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Enterprise And Entrepreneurail Management And InternationalMarketing Research and Data Analysis Business Strategy

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Introduction:

The current report encompasses various aspects of entrepreneurial management practices taking into consideration the case of Tesco supermarket. Tesco is considered to be the leading supermarket chain in UK and the third largest supermarket chain business in the globe. Currently the organisation has considered venturing the Indian retail industry for the business growth in the Asia Pacific region. The author has played the role of a business development manager for Tesco and the present report has been developed in fulfilling the aims of the organisation that is to assess optimum international business strategy so that venturing in the Indian retail industry could prove to be a success in the long run.

Task 1

1.1 Three changing elements of the global environment:

With continuous change in the global business environment, organisations across all business sectors have been facing increasing challenge to maintain desired level of competency in the respective industry. Calvin (2002) argued that a significant number of business organisations have failed to maintain competency level in the industry over the years and one possible reason behind that may be the continuous change in the global business environment. Although the external global business environment is influenced by a significant number of changing elements but the influence of social, economic and technological factors are considered as pivotal in dictating the nature of the business environment.

Economic:

The global economy has experienced massive alteration during the past two decade or so. According to Cavusgil et al. (2008), the global economy has been growing almost two times faster in the 2000s compared to the 1990s. Despite the setback during the year 2008, the average growth rate of the last decade has been substantial as per the corporate sector is concerned. Researchers believe that the coming years are likely to be offering more prospects for the corporate

_{heavyweights and more competitive environment is also likely in future. Majority of}

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the organisations nowadays are trying developing international business policies to boost the sales volume and revenue and accordingly the new market venturing activities is soon becoming a common strategy across corporate sectors.

Social:

The changing nature of the societies is also a possible reason behind overall change in the global business environment. In the words of Choo (2006), customers are the most valuable data and organisations would always try keeping pace with the changing need of the targeted demography. A drastic change has been observed in the social lifestyle of people over the last two decade or so and it is believed that such social change has influenced the business organisations to modify the respective business policies accordingly. Organisations now try developing cross cultural work environment in order to venture new emerging markets and expand globally.

Technological:

Technology is perhaps the most influential change elements behind the global business environmental change phenomenon. Rugman and Brewer (2001) acknowledged that it was the technology that eased the path of the emergence of international business concept. In the era of web 2.0, organisations communication is no longer a barrier across the border. Furthermore, the continuous enhancement in the field of technology is helping minimising cost and maximising profit.

1.2 Assessment of the change elements in relation to Indian retail industry:

When it comes to global retail industry, the frequency of change in business environment is found to be higher compared to other business sector. According to Root (1994), retail sector is more vulnerable to change compared to any other sector as it is consisted of a significant number of players for a limited number of

_{customers. With the continuous social, economic and technological changes, the}

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global retail sector is found to be one of the most competitive business sectors in the world.

Opportunities in relation with economy:

Abramson and Ai (2008) termed Indian as one of the prosperous economies within the world. New business venture in the country can be profitable for organisations. The retail industry of the country is yet to grow with low competition and high prospect. On the other hand, the GDP of the country is found to be more than 1.8 trillion which makes the country a lucrative prospect.

Threats in relation with economy:

The average income of people in India is found to be significantly low. More than

70% of the total population is found to be below the poverty line category. On the other hand, the value of INR is significantly lower than GBP which can reduce the margin of for business organisations.

Opportunities in relation with social aspects:

The retail industry of the country is significantly large in volume with a diverse customer base. People here would like the concept of one store shopping solution.

Threats in relation with social aspects:

Perception gap between the organisations and customers can be an issue. Indians like and respect regional cultures and as a result, there is every possibility of cross cultural gap.

Opportunities in relation with technology:

Indian business sector is significantly influenced by the technology. More Indian customers are becoming tech savvy by day. Since the technological infrastructure of the country is yet to develop to full potential, cutting edge technology of the new organisations can provide significant competitive edge.

_{Threats in relation with technology:}

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Only the younger demography of India is found to be somewhat aware of the latest technological practices. However, the older demography lacks technological knowledge. Hence, new business organisations can only expect appreciation from the younger demography of the country in regards to successful technological practices.

1.3 Impact of change elements on Tesco’s business in Indian retail sector:

Economic influence:

Opportunities:

Considering the case of Indian retail industry, the sector can be a good prospect for retail organisations as minimal numbers of players operate the market. Apart from Walmart, no heavyweight retail organisation is current operating in the sector and that eventually can be a motivation for Tesco. Finally, India is considered to be one of the fastest growing economies in the world. Hence, venturing in the Indian retail sector is looking a good prospect for Tesco.

Threats:

Majority of people in India (almost 70%) belong to below poverty line category. Hence, the number of target customers would be lowered from 1.3 billion to approximately 400 million. On the other hand, the economic diversity across different Indian state can turn out to be another issues as Tesco would require developing different strategies for different regional stores.

Social influence:

Opportunities:

The Indian retail sector is consisted of a wide range of customers that can help boosting the sales volume of Tesco. Due to lack of one stop stores near residential places, people generally go to single retail outlets in open markets to buy products. Hence, it is assumed that the one stop shopping solutions can be a hit among the

_Indians.

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Threats:

Indian customers are often regarded as strong bargainers and often seek for value for money products. Hence, if appropriate pricing policies are not followed, customers would look for substitute products, resulting in dip in sales for Tesco. On the other hand, Indians prioritise ethnicity and would look for ethnic products. Hence, if Tesco fail to assess cultural aspects, failure can be experienced by the organisation.

Technological influence:

Opportunities:

The Indian retail sector lack cutting edge technology. Hence, Tesco can emphasis on this area and achieve significant competitive edge in the industry with the use of latest technological platform for running the business. The online ecommerce policy is well appreciated by lots of Tesco customers. Hence, it is assumed that the same policy can be a hit among Indian customers.

Threats:

The aging population of India lack technological awareness and would struggle to handle modern technologies such as online shopping tools or dedicated company apps. Hence, the cutting edge technology of Tesco would only attract the younger demography of the country. Moreover, the technological infrastructure of the country is still below standard is the rural and suburbs of the country which can possibly turn out to be a constraint for Tesco.

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Task 2

2.1 Impact of local government policies on the new venture strategies of

Tesco in Indian retail sector:

The government plays a significant role in determining the course of business for every organisation. Tesco, the retail chain of UK is on the verge of initiating business in India. The policies of the Indian government in the sector of foreign trade will have an impact on the functioning of Tesco. The policies of the Indian government that can have an effect on Tesco are as follows:

Foreign Direct Investment (FDI) policy: The foreign direct investment cap has been raised to 51% in multi–brand retail facilitating companies like Tesco to initiate operations in India (Ibef.org. 2014). The Department of Industrial Policy and Promotion eased the FDI norms to facilitate Tesco and other firms like it by lowering the entry barrier. The positive impact on the business of Tesco are–

a. Developing economy- Tesco will experience benefits of functioning in the midst of the growing economy of India. The population of India also provides a large customer base for the organisation.

b. Human resource abundance– The firm can also get benefits from the knowledgeable workforce of India. The human resources can be easily available for Tesco for better performance of its business functions.

c. Cheap labour- Tesco will also be benefitted from the fact that the firm will be able to employ low salaried workers and staffs for its operations. The firm can achieve minimization of production costs by employing Indian workers.

d. Indian retail sector holds promise for the future due to changing customer pattern and expansion of urban population, which presents a large customer base for Tesco.

On the contrary, Tesco may counter some hindrances–

The local government has formulated some points which may cause restriction on

_{Tesco – Firstly, the organisation has to develop the back–end infrastructure before}

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starting operation, the company should open stores only in places having 10 lakh population. The propositions can cause restriction of certain activities of Tesco and may pose problems for the firm to operate smoothly. Besides there can be problems arising from the local small and medium scale retail sectors along with opposition from various political and social organisations.

Taxation policy – The taxation policy of the local government forms the basis of industry attractiveness of any sector (Ang et al. 2006). Tesco being a new entrant into the Indian retail sector can enjoy tax benefits through Goods and Services Tax (GST) framed by the government. The new tax law ensures that organisations like Tesco do not have to pay taxes multiple times to different authorities. The new tax payment rules can help Tesco to minimize their production cost to produce goods and services at reasonable prices to capture broader population. But, the GST laws are still not implemented which means that initially Tesco have to adjust themselves with the existing taxation framework. Tesco has to comply with VAT, Octroi and state and central level excise duties. The existing taxation system may cause enhanced financial outflow for the company in the form of tax.

2.2 Overcoming the disadvantages:

Regarding the FDI policy the Tesco needs to develop the infrastructure of retail market in India. This involves both time and capital outflows for the firm and can hamper its business objectives in terms of increased profit generation.

Possible measures:

Tesco can involve in joint ventures with local companies for development of storage facilities. The firm may acquire existing Indian retail houses having their own back– end processes to minimize their investment on developing the infrastructure. In the beginning of their operation the company may involve in outsourcing of the supply chain and logistics process to reduce capital expenditure.

The other drawback is that Tesco can open stores only in areas or cities having a minimum one million population.

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Possible measures:

The company may address the situation by involving in market research to identify the existing customer pattern and their buying behaviour. The lifestyle and buying pattern of the population may be analysed to decide the target market area for the firm (Bangert and Pirzada, 2002). Tesco should deliberately identify and select location for gaining viable returns in the beginning of their venture.

The taxation policy in India is overtly complex and it includes the negative aspect of multiple tax payments at various levels. Tesco may overcome the tax impediments by employing specific business strategies.

Possible measures:

The company can engage in formulation and implementation of HR policies with regards to training and developing employees. The organisation can claim tax exemption on account of the expenditure incurred by the firm in developing the workforce of the nation.

The firm may take over local firms and reorganise the business functioning of the Indian firms, which may help Tesco to appeal for tax exemption to the government on account of the set– off facility provided by the government on accumulated tax

_{losses during amalgamation or takeover.}

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Task 3

3.1 Key Entrepreneurial traits and behaviours:

To become successful in business ventures the entrepreneurs should develop specific skills and knowledge. The skills and knowledge of are dependent on the traits and behaviours of entrepreneurs. The key entrepreneurial traits and behaviour can be as follows–

Forward linking approach:

The forward linking approach trait helps an entrepreneur of Tesco to identify the beginning and end of an operation. This trait is useful as it provides the entrepreneurs with a thorough understanding of the processes (Bazerman et al.

2000). The entrepreneurs then can employ strategies to reach the end point by utilizing proper media and resources. This particular trait can be very useful for Tesco to achieve business objectives in the complex and diverse market of India.

Constant flow of ideas

The most important behaviour that differentiates entrepreneurs form others is the constant flow of ideas (Brislin et al. 2006). The trait provides entrepreneurs to take innovative approaches to counter any situation. The entrepreneurship trait can help Tesco in carrying out their new venture in new and unknown environment. Constant flow of ideas are important for organizations to align their activities and culture with the diverse and complex environment of India.

Effective negotiation skills:

The negotiation traits of entrepreneurs can be very valuable for Tesco as it may help the company to deal with the taxation policy of the local government. The negotiation traits can be used by Tesco to manage the different government policy

_{issues to derive benefits for the organisation.}

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3.2 Contribution of Entrepreneurial traits in running business in challenging conditions:

According to Chaisrakeo and Mark (2004), the forward linking approach can be helpful for organisations set to start business operations in new and unknown markets. It can help the firm to identify the uncertainties and threats in its business path and can help avert uncomfortable situations. This particular trait suits Tesco as it aim to initiate new business venture in India.

The constant flow of ideas for the entrepreneurs will provide Tesco to counter challenges in India as the local government imposed various restrictions regarding retail operation. The trait may provide Tesco to utilize maximum benefits from existing resources.

The most important trait that Tesco can utilize to face challenges is the negotiating capability of entrepreneurs. The negotiation skills can facilitate alignment of organisational objectives with the policies of the local government (Earley and Mosakowski, 2004). Tesco can implement the trait to influence the taxation policy and investment policy of the Indian government for meeting their business needs.

3.3 Role of entrepreneurial traits in overcoming the threats within retail sector:

The traits and behaviour of Tesco entrepreneurs can dictate the organisational growth in the Indian retail industry. As opined by Woodcock et al. (2004), the right combination of leadership traits not only influences the workforce productivity but also help dictating the growth of organisations within respective sector. At the time of venturing in Indian retail industry, Tesco would bound to experience some hurdles regarding social, economic and technological change elements along with Government interventions. However, it is believed that entrepreneurial traits like forward looking approach, constant flow of ideas and effective negotiation skills can help tackling such barriers.

_{Usefulness of forward looking approach:}

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With the forward looking skills, Tesco leaders would be encouraged to thrive for improvement despite of setbacks. Tesco would face several complications regarding the FDI policies of India. The policy would restrict the direct imported foreign products in the region. However, with the forward looking approaches, Tesco leaders would be looking forward to utilise the local resources to optimum extent. It is feared that the lower value of INR can reduce the profit margin for the company. However, by developing a forward looking approach, local resources can be utilised and as a result, increased operating profit can be generate.

Usefulness of constant flow of ideas:

Constant flow of ideas would encourage the Tesco leaders to ponder more on innovation and creativity and promote a learning work culture across the organisational work environment. Tadesse and Ryan (2004) criticised that if leaders run out of ideas, that can trigger alarming situation for business organisations. Since Indian customers prioritise culture and ethnicity, particular emphasis is needed to be given on developing cultural products. On the other hand, creativity is needed to implement pricing policy for the products. Since Indian customers prioritise value for money products, Tesco need to focus on competitive pricing policy.

Usefulness of effective negotiation skills:

According to Peteraf (2003), leaders need to be effective negotiators to dictate continuous growth of new businesses. It has been found that some of the Government rules and regulations at India would be incompatible for the business of Tesco. Hence, Tesco leaders need to use effective negotiation skills and increase bargaining power to minimise the influence of taxation policy of the country. Tesco leaders can enter into the negotiation process with the proposition of some welfare activities such as the community development programs and social welfares and in against, the organisation can claim of certain tax consideration for smooth business

_process.

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Conclusion:

Summarising the findings from the study it can be concluded that despite several barriers, the prospect of Indian retail sector is looking good and Tesco can seriously consider venturing the market. The continuously growing economy, less competition and demand of the market can provide enough prospect for Tesco for expansion. However, lack of technological infrastructure, increasing poverty, misbalanced social lifestyle of people and several government interventions are needed to be focused prior to the market penetration. It is recommended to the leaders to Tesco to emphasis more on entrepreneurial traits such as forward looking approach, constant flow of ideas and effective negotiations skills so that a

_{successful a successful international business strategy can be adopted.}

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References:

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_{Ang, S., Dyne, L. V. and Koh, C. (2006) ‘Personality Correlates of the Four–Factor}

Model of Cultural Intelligence’. Group & Organization Management, 31(1), pp. 100-

123

Bangert, D. C. and Pirzada, K. (2002) ‘Culture and Negotiation’, The International

Executive, 34(1), pp. 43–64

Bazerman, M. H., Curhan, J. R., Moore, D. A. and Valley, K. L. (2000) ‘Negotiation’.

Annual Review of Psychology. 51, pp. 279–314

Brislin, R., Worthley, R. and Macnab, B. (2006) ‘Cultural Intelligence: Understanding Behaviors that Serve People’s Goals’. Group & Organization Management, 31(1), pp. 40-55

Calvin, R. J. (2002) Entrepreneurial management. New York: McGraw–Hill.

Cavusgil, S. T., Knight, G. A. and Riesenberger, J. R. (2008) International business. Upper saddle River, N.J.: Pearson Prentice Hall.

Chaisrakeo, S. and Mark, S. (2004) “Culture, intercultural communication competence, and sales negotiation: a qualitative research approach“, Journal of Business & Industrial Marketing, 19(4), pp. 267–282

Choo, S. (2006) Entrepreneurial management. Prahran, Vic.: Tilde University Press.

Earley, P. C. and Mosakowski, E. (2004) ‘Toward cultural intelligence: Turning cultural differences into a workplace advantage’. Academy of Management Executives, 18 (3), pp. 151 – 157.

_{Ibef.org. 2014. Retail Industry in India, Retail Sector In India, Indian Retail}

Industry. [online] Available at: http://www.ibef.org/industry/retail–india.aspx

[Accessed: 6 Jan 2014].

_{Peteraf, M. (2003) “The Cornerstones of Competitive Advantage: A Resource Based}

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Root, F. R. (1994) Entry strategies for international markets. San Francisco: Jossey- Bass Inc, Publishers.

Rugman, A. M. and Brewer, T. L. (2001) The Oxford handbook of international business. New York: Oxford University Press.

Tadesse, B. and Ryan M. J. (2004) “Host Market Characteristics, FDI and the FDI–

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View“, Strategic Management Journal, 14, pp. 179–191

Woodcock, C. P., Beamish, P. W. and Makino, S. (2004) “Ownership–Based Entry Mode Strategies and International Performance”. Journal of International Business Studies, 25(2), pp. 253–273.

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