Global and International Business Contexts (Research Paper Sample)

Global and International Business Contexts
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Global and International Business Contexts
For every company, it is vital to have a clear understanding concerning the essential competitive aspects in the firm’s operational industry (Cho & Moon, 2000). This aids in crafting a comprehensible picture regarding the firm’s growth prospective. This research will determine the attractiveness of the soft drink industry in Pakistan
Application of Porter’s National Diamond (PND) Model to the Pakistani Soft Drinks Industry
According to Cho & Moon (2000), there are four extensive nations’ aspects that independently or as a system, comprise the national benefit of a diamond. These aspects mutually establish each nation’s playing field for the foundation as well as the operation in a given industry. The extended version of Porters Diamond model aspects includes: Factor conditions, demand conditions, related and supporting industries, firm strategy, structure and rivalry, chance events as well as government. These aspects will be used to analyze the soft drinks industry in Pakistani.
Factor Conditions
Although factors of productions including land and labor are important elements in creating goods and services for the consumer, in the global aspects, many facets are involved as production factors e.g. skilled human resource and the communication as well as the banking system that eventually result to the competitive advantage of a given country. Even though Pakistan is blessed with plentiful natural resources, there are numerous factors that affect the opportunities of development as well as an investment. There is a need for the Country to fix the political situation, invest in new technology and the literacy level of the citizens so that to increase the industry attractiveness of the soft drink industry. Appendix 1 shows Pakistan’s rate of literacy as compared to other countries that reduces the country’s attractiveness of the soft drink industry. In the achievement of the competitive advantage, there is a need for the development of factors of production that are specific to the soft drink industry. Therefore, specific knowledge as well as skills that a country creates through the increment of the literacy level and other innovation are the key elements that result in the competitive advantage of a given country.
Demand Conditions
Demand conditions refer to the consumers’ demands for goods and services placed in an industry. When consumers in a given industry demand for goods and services that are highly specific, as well as sophisticated, the firms are forced to come up with highly innovative products that meet the consumers’ demands. The pressure from consumer gives a great challenge to the particular industry of a country. This makes the companies move to other countries where the consumers’ demands are low. When consumers are demanding, the firms in that country are pushed ahead as compared to those where the demands are low. This ultimately makes the industry of a country anticipate in a better way; future demand circumstances of the international market and react proactively to the requirements of products and services. In Pakistan, the soft drink business is subjugated by carbohydrates that have low cost. The industry greatly benefits from the essential demand triggers including the lack of noteworthy industry of alcoholic drinks as well as the warm temperature of the county. These demand circumstances significantly result to the prettiness of the Pakistan’s soft drink industry.
Related and Supporting Industries
Firms manage inputs in a more efficient manner when there are related and supporting industries. For instance, a country having a supply base that is strong aids an organization to get inputs at a low cost and methods that are timely. As a result, costs of manufacturing are considerably abridged. Moreover, including a close bond with sellers, leads to the expansion of probable competitive advantage via the shared research undertaking as well as acquaintance exchange. For the industries that are correlated, comparable opportunities are obtainable via the firm’s shared efforts. In Pakistan, there are several soft drink firms such as Coca-Coca beverages Pakistan, PepsiCo, Nestle Pakistan (De, 2010). Through joint research and development, the related firms have undertaken research and development to come up with products that are more attractive to consumers leading to the rise of consumption making the industry attractive. For instance, citrus flavor in Fanta was initiated by Coca-Cola Beverages Pakistan, and Nescafe was initiated by Nestlé Pakistan. Support given to the Pakistan’s industries too provides the nation with a competitive edge. For instance, the industry of Sugar that presents crucial raw materials to the industry of soft drink is leveled the second in terms of size after the industry textile. Additionally, the country has an immense prospects concerning industry of technology which is a key facet of the soft drink industry. This provides the country a viable advantage for Kraft Foods to make an invest in the industry (De, 2010)
Firm Strategy, Structure, and Rivalry
Gupta (2006) argues that when a country has a tough customer demand as well as bases of suppliers, the possibility of high novel entrants from the industries that are interrelated, the competition is principally relentless. In turn, this competition lifts the firms’ advancement competence and result in the allotment of goods as well as other services in the home country. When there is an intense rivalry in the home market, it gives a dominant momentum that organizations use in the modernization as well as coming up with novel sources regarding the competitive advantage. Fascinatingly, organizations are forced to search for new markets outside the Countries’ boundaries, come up with the needed conditions regarding the international competitiveness when rivalry intensifies. According to Cho & Moon (2000), Pakistan’s ever growing domestic beverage sector such the soft drinks that are carbonated, juice as well as drinks that are juice flavored has resulted in the International competitiveness in the soft drink industry. The Country’s competitiveness regarding the soft drink industry has triggered giant soft drink firms such as Coca-Cola and Pepsi to invest heavily in the Pakistan and they have also undertaken renovation regarding the existing brands and increasing the portfolio of beverages. This competition bestows the nation a viable edge in the soft drink industry investment. In the Porters’ diamond model regarding the competitiveness of a country, competition in the home market is perhaps the strongest achievement gauge in the worldwide competitiveness. When there is a strong competition in the domestic market, organizations come up with the necessary policies as well as arrangements that aid in the International market competition (Gupta, 2006)
Chance Events
According to Sahoo, Nataraj, & Dash (2013), chance events refer to the developments of disruptive nature outside the government as well as the firms’ control allowing in new actors who are engrossed in making use of prospects that occurs from the industry array that reforms. Chance events include wars, revolutions, fundamental innovations as well as an unexpected increase in the prices of oil. In the recent years, there have been numerous wars in Pakistan that acts as a chance event to allow new actors interested in the soft drink industry to invest. Cho & Moon (2000) argues that these wars include the Kargil War of 1999, Sianchen War of 1984 and the ongoing Waziristan war that can present an opportunity to invest in soft drink industry. Also, there is a frequent unexpected increase in petroleum prices in the global market with a general sales tax increase in the products of petroleum presenting an opportunity for new players in the soft drink industry to invest. Sahoo, Nataraj, & Dash (2013) further say that revolutions in Pakistan also present an opportunity for Kraft Foods Group to invest in the soft drink industry. This is because Pakistan is faced with the problem of democracy. The future of Pakistan is dark due to numerous attacks from some politicians as well as powerful forces outside the Country.
Government
The choice of approaches by the administration can have an enormous sway about the other facets of Porter’s diamond model. When the government implements successful policies, there is s a need for the country to have a national advantage regarding fundamental determinants, and there is a need to be reinforced by actions of the government (Sahoo, Nataraj, & Dash, 2013). In some circumstances, odds of gaining competitive advantage can be raised by the government but still lacks the authority to create its advantages (Moran, 2006). The administration of Pakistan has executed the capacity tax on the producers of soft drinks. According to Moran (2006), this policy created a lot of demands on the home producers making a majority of them close down their manufacturing plants. For instance, Pakola, produced by Mehran bottlers had to close down for almost one year due to capacity tax effects. This sort of administrative guidelines has on the other facets of the Porter’s diamond model that affects the prettiness of the soft drink industry.
Foreign Direct Investment (FDI) as an Entry Strategy for Pakistan
Foreign Direct Investment (FDI) is the participation of a long term by one country to another country. FDI typically engrosses the involvement in technology transmit, regulation, joint-venture as well as know-how (Moran, 2006). The FDI me...