International Expansion Free-Samples for Students-Myassignment

Question: Creates a Complete International Business Report. Answer: Introduction In this era of globalization, organizations want to explore the global avenues for expansion. The use of Information Technology and advancements in e-commerce has further pushed the organizations strategy to expand. There was a time when organizations used to target only the domestic market. However, in recent times, the competition has increased significantly. Today, the focus of the organizations is to expand in the global market to increase their market share. It is important that organizations must clearly understand the international market (Hillyer, Finch, Cerel, Dattelbaum Leopold, 2014). There would obviously be various cultural, economic and other challenges. It is important that the organizations must have a strategy in place to overcome these challenges. The objective of this paper is to discuss the expansion of an organization in an international market. The selected organization for this paper is Toys R Us and the selected market is India. The market of toy industries is developing in domestic as well as international arena (Nag, Han Yao, 2014). The buying capacity of buyers is increasing rapidly and the economy is liberal which leads to easy decision in terms of Making or Buying. Toys are considered to be developing the children intellectually and emotionally as well by the customers. A brief organizational background can be discussed as: Organizational background (Toys R Us) Toys R Us, Inc. is based in New Jersey and it operates as baby products and toys retailer along with its subsidiaries. It mainly produces products for children up to four years of age. The largest share of its market is USA followed by other countries globally including Europe, Japan, Canada, UK, China and South East Asia, etc. It has high brand resonance and has good positioning as Toys retailer and has cultivated loyalty in its customers through quality products and efficient communications. But recently company witnessed a declining sales trend in its market due to competition and declining demand due to decrease in birth rates in its market and this is one of the drivers for the company to expand internationally. The overseas expansion strategies for Toys R Us can be discussed as: Overseas expansion drivers for Toys R Us Toys R Us is toys and baby products retailers which is facing decline in its sales due to decrease in the target segment in its current markets. So, it is trying to tap into new markets as well where there is good opportunity in terms of earning revenues. Countries like India, Sri Lanka, Nigeria and Russia have been considered and compared as the probable markets where the market could be extended (Vogel, 2014). Potential target markets of India, Sri Lanka, Nigeria and Russia The current market situations in these countries are analyzed considering 12 C frameworks in view: Russia is a developed economy with less population and Sri Lanka and India are developing countries with higher population (Garton, 2017). Nigeria is an underdeveloped economy with high population which is witnessing high developments recently. In Russia, according to their culture, people tend to buy toys from specialty stores whereas in India, Sri Lanka and Nigeria, majority buys from small markets where the products are supposed to be at cheaper rate. However, the high-end customers are increasing in these countries as well. India and Sri Lanka are the Asian countries which have developing economies in which India is growing rapidly followed by Sri Lanka. This leads to increase in the capacity to pay but still they are mostly price sensitive. Russia is a grown market here people tend to invest more in toys especially in urban areas. In Nigeria, customers are highly price sensitive and tend to opt for cheap products (Balland, 2014). The demand for consumption in India is very high due to large population and there is large estimated growth in coming decade for the toy industry (Niu, 2013). Other countries have also average demands due to less population in Russia and less purchasing power parity in Sri Lanka and Nigeria. Currency of Russia is strong and that of India, Sri Lanka and Nigeria comparatively weak as they are developing countries whereas Russia has already a well-developed economy. Customers have more choices in Russia as there are already many toy companies whereas in other countries like India, Sri Lanka and Nigeria, there are still very less number of toy companies as compared to their population demand (Khajeheian, 2016). Hence, all the countries have their pros and cons and Toys R Us should go for the best option with long term view and market share and profits in consideration. It can be said that the best option for Toys R Us is India and therefore, this report will discuss the expansion of Toys R Us in Indian market. Brief introduction to India In India, in various parts, people invest less in toys due to presence of cheap options. But now people are understanding the safety value in the usage of toys by their children (Robertson, 2013). The toy industry is labor intensive and small sectors are predominantly producing and manufacturing. Innovative toys have witnessed increased demands in Indian market. Due to large population, it can inculcate and have enough capacity to have great demands even in the face of competition. Before entering India, Toys R Us should consider the requirements of customers there and according to the sentiments, product lines should be established The PESTLE analysis fir India can be discussed as: PESTLE analysis for Toys R Us in Indian market The PESTLE analysis for Indian market for the toys industry in general can be discussed as: Political Legal factors The political and legal factors can be considered as positive for the players in toys industry. There is heavy potential for cooperating with the multi- national companies for toys and baby products (Lin, Hong Jao, 2008). There could be development of low cost high quality manufacturing which could be enabled by using alliances strategically. The government is supporting and encouraging Foreign Direct Investments in India. Currently, Chinese products have largest market share which provides cheap products (Khajeheian, 2016). The consumer preferences are changing but the designing of products and adaptability of changes is less in toys products due to lack of technology. The government of India wants that people should have options other than the Chinese products. At the same time, it is important to mention that corruption rate is high in the country and the country does not score well in the ease of doing business in Indian market. Therefore, it would be correct to say that political and legal factors are average for the companies in toy segment to enter the Indian market and grow their business. Economic factors The production of toys could be done in India itself as here skilled labour is available at cheaper rate and women constitute the majority of toy manufacturing workforce (Hanerlio?ullar?, ?en Aktun, 2016). There is tremendous growth in the market domestically in India. Now, the disposable income is increasing, which leads to an increasing in purchasing power of the consumers (iko, 2015). Now consumers are getting aware of the international brands and they are growing interests and confidence towards the same. The raw materials and skilled labours are easily available in Indian market at a low price. The overhead costs are low and also due to large population, variety of demand is present. There is less economy of scale due to less penetration and hence, the production cost is comparatively high (Christensen, Anthony, Roth, 2013). The support system of vendors is currently inconsistent and insufficient. The customer feedback system is not efficient. The surplus income of middle clas s family which is the largest chunk in India is increased and will be increasing in the coming years as per the economic growth. The economy of India is growing at a CAGR (Compounded Annual Growth Rate) of more than 6% (Garton, 2017). This is one of the best growth rate in the international market. Therefore, it would be correct to say that economic factors are favorable for the companies in toy segment to enter the Indian market and grow their business. Social Cultural Ethical factors The joint family culture is now diminishing and nuclear family culture is imbibing in India (Vogel, 2014). Due to which, people have more focus towards their childrens requirements. Around 40% of the toys consumed are from organized sector, which has increased from previous decade and is continuously increasing. There is an estimated growth rate of 15%- 20% annually in the coming five years (Hillyer,2014). The government is focusing on increase in Foreign Direct Investments for the growth of economy which leads to easy penetration in the market. The social and cultural factors can be termed as positive for players in the toys industry. There children are accompanied by their parents or other elders and they are only influencers, the ultimate decision of purchasing toy and baby products is generally that of the elders (Lin, 2008). Accordingly, the integrated marketing communication of toys and baby products must be done in order to resonate during making purchase decision by the custo mer. The ethical factors are not good in Indian market. According to 2016 results ofCorruption Perception IndexofTransparency International, India ranks 79th place out of 176 countries.The corruption is high in the Indian market and the ethical standards of people is less than the global average. Therefore, it would be correct to say that social and cultural factors are favorable for the companies in toy segment to enter the Indian market and grow their business. The ethical factors are not favorable for Toys R Us to operate in Indian market. Technological factors Innovative toys are in markets which are attracting customers and they also tend to buy more frequently due to this to have variety in their childrens play. There is lack of the facilities of development and research in India itself. The technical knowledge is fragmented. There are not specific professional and strong associations for Toys industries (Bhatia, 2015). There is lack of coordination amongst the toys manufacturers. Currently, there are general purposed machines largely which are used to produce the specialized products. Hence, innovation is lacking and capability framework is of poor quality due to improper tooling facilities (Niu, Miles Lee, 2013). The video games and other electronic toys have improper technical capabilities till now. In the last decade or so, there has been a significant increase in the use of technology in gaming sector (Mahon McGowan, 2010). Therefore, it would be correct to say that technological factors are favorable for the companies in toy segment to enter the Indian market and grow their business. Environmental factors The environmental factors are not much great for the organizations in the toy industry. Operation capabilities in India of toy products are comparatively less which leads to large investments initially for the development of specialized products such as toys and baby products. The quality and safety standards are yet not appropriate in terms of material and designing of products for children. India does not have good edge in terms of competition for electronic toys which have recently witnessed heavy increase in demands (Balland, Belso-Martnez Morrison, 2014). Children are now giving more time to their studies or computers and internet which leads to decrease in the physical play by them. It is reported that the manufacturers of toys use plastic and it is not good for environment (Oudan, 2010). This is the reason that environmentalist have various complaints and issues against the players in the toys industry. Therefore, it would be correct to say that environmental factors are not favorable for the companies in toy segment to enter the Indian market and grow their business. Macro and Competitive Factors that influence Global Toys Industry- There are various factors affecting the Global Toys Industry such as following: Birth Rate- There is decrease in birth rates as people are now focusing on population control. Also, various governments of different countries also encourage people to have less number of children to have better living standards (Bhatia, 2015). Due to this, decrease in demands is seen in various countries for baby products as target segment is shrinking. Entertainment Industry- Buyers may not be the users of toys. Hence, to encourage them for buying the toys, it is required that toys industry is integrated with the entertainment industry (Robertson Breen, 2013). Products for girls- There has been major increase in demands of toys for girls. Hence, more product lines of toys must be developed for girls (Sisko, 2015). Conclusion Toys R Us could expand its international markets to generate more market and customers. It could enter into Indian market as it has good estimated CAGR growth in its toys industries. Also, the global toys industry is facing various changes in terms of changing preferences of customers in terms of innovative toys. All these parameters must be considered and after proper Research and Development, Toys R Us should incorporate required changes and maintain its market share and growth. Communication forms an important part in all these countries as customers should be well aware of the products and services provided by Toys R Us over its competitors (Hanerlio?ullar?, 2016). This could be done through following integrated marketing communication. Initially, the company should collaborate with already established stores where their target segments use to buy (Mahon, 2010). In the coming time, when people start getting attracted a loyalty segment is formed, they could operate individually. B ut since India has could witness great demands of branded and quality toys, they should try to acquire more and more customers. Currently urban population tends to spend much more than rural areas where still Chinese cheap toys have notable market share. Hence, Toys R Us should target the metro and other large cities. Also, positioning should be done in a way that the toys are safe for children and help them grow intellectually as well. The toxic aspects including Lead, Nickel etc. of the raw materials used in the manufacturing of toys must be minimal and this must be communicated to the consumers (Oudan, 2010). Also, the utility value and the aesthetics of toys and other products must be in accordance with the customers. Hence, by an efficient market plan and with proper collaboration, Toys R Us can generate large market share in Indian market. References Balland, P.A., Belso-Martnez, J.A. and Morrison, A., 2014.The dynamics of technical and business networks in industrial clusters: embeddedness, status or proximity?(No. 1412). Utrecht University, Section of Economic Geography. Bhatia, M., 2015. Dragon vs elephant: a comparative study of competiveness in toy industry of China and India.ZENITH International Journal of Business Economics Management Research,5(11), pp.11-19. Christensen, C., Anthony, S. and Roth, E.A., 2013.Seeing what's next: Using the theories of innovation to predict industry change. Harvard Business Press. Garton, K., 2017.Apocalypse at the Doll Counter Barbie, Marjie, and the North American Toy Industry, 1959-67(Doctoral dissertation). 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