Critical discussion: DIFFERENT MODES AND MEANS OF GROWTH FOR A BUSINESS

Introduction of Different Modes and Means of Growth

In the modern time, the technological advancement has transformed everything in this world and at the same time, the impact of this transformation can be prominently seen on the business world. The technological advancement has enabled the business organization to expand their target market, speed up their operation and to increase the accuracy of their business practices. Overall, the advanced technology has opened new doors of opportunities for the business organizations. However, the globalization is a two edges swords as its one side is bright whereas its other side is dark as well as it has brought news challenges and constraints to the business organization by strengthening the competition among the organizations (Goryakin, 2015).

In this intensifying business world, it becomes difficult for the organization to survive without effective business strategies. Subsequently, the organization uses various strategies to survive and to expand their business by addressing that the only organization can survive that integrate its business practices. However, in this attempt of business integration some organization only focuses on the expansion and forgets the impact of the external forces and in the end they have to face serious circumstances (Hamdi, 2015).

Considering the organizational integration, the following writing is aimed to discuss various modes of organizational integration and challenges associated with it. Following this, the research is also aimed to shed light on the potential challenges that an organization should address in its process of integration to avoid the business failure in the process of business integration

Discussion Different Modes and Means of growth a business 

It is the aim of the every organization to reach to the heights of business success therefore, after becoming successful at one place; the organizations move to forward and growth its business. Subsequently, in this practice of organizational growth following are the two integration types usually adopted by the organizations (Goryakin, 2015);

Vertical Growth

In vertical expansion the business grow in a way as it does not remains dependent to the suppliers but start to become its own supplier. In this process, usually two different units works together and develop a new product to satisfy the need of the customers.

Horizontal Growth

In the horizontal growth an organization expand its business in a way by increasing the sale of its products. Usually in the horizontal process an organization expand its business internationally to target new market with an ultimate aim to increase its sale and profit (Unger & Raab., 2015).

In the process of international or global expansion an organization has various options to enter into the market. Subsequently, following are some of the modes of international market expansion.

Modes of Entry into international market

It is very important for an organization to be well aware about the various modes of international expansion and select the most suitable one that give a rise to the business (Goryakin, 2015).

Joint venture in internationalization

Joint venture is one of the ways used by the organization to enter into the new market. In this process, the organizations work jointly and two or more organizations start a new venture. One of the most common examples of joint venture is the co-operation of Toyota and BMW in the development of ultra-light weight electric vehicles (Sobol, 2018).

Strategic alliance

In the process of strategic alliance, two business organizations decided to work as a partner. One of the most famous strategic alliance can be seen between the traditional book retailer start bucks and worldwide famous Starbucks. Another famous strategic alliance is held between Ford and Eddie Bauer (Kamau, 2016).  

International distributor and agent

The international distributor and agent works on your behalf or on the behalf of a company in an international market and manage the business dealing as an agent. Following this, they sell products of a company to another party in international market and take commission over it.

Home manufacture and foreign seller

In this option of internationalization an organization opted to sell its product into the international market without setting business in the international market. The product manufacture in the home country whereas it sells in the foreign market. Some businessmen or business organization work opposite to it as they manufacture their product in the foreign country and sells it in the home country (Kamau, 2016).

Potential Constraints for internationalization

Internationalization seems very interesting as an organization targets a new market and decided to sell its product into a new market. Internationalization pose great opportunities for the business organization as it allows the organization to expand its business by targeting new market that can give a huge rise to the product sale. However, there are many cases where organizations have failed in an attempt of internationalization (Goryakin, 2015).

Miss-calculation the internationalization

One of the major constraints in internationalization is the miss-calculation. There are many examples of the organizations that failed to calculate the external factors that influence their attempt of internationalisation. In this regards, one of the most common example is of Tesco’s failure in the USA. Tesco is the UKs largest retailer and after receiving great success in the home region, in 2006 Tesco decided to expand its business in United States (Hamdi, 2015). Tesco believed that the circumstances are same in UK and USA such as people are English in both countries and they also have similar history and so they believed that the company will also become successful in United States. However, due to the miss-calculation things went wrong as US people rejected Tesco and in the result of it Tesco had to face a loss of billions of pounds.

Cultural Difference of various organizations

Cultural difference is another considerable constraint behind the failure of international expansion of various organizations. In this regards, the example of the Toyota Motors expansion to US and UK is well suited example as after embracing success in Japan, Toyota decided to expand its business into the new region and entered into US and UK. Toyota went there with their Japanese work force with an aim to maintain their quality. However, the company had to face great failure in UK and US region. Toyota investigated its failure in the new region and found that the reason is cultural difference as the Japanese people like to have big cars whereas as the Europeans like to drive small cars that consume less fuel and cover less place. Toyota understood the cultural difference and it started to manufacture vehicles according to the cultural demand and now Toyota has become the most successful car manufacturing brand all over the world (Collins, 2015).

Religious differences, The case of McDonald failure in India and china

The case of McDonald failure in India and china is the prominent example of internationalization constraint. At the initial stages, McDonald introduced its regular menu with variety of meat products (Hamdi, 2015). India is the second largest country in terms of population therefore, McDonald was expecting huge revenue from the Indian market but results shocked McDonald as vegetarian majority of Indians rejected McDonald’s meaty menu as Hindu’s believe in non-vegetarian and they do not eat meat. However, later on by understanding the demand of the Indian market, in 2012 McDonald regain Indian market by introducing vegetable menu. This time McDonald hit on the right time and provided the product according to the religious believe of Hindus and result has been very positive and Indian become one of the largest customers of McDonald (McDonald, 2017).

Conclusion on Different Modes and Means of Growth of a business 

From this research, it is concluded that in the modern time, it is necessary for every organization to timely integrate its business practices because it is the only way to survive as well as to grow organizational business otherwise, it would become difficult for a company to retain its position in the market. Subsequently, the international market has huge opportunities for the business organizations as it allow the companies to target new market, increase their sales and revenue. However, before taking the decision of internationalization or globalization it is necessary to take in-depth analysis of the market to understand all the opportunities and risk factors associated with it. Overall, it is concluded that in the practice of internationalization, the strategic decision plays vital role as a single mistake can cause an organization millions or sometimes billions of dollars as it has been seen in the case of Tesco, Toyota and McDonald. Therefore, its suggested to the organization to thoroughly address every possible factor and rightly estimate the risks and opportunities available in an international market.

References of Different Modes and Means of Growth of a business 

Collins, M. (2015). The Pros And Cons Of Globalization. Retrieved December 10, 2018, from https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-cons-of-globalization/#4c0699eeccce

Goryakin, Y. (2015). The impact of economic, political and social globalization on overweight and obesity in the 56 low and middle income countries. Social Science Medicine, 67–76.

Hamdi, F. (2015). The Impact of Globalization in the Developing Countries. Retrieved 2018, from https://www.linkedin.com/pulse/impact-globalization-developing-countries-fairooz-hamdi/

Kamau, N. (2016). SUCCESSFUL STRATEGIC ALLIANCES: 5 EXAMPLES OF COMPANIES DOING IT RIGHT. Retrieved 2019, from https://www.allbound.com/blog/successful-strategic-alliances-5-examples-of-companies-doing-it-right/

McDonald, J. (2017). Branding. The international Encyclopedia of Organizational Communication , 54-63.

Sobol, K. (2018). Globalization, national identity, biculturalism and consumer behavior: A longitudinal study of Dutch consumers. Journal of Business Research, 82, 340-353.

Unger, A., & Raab., G. (2015). The dark side of globalization and consumption: How similar are Chinese and German consumers toward their proneness to compulsive buying? Journal of Asia-Pacific Business , 4-20.