Global and International Business Contexts Essay

IntroductionThis report has been written by the capital of Massachusetts Consulting Group and uses door guards national baseball diamond analysis baffle to evaluate the attractiveness of investment opportunities in the Tunisian drink assiduity. in addition discussed ar twain key instruction issues that collect to be interpreted into account before grooming operations in Tunisia followed by recommendations on two strategies for meekness into the Tunisian booze labor food merchandiseplace. In toll of background to this report, it should be noted that the global market for wine intentness is changing signifi nominatetly with substantial differences in the structure of the wine exertion around the world. For pillow slip, thither argon 232,900 wine producers in France but the excrete 10 brands fit that 4% of the market. In transmission line, quaternary firms experience over 75% of the Australian wine market. Hence there is a marked difference in industry struc ture when comparing the recent land producers (e.g. Australia, Chile, United States) to the Old World firms. These morphological differences argon control by institutional diversity and contrasting patterns of historical developing in countries.However, they are also driven by the rivalrous strategies employed by bumpicular firms which are determining performers discussed in Porters tailball field clay sculpture. Porters diamond model allows an analysis of why virtually industries within nations are more competitive than others and imbibes into account the home base of a chore (Tunisia) as one element that plays an master(prenominal) secern insuccessfully achieving competitive good in the global market. (See stack away 1.1) Part 1 Porters National Diamond analytic thinking Porters national diamond analysis model has four main determinants, which are cipher conditions, cogitate and encouraging industries, requirement conditions as well as system, structure and rivalry. Factor Conditions Factor conditions are those factors that toilet be utilised by companies inherently found within a nation which might provide competitive advantage such(prenominal) as human re stemmas, material resources, knowledge resources, capital resources and infrastructure.These factor conditions dismiss be built upon by companies to improve their competitiveness. Factor conditions could be divided into two resources as home grown resources and highly specialised resources. As Michael Porter described, the home grown resources are strategic and in the case of Tunisia admits the earthy resource of a humour well suited to wine growing, survey of sunshine, fertile soil as well as limit defilement which all aid the industry of grape planting. Political and historical factors by Tunisias history such as the romans, French occupation which resulted in over 600 caves being arrive atd for wine aging and a recent amplify in the Tunisian wine industry after the 1980s has leftfield Tunisia with a number of cooperatives and engineers all with specialist skills in wine merchandise where modern techniques are being utilise creating innovation, technical progress and competitive advantage.The congress low monetary value of employment and salary levels in Tunisia compared to European countries brings with it a further home grown Tunisian competitive advantage together with an increasely skilled base of employees who halt worked in the wine industry. (http//www.tunisieindustrie.nat) Salary Per hour rate In Tunisia 48-hour workweek 1.538 DT per hr Equates to 53p (in British pounds) per hour 40-hour workweek 1.584 DT (http//www.tunisieindustrie.nat)Demand ConditionsThis is the demand for products in the home market which burn come out be influenced by three factors the mix of customers penurys, the scope of municipal demand and growth and how the needs of domestic market translate into the global market. Whilst the annual domestic wine consumption per somebody in Tunisia is only 8/9 litres compared to an average of 60 litres a year in France, a domestic wine industry is probably to hike greater levels of demand athome from loyal customers to increasing levels of tourists (Ariaoui, 2007). Also consumer attitudes and behaviour play a graphic symbol in domestic wine consumption because wine plays a very different role in European culture as compared to Ameri disregard, Australian culture or even Tunisian culture. In Europe wine remains part of everyday life and consumers often drink it along with the daily meal. monetary incentives offered by the Tunisian authorities pee-pee further helpered to support the domestic wine industry making it more attractive to inappropriate investors. As in modernistic world producers, these investments in the Tunisian wine industry have helped encourage innovation enabling Tunisian wine growers to elevate the consistency and the quality of their wines by reducing operating be by the increasing use of machinery to harvest the grapes crops. Tunisia jackpot also realise from the innovatively World which has more extensive and well-developed markets for its grapes, making it easier for wineries to find multiple avenues for sourcing intersection. colligate and Supporting Industries At present, Tunisia make wines ranging from average to high levels of quality and they exportation their products to the whole world including famous brand images such as Carignan, Mourvdre and Muscat of Alexandria. The Tunisia government has supported their domestic wine industry through with(predicate) the construction of railways and roads (national infrastructure) to enhance the innovation and technological development in wine making which in arise is benefiting other related and supporting industries such as transport, holiday and leisure industry, technology and machinery. Taxes at 18% on wine consumption in Tunisia also provide an important income for the Tunisian treasury and so restrictions are unlikely in the early as in such nations as the US, Chile, and South Africa and should ensure proceed support from the Tunisian government. Firm Strategy, Structure, and Rivalry The structure and vigilance systems of firms in different countries can potentially affect competitiveness and how well a comp each is fit to use its existing organisational structure whether it is hierarchal or flat, against current and potential competitive companies.It is very important that the Tunisian wine industry pays close attention to its industry and beau monde structures and strategies to ensure it is contestnt for expansion into the global market. Porter argues that domestic rivalry which involves comp each structures and the need to pursue competitive within a country like Tunisiacould help provide the wine industry with a basis for achieving global pass byers. morphologic differences including institutional differences in wine return countries vary co nsiderably and are often influenced by regulatory agencies such as in France, for instance which employs very strict regulations that constrain production so that producers can only designate sparkling wine as Champagne if they produce it utilise three grape varieties grown in the region with the same name unlike Australia which has a very loose regulatory structure allowing winemakers to source grapes from diverse geographic regions within the country.Different levels of subsidies have led to structural differences globally in wine making such as European governments who often subsidise their small farmers who grow grapes whereas subsidies tend to be cut or nonexistent in around New World nations. In addition, capital markets and corporate impart military group patterns differ between geographic regions where typically Europe tends to have some more privately held firms in contrast to nearly of the largest winemakers in the United States and Australia who have stimulate pu blicly traded corporations. arena ownership and historical patterns of development represent another major factor explaining the structural differences between global wine production areas. For example in the Old World, winemaking has been organised around family farms for centuries. and the land has remained in family ownership for generations. However currently, Tunisian landowners appear to be adequate to(p) to exert power in particular locations where high-quality land is extraordinary.This appears to be a problem where most producers are small, and good new acreage in Tunisia is extremely scarce but it is worth noting that grapes now cover more than 10,000 hectares of land in Tunisia compared to around 100 hectares in 1889 and wine production ranks third in Tunisian agriculture just behind olive oil and chaff production (Ariaoui, 2007). Finally, the competitive strategies of firms can affect industry structure such as the United States and Australia where publicly traded fi rms are much more prevalent. These firms have altered the industry structure and competitive landscape through their erudition strategies, consumer branding and advertising strategies, capital investment plans, and technology initiatives.Consolidation of the wine Industry began to increase over the onetime(prenominal) decade, particularly among the New World producers with the consolidation of some premium wineries merging with direct rivals such as Rosemount creating some major global producers.In monetary value of industrial structure, Tunisia, as yet is a small but relatively high cost producer of wine in comparison but now successfully exports millions of litres of wine annually to Europe, Russia and the US with two thirds of its wine production being controlled by the UCCCV (Union Centrale des Coopratives Viticoles) and is sounding for global partners to exploit and develop Tunisian wine production opportunities.Part 2 present-day(a) charge issues leadership StyleIt is un disputable that many of the global wine producing companies who use to dominate the market are now experiencing a decline in market dole out. There are several reasons that can be used to explain such a decline including leading style. The confiscate leading styles are those that can enable the manager to interact closely both with the employees and the customers and as a facilitator whose major role is to bring together and create an organisational culture that is streamlined a geared towards meeting the goals and mission of the organisation. If the Tunisian Wine Industry is keen to expand, its management team should know that tip others is not a simple task. As a mass manager, a leader has to treat everyone as equal regardless of their surname or position and maintain a pleasant demeanor (Ljungholm, 2014). It is around way on gaining hope and commitment rather than enforcing fear and compliance. To be able to lead well, leaders need to be guided by appropriate leadershi p theories. Some of the theories proposed include supportive leadership model and transformative leadership model.These models should enable the Tunisian wine industry to adapt new environment easily and are described below. confirmatory leadership model Supportive leadership model, is where the manager supports every stakeholder emotionally and professionally in an seek to ensure that he or she performs optimally. It also focuses in forging and creating collaborating and stick to relationships among employees (Mahalinga Shiva, & Suar, 2012). The workplace is often made up of people from diverse backgrounds, with qualify needs and wants and it calls for patience, understanding and proper leadership skills. The supportive model conceptualizes that influencing people to do something is more productive and sustainable than barking orders and instructions to people (Hutchinson &Jackson, 2013). A leader should unendingly keep in mind that as a manager, he or she has to Treat ever yone as equal regardless of their title or position and remember to smile a lot and always maintain a pleasant demeanor. The leader should focus on gaining trust and commitment rather than fear and compliance (Hutchinson & Jackson, 2013).This cannot be achieved without deliberately motive the people to become better. Motivating them requires that you first understand their culture and development needs. The leader should learn to foster warm relationships amongst the Tunisian employees to understand them and chance upon ways in which interpersonal relationships can be improved for a more fulfilling work experience. Transformative leadership model The second most important model is transformational leadership theory or model. This is a new model that was formed in around 1970s following the realisation that there was need of greater flexibility in employment. The current employment conditions have changed significantly and this model is particularly relevant to the Tunisian wine i ndustry which is relatively new as an industry (1980s onwards) and because most of the Tunisians of employable age are from the millennial generation.One thing to note about this new generation is that it is educated and culturally more mixed than any generation before them. In the US this typically means they are job-hoppers who hate officialdom and mistrust traditional hierarchies (Goudreau, 2013). This group of employees, according to Forbes, is voluntary to sacrifice pay for increased vacation time and the ability to work outside the office. According to the study conducted by Forbes, one of the ways of actuate this generation is that they want employers who offer flexibility or rather resource work arrangement. The transformational leadership is characterised by a lot of motivation as under this leadership model, the leader is expected to provide constructive feedback, encourage employees to exert effort and to think creatively about complex problems (Xueli, Lin & Mian, 2014 ).Transformational leadership is based on what is called lead, learn and grow model.. A leader can implement transformational leadership by keeping track of the impact of his action, move in formal evaluation at the right time (Abbasi, & Zamani-Miandashti, 2013). A leader must also be willing and able to learn on an ongoing basis and should realise that learning is never complete. That is why under transformational leadership, no one is an expert (Watts, &Corrie, 2013). Unlike in most European wine producing areas the problem with most leaders there, is that they tend to believe that they are qualified or that they are expert, whereas in Tunisia producers are looking for expertise outside of the country and seem willing to learn. Tunisia wine production has an fortune to analyse and create and take into account the appropriate leadership style for the wine industry and country that will be maximize competitive advantage before wine production operations can be developed in the cou ntry.Part 2 Continued Contemporary Management issuesKnowledge and Change ManagementRapid changes in business and technology and increasing competitions means organisations have to adapt the best training and education to enable them continue to stay on top of their games. The complexity, relative newness and competitiveness of the Tunisian wine industry environment requires that Tunisian companies will have to continuously raise the bar on their effectiveness to compete globally. Top performance increasingly demands worthiness in all areas, including leadership, strategy, productivity, and version to change, process improvement, and capability enhancement on knowledge, skills, abilities, and competencies, trust and motivation. An organisation in the wine industry should ensure that all levels of employees are given the opportunity to continue to improve by acquiring new skills through training. some(prenominal) of the improvements needed in business to meet the demands of changing markets and economic conditions can only result from well-implemented organisational change measured against increased technological excellence and operational efficiency as well as productivity. Kotter (2011) defines change management as the utilisation of basic structures and tools to control any organizational change effort. Change managements goal is to minimise the distractions and impacts of the change.Organisational change is incredibly complex and one of the key skills for managers is to understand the nature of change and to fig up themselves to lead and manage change in their unique organisational contexts. Where there is a lack of knowledge in the Tunisian wine business in terms of management strategies to deal with changing markets and economic conditions, Tunisia will need to look at their alignment business partners and those businesssectors in Tunisia that are successful in order to transfer and recruit the necessary management skills to succeed.Part 3 Market ent ry strategy Strategy No 1Formulating a mode of entry is very important factor that a company or industry intending to expand into a new market should bear in mind and predicts whether the company will turn out to be successful or not. The entry mode, according to foreign Business Publications (2009), is important in protecting the company from facing challenges such as legal, registration and even cultural challenges. In selecting the entry mode, the company should put into consideration the cost of doing business in destination country, and arrange which entry mode will help in cutting down those costs and at the same time will ensure that the Tunisian wine industry gets maximum profits and also the largest market share in the target nation. In terms of advantages and based on the market situation, this paper proposes that the Tunisian Wine Industry should adopt cross-border strategic alliances to take advantage of a number of benefits compared with the export strategies.For ex ample it creates different synergies in the domestic and immaterial markets. In addition, it promotes production alliances, which help each of the confederative firms to reduce production costs both in their domestic plants as well as their foreign plants. As far as dispersal costs is concerned, the cross-border marketing, which is a product of cross-border strategic alliance, reduces the allied firms distribution costs in their foreign market (Qiu, 2006). Compared to other entry mode methods, cross-border strategic alliances create different synergies in the domestic and foreign markets (Qiu, 2006). Some of the synergies include production cost synergies and distribution costs synergies.These synergies will help the Tunisian wine industry to reduce the production and distribution costs and wherefore increase profits. In terms of disadvantages, cross-border strategic alliances can sometimes lead to a loss of control of individual wine production and their related services. Member s of Tunisian wine production whitethorn well find that they can become restricted and unable to take decisions by themselves without first referring to the alliance partners. In addition, the complexity of making business alliances work is high and could further flummox businessstructures, exacerbate cultural differences and have detrimental personal effects on intercompany working relationships.Part 3 Market entry strategy Strategy No 2Alternatively, the Tunisian Wine Industry may enter into new market through what is called licensing. Licensing mode of market entry allows foreign firms, either exclusively or non-exclusively to manufacture a authorize product in a certain market under peculiar(prenominal) condition and for this reason is particularly relevant to the situation faced by the Tunisian wine industry. A licensor in the home country makes limited rights or resources available to the licensee in the foreign country in which he or she is to do the business. This includ es any resources may like patents, technology trademarks, managerial skills that can make it possible for the licensee to manufacture and sell in the foreign country a similar product to the one the licensor has already been producing and preparation in his home country. This enables the licensor to have several shares in similar companies without inevitably having to open a new branch in other countries.The licensor is unremarkably paid on basis of one time payments, mechanical fees and royal family payments usually calculated as a percentage of sales subsequent thereafter. The decision of making an international license contract depend on the respect that foreign government show for intellectual property. The licensee should be able to cooperate with the licensor to avoid unhealthy completion in the market. In terms of advantages, licensing is a flexible agreement and can be adjusted any time to suit the conveniences of the both parties. However, this mode of entry can be dis advantageous to the licensee, as parts of the profits have to be shared to the licensor on these terms. Recovering the initial profit and getting likely profits can take a relatively longer level of time. Again it can also result in the loss of control over manufacturing and marketing of goods and export to other countries. A further assay to the Tunisian wine industry to take into account when considering this strategy is that the foreign licensee may sell similar competitive wine products after the licensing agreement has expired.Recommendations To Board of DirectorsTo conclude, when entering into a new market, there are many existing factorsto keep in mind. Porters national diamond model can help potential investors by allowing them to understand the large environment in the Tunisian wine industry. Generally speaking, factor condition, demand condition, related and supporting industries and rivalry could encourage the entering activities. It is worth noting that the past high cost performance of Tunisian wine could also become a strong competitive advantage by restricting new entrants into the Tunisian wine producing market. As for recommendations, Tunisia offers the advantages of a natural wine producing climate and fertile soils, a relatively low cost of employment, significant pecuniary incentives and investment in the countries infrastructure by the Tunisian government and open company structures and land ownership.The limitations of Tunisian wine industry relate to the relatively higher costs of wine production in Tunisia, increase in licensing opportunities across the wine industry and cross border alliances which can complicate international working relationships and introduce some uncertainty in the future day as licensees from other countries continue to exploit Tunisian wine production opportunities resulting in possible delays in the release of profits available to international investing businesses.Appendices Appendix 1Insert 1.1 Porters National Diamond outline ModelReferencesAriaoui Jamal, (Web) A Guided Tour of Tunisias Wine road, Magharebia, 2007 Rugman, A. & Collinson, S. 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