diversity and heterogeneity of the Indian market is tremendously complex. Segmenting the market along a variety of attributes will be the key for British Airways to succeed in India. It is further important to mention that the Indian middle class customer is a value conscious shopper and therefore would be satisfied if delivered with world class products or services at Indian prices (Halepete, Iyer and Park, 1973). BA will have an advantage with varied Indian population as it will not only provide employment to the people from different backgrounds but also gain highly skilled staff with different cultural backgrounds efficient in providing better customer service in domestic as well as international flights. Increasing Economy The overall impact of the rising slowdown of global economy has been widespread and intense. While global growth has slipped below 2 percent in 2001, the Indian economy has been well above the global rate and continued to grow at a rate ranging 5 – 6 percent with a credible inflation record. The J.P. Morgan report offers significant insights in favor of India with GDP growing at 5.3 percent and inflation at 5 percent. J.P. Morgan forecasted that public spending is likely to increase if provided with impetus to a sagging economy. The Indian economy is consistently posting robust growth in numbers in all sectors leading to impressive growth in GDP and has been stable and reliable while experiencing a positive upward growth trend. Further consistent 8 to 9 percent growth rate has been supported by a number of favorable economic indicators including a huge inflow of foreign funds (Sarkar, 2009). External and Internal Environment Internal environment needs to be effective which is valuable to customers and is competitive and external environment becomes critical with regard to customers and competitors in the market (Janson, 2008). Punzel (2011) advocates the use of SWOT analysis to measure both internal and external forces identifying the strengths and weakness along with opportunities and threats in the country of expansion. India being home to population of over billion population and diverse economy, Further it is reported that the Indian aviation industry has witnessed an impressive growth during past few years with major contribution from the civil aviation segment and is expected to be the fastest civil aviation market in the world by 2020 with about 420 million passengers being handled by the Indian airport system as revealed by the Economic Survey 2010-11. The number of passengers has increased by 19.6 percent in 2011 as compared to previous year (India Brand Equity Foundation, 2011). BA with over 243 aircrafts has the capabilities and resource to cater to the services of millions of customers. Moreover, the brand BA will work in its favor increasing the customer preference to fly with BA. BA will have to compete among the best airways in the industry that also are catering to the needs of Indian customers and other companies eyeing to enter the market which is a considerable threat to BA. British airways could think the possibility of merging with the already existing airlines in India or acquire one, so as to enter the market. This would facilitate in understanding the market situation, staff, operations, and other factors which would help the company to devise and amend their strategy accordingly. The Indian FDI policy allows 100 percent under the automatic route for Greenfield projects. Many airlines are already lined up with US Embassy initiating US India Aviation Programme strengthening the ties to encourage investment in India (India Brand Equity Foundation, 2011). The revenue generated through business in India could be used for future strategic expansion in India and other social activities like providing better and unique customer service on par with international standards and thus creating employment opportunities for the Indian population in aviation sector. Conclusion British Airways must formulate its strategy basing on global integration as it envisages serving the customers from all over the world. India being a country of diverse population with different people, languages, culture and sociological background, it may be difficult for BA to create specific strategy that would entice each and every sect of Indian society in spite of increasing spending characteristics visible in middle class population, friendly FDI policy and booming aviation industry. Therefore it is advisable to devise a global strategy that would associate the whole of India in turn creating huge customer base and business. References 1. Aswathappa K (2010) International Business, Ed.4th, ata McGraw-Hill Education, India 2. Becker K (2000) Culture and international business, Routledge, US 3. British Airways, Fact Sheet, 4. Census of India, 2011, 5. Chandra, A., Rau PA., and Ryans J (2002) India business: finding opportunities in this big emerging market, Paramount Market Publishing,, India 6. Halepete, J, Iyer K.V.S. and Park, S.C. (1973) Wal-Mart in India: A success or failure?, International Journal of Retail & Distribution Management, Vol 36 (9) pp 701-713 7. Hill, C.W.L. and Jain, A.K. (2008) International Business: Competing in the Global Marketplace, Ed 6th, Tata McGraw Hill, India 8. Homer, S and Swarbrooke, J (2004) International cases in tourism management, Butterworth-Heinemann, US 9. India Brand Equity Foundation, (2011) Aviation, Accessed at 10. Johnson D and Turner C (2009) International Business: Themes and Issues in the Modern Global Economy, Ed.2nd, Taylor & Francis, US 11. Jsnsson, H (2008) International Business Strategy in Emerging Country Markets: The Institutional Network Approach, Edward Elgar Publishing, UK 12. Katsioloudes, M and Hadjidakis, S (2007) International Business: A Global Perspective, Butterworth-Heinemann, US 13. National Audit Office, Great Britain (2007) Transforming logistics support for fast jets, The Stationery Office, UK 14. Punzel T (2011) Risks and Decision Making: Using the Example of British Airways, GRIN Verlag, Germany 15. Sarkar, A.N. (2009) Enhancing Global Competitiveness: Advantage India, I. K. International Pvt. Ltd,, India Read More