Analysis and Application of Critical Macro-Environmental Factors Using an Appropriate Framework

Published: 2021-08-15
1741 words
7 pages
15 min to read
University of California, Santa Barbara
Type of paper: 
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

There are important factors such as the behavioral, cultural and social factors ingrained in potential clients and are critical to the Mackie's Crisp's international business operations. This means the company's business model, strategy, and tactics of a business are affected by the environment in which the business was founded. For a company whose business operations are constrained to a limited geographical space, the management and marketing techniques usually adopt a linear model which means there are minimal alterations concerning the general business management and its marketing appropriate for that area. When a company such as Mackie's Crisps extends its business into other cultural spheres, the management style must be adapted to appeal to the clientele that the company is targeting in that region. The benefits of business internationalization are evident especially since the expansion helps in improving profits owing to the larger population that can buy the products and services of the company. However, some challenges are associated with business globalization, and they include costs in the adaptation of operations to the specific demands of the region or the possible event the business does not conquer the new market.

In the recent times, globalization has been a concept under much scrutiny, and it is an indicator that a business can expand its operations to nay part of the globe by launching its products and services in the new geographical space (Azuayi, R. 2016, 3). The more culturally appropriate term of globalization shows that the internalization of business operations can be successful in the management of a business considers the various elements unique to the region the business is investing. This report looks at the environmental factors that impact the management of international business. It also seeks to demonstrate the benefits of globalization and the advantages of implementing an environmental analysis model (De-Mattos, C. 2002, 6). For the work, the framework to be used in PESTLE analysis model which evaluates the political, social, economic, technological, legal and environmental factors that would affect the management of Mackie's Crisps in China. The utilization of this tool will be important in the determination of the prevalence

The Importance of Internationalization and Globalization

From the concept of globalization and internationalization, a more innovative term was invented which is glocalization. This concept is used in linking the two main approaches of a business globalizing or localizing its operations to appeal to the specific market the company is targeting. It entails striking a balance between the impositions of an established business model specific to a specific market and adapting to the various existing cultural biases of the region to the company is investing in the international markets (Azuayi, R. 2016, 3). The Glocalization of Mackie's Crisps means that it fuses the present practice of the business and factors that may find problems in the new region. This can be seen through the previous action of Mackie's Crisps in which the business decision on a Canadian packaging is ensuring it is bi-lingual entailing French and English inscriptions. The business also included a Scottish Saltire since there exist great affinity of the Canadian consumers with Scotland. Additionally, Mackie's Crisps has introduced a Chinese packaging that is unique to China. The key to success of Mackie's Crisps in the internationalization of its business is dependent on the introduction of the innovative products in a novice market while ensuring cultural sensitivity to the behavior of the consumers in the region. This means for success and sustainability in China, Mackie's Crisps must adapt the innovative products to the cultural behavior of customers in the Chinese market. For instance, the Chinese market is different from the UK market in that they buy things more online as compared to the UK. This means that Mackie's Crisps must adapt its business model to accommodate this customer behavior. The success of Mackie's Crisps will be highly influenced by how well the business implements the glocalization approach in its focus on international expansion. The company must demonstrate its sensitivity and responsiveness to the cultural biases existing in China in the formulation of its management approach and marketing techniques.

Internationalization, as described above, presents a business with benefits and challenges. The management of the business in the international context is costly and complicates the various business functions (Passaris, C. 2006, 2). The distinct environment factors affecting the international management of a business are stringent in the situation a company is expanding into diametrically different cultures (Mol and Koppius, O. 2002, 46). In this case, Mackie's Crisps is expanding into Chinese which has different consumer culture compared to the United Kingdom. With the application of Hofstede's cultural dimensional framework, it is possible to establish the Western cultures such as in the United Kingdom and the United States as opposed to the Asian cultures such as China.

Hofstede's Cultural Dimensional Framework

This framework details six dimensions that distinguish one nation from another.

IDV (Individualism): This dimension looks at the extent to which the society reinforces individual or collective achievement (Fening and Beyer, H. 2014, 2). The IDV in China is reported at 15 as compared to the West which has an average of 91. The low IDV in the Chinese culture is attributed to the close, and committed member groups and loyalty is a regarded trait in the society. This means that businesses do not easily change their suppliers and they tend to shop as a group.

PDI (Power Distance Index): This dimension looks the extent of equality or inequality in a society amongst the people in society (Moser et al., 2011, 4). The PDI in China is at 80 which shows a high inequality of power and wealth. For Mackie's Crisps to invest in China they need to understand the hierarchy that exists and conform to it in the management of the business.

MAS (The Masculinity): It entails the extent to which there is a reinforcement or not of the traditional masculine work role model (Hofstede, G. 2011, 12). This one instant in which China is closely aligned with the Western countries.

UAI (The Uncertainty Avoidance Index): It entails the tolerance level of the society to issues concerning ambiguity and uncertainty (Hofstede, G. 2011, 10). The UAI of China is 32 which lower comparing to the West. This shows that China is more liberal although this perception has been changing in the past twenty years.

LTO (Long Term Orientation): This dimension shows the existence of a cultural mismatch. In comparison with western nations have scores of the 20s, China ranks much higher with a score of 114 (Khairullah and Khairullah, Z. 2013, 3). Business such as Mackie's Crisps might meet challenges settling in due to the length of time taken to seals business deals.

From the Hofstede's Cultural Dimensional Framework discussed above, Mackie's Crisps appropriately identify the cultural disparities in China as compared to the UK and therefore institute required changes in the management of the business. For instance, when a business from the West expands into the Chinese market, culture is an element in how business is conducted which means Mackie's Crisps must devise successful management strategies. Culture is just one part that needs to be addressed, and the business must address various elements in the political, legal, environmental and technological as pointed by the PESTLE analysis.

PESTLE Analysis

Political Factors

In the international setup, the region in which a business seeks to expand has their specific political environment that implicates in the business in that country. For instance, China has tax policies that can influence doing business by Mackie's Crisps. In China, there is an increase in consumer rights protection which will potentially benefit multinational companies.

Economic Factors

China has witnessed a rapid growth in recent years. There has been an increment in the purchasing power. However, there are reports of increasing inflation rates and increase in property prices. However, the economic growths are expected to continue growing and its favorability for international businesses to invest.

Technological Factors

This entails the development of new products, novice buying mechanisms with the inclusion of extranet and intranet. This is about the development of new technologies for production and distribution and also mobile communications. There are also challenges on credit penetration owing to minimal security issues. This are that Mackie's Crisps need to consider.

Social Factors

In the operation of foreign business in China, the country's cultural and social aspects are essential. For instance, lately, there has been the increment of population and age distribution. Consequently, there is an alteration of cultural values and social trends. Family size, groups, and social behaviors are instrumental in consumer's decision-making process. This means that Mackie's Crisps will be careful to adjust accordingly.

International Human Resource Management Approaches

International Human Resource Management (IHRM) usually deals with the investigation of the design and the implications of human resource practices while considering cross-cultural aspects. It takes an intriguing part on the interstices of the global business and the human resource management. There are different in which multinational companies have been conducting their foreign business. Some business carries out their international business through the use of exports and import agents. However, others such as Mackie's Crisps have been adapting their various operations such as sales, marketing, management strategies, and finance to the being actively involved in the marketing and thereby selling their products and services to the consumers internationally. For international businesses, it is essential to foster real connections and develop long-term relationships (Lundeborg, L. 2017). To ensure the success of international businesses, it is important for managers to understand and adapt their business to their international clientele thereby gaining the ability to navigate through foreign markets easily. Similarly to other decisions and practices concerning human resource management, it is important to also link global staffing to the multinational enterprise's strategy and objectives. There are four international management and staffing approaches identified by the IHRM literature. These four approaches include:

Ethnocentric Management Approach

This approach entails the conviction on the superiority of one's cultural group. In its application in the international context, this approach describes an approach in which there is the tendency to utilize similar management strategy as the one used in the home business (Shahid et al., 2015, 16). It presents some risks in that a multinational business can lose its face or risk losing millions in sales. The failure of adaptation to the culture of the host nation through the utilization of ethnocentric approach can lead to harm to a brand which is well established and ultimately resulting in business failure.

Polycentric Management Approach

This management approach to international business usually features on the creation of a workforce which costs of locals. In the situation a company implements this strategy, the recruitment processes are...

Request Removal

If you are the original author of this essay and no longer wish to have it published on the website, please click below to request its removal: