Logistic Challenges When Bussineses Expand into the BRICS Market - Research Paper Example

?Logistic Challenges When Businesses Expand Into the BRICS Market Management d: July 4, For the organizations to be ready for action in an international market it is essential for them to produce their products and services and provide them worldwide in order to make sure that the requirements of the customers are satisfied. This research paper depicts challenges faced by the businesses when they decide to expand in the BRIC countries. Moreover, it also states that competitiveness is linked to a well-organized infrastructure system to which a competitive logistics transport system is vital and that assists the countries in progressing along with helping the companies to develop. This objective should be accomplished when the policies are associated to multicultural knowledge. This research paper further aims to emphasize the significance of the logistics transport system and the infrastructure to achieve economic development. Additionally, it signifies other challenges including the political instability, fewer mediums of transportation, in-advancement of IT and much more. Possible solutions to these problems are also recommended. Table of Contents Abstract……………………………………………………………………………...02 Chapter One: Introduction of the Study…………………………….....................04 1.0 Background of the Study……………………………………………………......04 1.1 Significance of the Study………………………………………………………..04 1.2 Research Question and Objectives……………………………………………....04 1.3 Scope of the Study……………………………………………………………....05 1.4 Critical Review of Literature…………………………………………………….05 1.5 Hypothesis……………………………………………………………………….05 1.6 Research Method………………………………………………………………...05 1.7 Data Collection Method…………………………………………………………05 1.8 Ethical Consideration…………………………………………………………....05 1.9 Limitations…………………………………………………………………….....05 Chapter Two: Literature Review …………………………………………….....06 2.0 BRIC Markets……………………………….……………………………………06 2.1 Logistics Challenges Faced by Businesses.............................................................06 2.2 Relevance of these Challenges................................................................................07 Chapter Three: Data Analysis………………………………………………………08 Chapter Four: Recommendations and Conclusions……………………………….09 4.0 Recommendations…………………………………………………………………09 4.1 Conclusion…………………………………………………………………………09 References………………………………………………………………………..........10 CHAPTER ONE: INTRODUCTION 1.0 Background BRIC is generally portrayed as Big Four, BRICs or BRIC markets. A grouping acronym, BRIC is a group of four countries namely, Brazil, Russia, India and China which are believed to be at a similar stage of economic development. BRIC markets are one of the most emerging markets and are of great interest to the companies around the world (Dash, 2007). According to A. G. Canen & I. Tammela, logistics portrays the administration of the movement of services and goods from point of production to the point of consumption to meet customer requirements. It is a medium of supply chain which helps to put in the worth of place utility and time. Logistics involves the amalgamation of transportation, packaging, inventory, information, material handling, security and warehousing. 1.1 Significance of the Study Through this research I attempt to find out numerous logistics challenges faced by the businesses while their expansion into the BRIC markets. 1.2 Research Questions and Objectives Research Questions Research Objectives 1. What are the logistics challenges faced by the businesses while expanding into BRICs markets? 2. Why are these challenges said to be relevant? 3. What are the types of solutions to these challenges? 1. To identify the logistics challenges faced by the businesses while expanding into BRICs markets. 2. To work out the relevance of these challenges. 3. To recognize the types of solutions to these challenges. 1.3 Scope of the Study The data was mainly collected from secondary sources including books, articles, internet and journals. 1.4 Critical Review of Literature I am succeeded in illustrating the literature consisting of articles and journals on the research subject matter. The reviewed literature refined my knowledge concerning the matter of the study and provided me with a number of study materials published prior related to the research matter, thus supported the significance of this study. 1.5 Hypothesis The research objective is to test the following hypothesis: H1: IT for logistics management is the most important challenge faced by the businesses. H2: The economic growth of BRIC markets relative to G7 countries is inferior. 1.6 Research Method Only qualitative approach was employed to investigate the matter. 1.7 Data Collection Methods For qualitative research, secondary data has been used including articles, internet and journals. 1.8 Ethical Considerations Efforts were made to minimize errors. Complete responsibility was taken to produce work without any bias. Confidentiality, integrity of data, errors and negligence, social responsibility, non-discrimination legal were given prior consideration during execution of this study. 1.9 Limitations The major limitation of this research is that it is relying on secondary data only. Moreover, the data collected might be biased and provide restricted information due to distinctive perceptions of the authors included in the literature of the research. CHAPTER TWO: LITERATURE REVIEW 2.0 BRIC Markets BRIC is generally portrayed as Big Four, BRICs or BRIC markets. A grouping acronym, BRIC is a group of four countries namely, Brazil, Russia, India and China which are believed to be at a similar stage of economic development. BRIC markets are one of the most emerging markets and are of great interest to the companies around the world (Dash, 2007). The economic growth in the BRIC markets is growing speedily and its immense growth is said to be greater than the G7 countries which include the UK, France, Canada, the US, Italy and Germany in less than the period of 20 years. Due to various reasons investors consider BRIC countries providing greater prospective. Initially, this is because these countries are rapidly mounting economies. BRICs are involved in making enormous amounts of investments. Additionally, these countries are one of the giants having large populations; therefore, companies progressing in one of the nations of BRICs are blessed with vast markets for their services and products. Furthermore, countries around the globe attempt to enlarge trade relations with these countries as they possess potential for development in education and tourism. Moreover, labour laws in these countries are found to be flexible enough to force the cost of production to reduce which helps to lower the prices of consumer goods (Dash, 2007). 2.1 The Logistics Challenges Faced by the Businesses While Expanding into BRICS Markets There are several challenges faced by the businesses while expanding their operations in the BRIC markets. Their future ultimately depends on the capability of the industry to handle these obstacles. Some of these barriers are at the policy level whereas others are at firm level. The policy level includes two significant areas that need concentration which are the matters of integration and infrastructure of the country’s logistics network (Chandra and Jain, 2007). Though, potential weaknesses need be considered including slow growth rate of expressway, poor road conditions, fewer national highways, high prices of toll on the expressways, shortage of railroad lines, unusual dimensions of gauge, unavailability of railways, non-development of transport technology, less investments in trains, wagons and equipments, non-security of goods, as well as IT for logistics management which is the major challenge (Prof. Fleury, 2009). 2.2 Relevance of these Challenges These challenges on transport provide the basis of numerous costs that influence the businesses expanding in BRICs particularly against the competitors worldwide. In an attempt to accomplish economic growth competitiveness, businesses need to have a surrounding that advances this improvement specifically relevant to logistics. Therefore, the expanding businesses are required to culturally recognize the significant task of an effectual logistics infrastructure to maintain its development. Some of the ethnical assumptions need to be reviewed in order to identify this, that are likely to put a lot of emphasis on political and economic issues to the disadvantage of the management of logistics infrastructure. With the development of logistics infrastructure a country gets competitive edge as well as becomes efficient as compare to its competitors as every country possesses distinctive cultures. It also helps to increase the value of the country, thereby increasing the value of the organizations and their products and services as well (Canen and Canen, 1999). CHAPTER THREE: DATA ANALYSIS The data for this research was gathered mainly through secondary sources including journals, articles, books and internet. According the objectives of this research the theoretical analysis is the most suitable choice as this data is to be represented qualitatively. Firstly, logistics challenges faced by the businesses while expanding into BRICs markets were to be recognized. According to Myrna Flores, Claudio Boer, Luca Canetta, Michel Pouly and Mathew Cherian, there are numerous challenges faced by the organizations worldwide planning to expand their operations in the BRIC markets. These challenges include deprivation of infrastructure widely involving transport, communication, power supply and water scarcity problems. Moreover, lack of required competencies, distinctive religion, languages and cultures, problems in finding local suppliers, bureaucracy, corruption, political instability and trade barriers are among the major challenges faced by most of the businesses trying to develop in BRIC countries. Secondly, the relevance of these challenges has to be figured out. Canen and Canen suggests that with the development of logistics infrastructure a country gets competitive edge as well as becomes efficient as compare to its competitors as every country possesses distinctive cultures. It also helps to increase the value of the country, thereby increasing the value of the organizations and their products and services as well (1999). Thirdly, the types of solutions to these challenges are sought through the recommendations in this research. Furthermore, the first hypothesis of this research H1: IT for logistics management is the most important challenge faced by the businesses is accepted as it is stated in the literature review that according to Prof. Fleury IT for logistics management is the major challenge faced by the businesses (2009). Whereas second hypothesis of my research H2: The economic growth of BRIC markets relative to G7 countries is inferior has been rejected due to the research of Srikant Dash that economic growth in the BRIC markets is growing speedily and its immense growth is said to be greater than the G7 countries which include the UK, France, Canada, the US, Italy and Germany in less than the period of 20 years (2009). Works Cited Canen and Tammela. (n.d). “Brazil Logistics Infrastructure: Challenges to Face”. Department of Production Engineering, Universidade Federal do Rio de Janeiro. Brazil. Retrieved July 3, 2011, from lipas.uwasa.fi: http://lipas.uwasa.fi/~phelo/ICIL2008TelAviv/14.pdf Canen and Canen. (1999). “Logistics and Cultural Diversity: Hand in Hand For Organizational Success”. Cross Cultural Management, vol. 6, no. 1, pp 3-10 Chandra and Jain. (2007). “The Logistics Sector In India: Overview And Challenges”. Indian Institute of Management. India. Retrieved July 3, 2011, from Www.Iimahd.Ernet.In: Http://Www.Iimahd.Ernet.In/Publications/Data/2007-03-07Pankajchandra.Pdf Dash, S. (2007, June). "BRIC Markets: Investment Rationale, Risks and Access Options". Retrieved July 3, 2011, from www.standardandpoors.com: http://www.standardandpoors.com Flores, Boer, Canetta, Pouly and Cherian. (n.d).“Critical Success Factors and Challenges to develop new Sustainable Supply Chains in India based on Swiss Experiences”. Swiss Innovation Promotion Agency. Retrieved July 3, 2011, from www.coves-project.org: http://www.coves-project.org/projects/408/ICE%202008/Networked%20and%20Virtual%20Enterprises/017%20-%2034.pdf Prof. Fleury. (2009). “Logistics Infrastructure In Brazil: Challenges And Opportunities”. ILOS Institute. Retrieved July 3, 2011, from www.lateinamerikaverein.de: http://www.lateinamerikaverein.de/de/index.html Read More