1 Introduction
Globalization has helped the businesses to expand in an extreme manner and at the same time, it has made the businesses to survive against heavy competition. Doing business internationally has become a major challenge in the highly competitive business environment (Carlton, 2011). The primary task for any major business is to select an appropriate country, to expand his business, which will best suite their business operations (Donaldson, 2012). Each country differs from other countries and it is the responsibility of the business men to identify the uniqueness of a nation, which will help in gaining competitive advantage for his business over the other businesses in its industry (Hodgetts, 2011).
This assignment aims at studying and analysing the investment and operational possibility of a foreign company in the country of England. The report covers the England market and its competitive status. Also the report analyses the economic, political, social and cultural factors that shows England’s uniqueness, its business practices and its corporations. The report also provides strategic analyses of England with respect to the competitive intelligence and evaluation of location. Finally, the report identifies the strengths and weakness of the firms in the country of England and identifies the opportunities and threats for the foreign countries that invest in England. The report concludes by listing out the ways by which certain successful organizations have succeeded in England.
2 Market of England
The industries in the country of England can be broadly classified as agricultural industry, manufacturing industry, services industry, construction industry and energy and water industry (Luther, 2011).
Figure 1 – Industries of England
Source – (Collinson, 2012)
2.1 Agricultural Industry
The agricultural industry has met a huge decline from the year of 1830 onwards (Hodgetts, 2011). With the invention of high pressured steam engine, most of the citizens of England who were involved in the business of agriculture and fishing started to build the railways and large number of agriculturists did not return back to continue their agricultural business and were settled in the cities as they were able to gain more benefits (Doh, 2013). Only few turned back to the rural life style which made the agricultural and fishing activities to decline (Donaldson, 2012).
At present England is the smallest to be in the business of agriculture. Only one in hundred people of England were involved in doing the business of agriculture and fishing activities (Armstrong, 2014). Meanwhile, the United States of America started to export surplus of the agricultural products by means of steam powered railways and ships, which also brought down the agricultural activities. With the improvement in technology life large refrigerators, England was able to store huge amount of agricultural products that was imported. The technologies like tractors, pesticides, fertilizers etc. helped the few farmers from developing crops in a successful manner without failures within shorter time (Wrenn, 2013). The foreign companies investing in the agricultural business of England will not be successful and they will not be able to perform operations in a successful manner, as it will be difficult to find employees to work in the fields (Simkin, 2012).
2.2 Manufacturing Industry
With the growth in technologies, the manufacturing industry in the country of England was able to achieve heights. With the introduction of new machineries and improved technologies England was able to compete with other countries (Sergi, 2010). The iron and steel manufacturing found great heights in the country, as they used a cost efficient and time efficient manner of producing iron and steel from the pig iron. England has a good infrastructure to lead the world with its manufacturing industries. With the better transport links, the manufacturing organizations are able to bring employees from different parts of the country, so that they are skilled enough to perform their tasks (Luther, 2011). England became the world leader in the manufacturing of textile products and other trendy clothing that best suites the changing life style of the people (Wrenn, 2013).
The manufacturing industries of England are more mechanised and it needs only few employees to operate the machineries in an effective and efficient manner (Comfort, 2012). The growth of the manufacturing industry in England started to decrease gradually because of the people’s preference of the quality, affordable and differentiated products that were imported from other countries, especially Germany. With the heavy imports, the operations of the manufacturing industries have slowed down (Doh, 2013).
Figure 2 – England’s Import Partner
Source – (Delener, 2014)
The foreign companies investing in the manufacturing industry of England will be successful and they will be able to perform operations in a successful manner, as there are enough resources and demands for good products from the people of England (Donaldson, 2012).
2.3 Service Industry
The figure below shows the industries that are considered under the service industry in the country of England.
Figure 3 – Service Industries in England
Source – (Doh, 2013)
England is facing a steady growth in the industry of services. The country is able to improve its gross domestic products rate with the help of the service industries when compared to the manufacturing industries (DuBrin, 2011). With the changing life style and modernisation of the people of England, it has become a trend to have parties and dinner with their friends and family at restaurants and hotels. There are many companies which have invested in the service sector of the nation (Hodgetts, 2011). The literacy rate of the people of England is really huge, which has made them to create more opportunities in the service industries. With the development of new medicines and with great researches, England is able to grow up in the service industry (Klosek, 2012). England is also able to provide leading support and services to the information technology industry and is able to reach heights. The country is not only involved in providing services to the domestic organizations but is also exporting the services in different forms to other countries (Palmer, 2015).
Figure 4 – England’s Export Partner
Source – (Delener, 2014)
The foreign companies investing in the service industries of England will be successful, but will have heavy competitions, and they will be able to perform operations in a successful manner, as there are huge numbers of well-educated people in England (Doh, 2013).
2.4 Construction Industry
The construction industry has also started to grow up in the recent years. Newer projects of building dams, bridges and other huge buildings have generated new opportunities in the construction industry. This industry, in England, mainly employs only men as it requires a lot of physical work (DuBrin, 2011). The foreign companies investing in the construction industries of England will be less successful and they will not be able to perform operations in a successful manner, as it is difficult to find labours for daily wages and the employing contract labours for constructing building has also become expensive in the country like England, which has more educated people (Johnson, 2011).
2.5 Energy and Water Industry
The energy and water industry includes the mining and quarrying, electricity, gas, steam and air conditioning supply, water supply, sewerage, waste management and remediation activities (Klosek, 2012). Most of these activities are carried out by the government of England and the foreign companies have fewer roles in the energy and water industry. Even if foreign companies start this business, the intervention of the government in their business activities will be more (Palmer, 2015). So, the foreign companies investing in the energy and water industries of England will be less successful and they will not be able to perform operations in a successful manner (Klein, 2011).
3 Competitive Status of England
3.1 Productivity
The labour laws of the country of England are strict and make all the organizations to provide high wages and salaries to the employees. This encourages the employees to put in more efforts to increase the productivity of an organization (Carlton, 2011). The labour law also makes it difficult to terminate the workers who have worked more than a year. This makes the employees to be careless at their jobs and slow down the production process (Hodgetts, 2011). England’s productivity showed growth at an average of 2.3 % per annum before the crisis of 2008 and later showed a decline of 1 % every year in the manufacturing industries (Comfort, 2012).
Figure 5 – England’s Productivity in Manufacturing Industries
Source – (Johnson, 2011)
Though England shows downtrend in the productivity of manufacturing industries, England is able to achieve high productivity in the service industries. Nearly 5.8 % of productivity has been increased in the service industries from the year of 2013 to 2014 (Klein, 2011). The trade block of England also plays a major role in facilitating the country to increase the productivity of the firms (Luthans, 2011).
Figure 6 – England’s Productivity in Service Industries
Source – (Luthans, 2011)
3.2 Investment Spending
Earlier, England does not plan well in making their investment spending. The industries of England provided increased compensation and other benefits to the employees, imagining that the productivity will be increased, but that did not happen (Klosek, 2012). This made the firms to take loans from the banks at greater interest rates, more taxes and more than 50 % was contributed by the government to make the situation not turning worse (Klein, 2011). But recently, England is able to plan its investment spending in an effective and efficient manner, which helps the organizations to achieve competitive advantage over its foreign competitors. Also with the guidance of the trade block of European Union, England is able to make plans in an orderly manner (Armstrong, 2014).
3.3 Education
The literacy rate of England is found to be 99 % and the people are all highly educated in the country of England. The students at their high school itself are well versed in their vocational education and training (VET) (DuBrin, 2011). Job related skills and technical skills are been developed by the students which helps in developing many career opportunities for themselves and also helps in developing the organizations and the country as a whole. The theoretical and practical knowledge gained by the students in the universities helps them in making effective and efficient decisions in the organizations (Wrenn, 2013).
4 Distinctiveness of England
The economic factor, political factor, social factor and the cultural factor of England, which are given below, show the uniqueness of the country of England, which helps the foreign investors to consider England an attract country to make investments (Carlton, 2011).
4.1 Economic Factor
England is a mixed economy, where both the private and the government have the power to run the business. It is the private organization which decides what to produce, how to produce and for whom to produce and it is the government that regulates the organizations if it is found to affect the country in a negative manner (Johnson, 2011). Being a mixed economy, England attracts many foreign investors. The reduced interest rates in the banks of England, flexible exchange rate and the cut of corporate tax help in attracting foreign direct investments (Hodgetts, 2011). The unemployment rate in England is 5.4 % in the year of 2015 which has made the GDP to reach 2.678 trillion USD and attracts foreign investments (Carlton, 2011).
4.2 Political Factor
England is a politically stable country and the influence of military is very less in the political decisions. The politically stability of England has the ability to attract more number of foreign investors and foreign direct investments to invest in the businesses of England (DuBrin, 2011). The constitution of England is also flexible, which helps in introducing new laws without taking much time. This helps the businesses to operate in an effective manner (Wrenn, 2013). The change in the laws and regulations of the country like labour laws, consumer protection legislation etc. has the potential to affect the foreign investments inside the country of England (Luthans, 2011).
4.3 Social and Cultural Factor
The changing tastes and preferences of the customers, the purchasing behaviour of the customers and the changing life style of the people of England can be considered as the social and the cultural factors that help in developing new businesses and also help in attracting foreign investors to invest in the country of England (Comfort, 2012). The youths are becoming highly modern and the people are becoming more health conscious, which has encouraged more businesses in the fashion clothing and organic restaurants, respectively (Carlton, 2011).
4.4 Business Practices of England
The organizations in the country of England, gives more importance to the corporate social responsibilities. The government of England supports the organizations in its CSR activities by levying reduced corporate taxes (Sabath, 2012). The business people of England give more importance to time. The people are punctual and they expect all the other business people to keep up with the said time for the meetings or other gatherings (Delener, 2014). The business people of England consider time as their economic resource. The business operations in the country of England do not involve bribery or corruption and they also avoid receiving expensive gifts officially (Sabath, 2012).
5 Strategic Analysis of England’s Market
The foreign companies, that need to invest in England and need to expand its business, have to conduct strategic analysis in order to understand the market of England. The overall strategic analysis comprises of the analyses like competitive intelligence and evaluation of location (Comfort, 2012).
5.1 Competitive Intelligence
The competitive intelligence helps in gathering the external information and analysing the internal infrastructure of the country (Johnson, 2011).
External Information Gathering
It is the secondary source of information that helps the foreign organization to understand the competitors that they need to compete with after entering the country of England. The foreign company will be more successful in its business venture if it is able to gather quality information about the competitors before expanding the business (Luther, 2011). The advertising and sales brochures of the competitors will help the foreign company to understand the prices and offers and also the way the competitors position their products to the people of England. Newspapers and magazine articles of the competitors help the foreign company to understand the future plans and new products of the organization (Simkin, 2012). The external competitive information can also be gathered from the annual reports of the competitors and the sales persons who will have more knowledge on the benefits and complaints of the competitor products (Zsolnai, 2012).
Internal Infrastructural Analysis
When the national markets are found to be similar to one other to a great extent and when the business units in the domestic country exchange and share their assets with the foreign company to facilitate the growth of sales for both business units, then coordinated infrastructure can be used by the foreign company (Collinson, 2012). When the national markets are found to be similar to one other to a great extent and when the business units in the domestic country exchange and share only few of their assets with the foreign company, then market coordination infrastructure can be used by the foreign company (Comfort, 2012). When the national markets are not found to be similar to one other and when the business units in the domestic country exchange and share their assets with the foreign company to facilitate the growth of sales for both business units, then resource sharing infrastructure can be used by the foreign company (DuBrin, 2011). When the national markets are not found to be similar to one other and when the business units in the domestic country does not exchange and share their assets with the foreign company, then autonomous infrastructure can be used by the foreign company (Collinson, 2012).
5.2 Evaluating Locations
Once the country in which the business is to be expanded is decided, it is then necessary to decide the region in which the business is to operate. The business operation has to be carried out in the urban region in an attractive environment, so that the organization will be easy and attractive for the customers and suppliers to access (Hodgetts, 2011). The organization must be located in a region where the skilled and knowledgeable employees are available at a reduced cost and where the rent for the land and the building has to be at its minimum. The organization has to be located in a region where it will be able to expand the business in the future (Sabath, 2012).
6 SWOT Analysis
The following SWOT analysis shows the strengths and weakness of the domestic companies in England and also the opportunities and threats that are faced by the foreign companies investing in the country of England.
Strengths
The country of England has the sufficient resources for the survival of the domestic companies. The country is politically stable which affects the domestic companies in a positive manner, which also helps in developing and maintaining good industrial relations in England (Delener, 2014). The unemployment rate in England is very less when compared to other countries which facilitates the domestic organizations with sufficient labours and high productivity. The people of England has got high level of literacy, which helps the domestic organizations to gain more number of skilled and qualified employees in order to achieve competitive advantage over other companies of other nations (Wrenn, 2013). English as the first language in England and the good educational system that provides vocational education and training to the high school students improves the businesses in the country of England. The less interest rates and the cut of corporate taxes for the organizations encourage competition between companies and improves the business (Zsolnai, 2012).
Weakness
The transportation system in the country of England is found to be poor, which affects the trade and other operations of the domestic organizations. The currency of England, pound, is of more value which results in making the exports as an expensive one and making the imports as a dearer one (Hodgetts, 2011). Though the customers of England spends high amount to purchase the products offered by the domestic companies, the levels of consumer debt is found to be high (Zsolnai, 2012). So, if the interest rate is increased most of the customers will be affected in a negative manner and the sale of the domestic company products will be reduced greatly. The cost of the land and building in England is costly, which increases the cost to the company and thus increases the price of the products offered by those companies (Collinson, 2012).
Opportunities
The trade block of England, European Union, has reduced the tariff and non-tariff barriers of trade, which will encourage the foreign companies to expand their business in the country of England (Wrenn, 2013). The foreign companies can invest huge amounts in the research and developments, so that more innovative products will help them to compete with the domestic company products and can achieve competitive advantage in an effective and efficient manner (Klosek, 2012). England has got larger market which can be utilised by the foreign companies to trade in a successful manner. The foreign companies can make use of the migrants or can appoint a person from other country for the purpose of filling up the skill gap (Armstrong, 2014).
Threats
The competition has increased in the country of England, as the cost of labour is less and it is a great threat for the firms to survive in the highly competitive business environment. England imports many cheap products from Asian countries like China, Japan etc. which reduces the sale of the foreign companies in the England (Simkin, 2012). The trade block of England has reduced its spending on England, as it needs to focus on providing investments to the new countries. Any such crisis like the 2008 crisis will affect all the businesses of England in an adverse manner (Wrenn, 2013).
7 Ways to achieve success in England
Exporting
The foreign company can start their operations in England just by exporting their products and if they are able to sell their products in a successful manner, they can switch over to other modes and gain more profits (Wrenn, 2013). By this the cost of founding manufacturing units in England can be saved and the company can get the advantage of economies of scale from its sales volume (Carlton, 2011).
Licensing
The foreign company can start their operations in England by making an agreement with an England company to produce the products that the foreign company requires to manufacture for a negotiated fee (Wrenn, 2013). The licensee takes up the responsibility to manufacture the products by investing the capital required. Licensing helps the foreign company to enter England without any developmental costs or any risks (DuBrin, 2011).
Franchising
The foreign company can start their operations in England by means of franchisee in England for a royalty payment (Wrenn, 2013). The franchisee in England will abide by the rules imposed by the foreign company, by which the foreign company can have more control and a closer look. KFC has succeeded in entering many countries by the way of effective franchising. Franchising will help in entering England quickly and at low cost (DuBrin, 2011).
Joint Ventures
The foreign company can start their operations in England by establishing a joint venture with a company in England (Sabath, 2012). Either the companies can have a 50 % share over the profits and can make equal investments or the foreign company can have majority shareholding to have more control over their business. By this method, the firm can succeed with the help of local partner’s knowledge about the local customers and the culture of England (Collinson, 2012).
Wholly Owned Subsidiaries
The foreign company can start their operations in England by setting up a new subsidiary unit in England or acquire an existing company of England and can manufacture and sell their products to the customers of England (Carlton, 2011). By this mode of entry, the foreign company will have tight control over its subsidiary and can realize the location economies (Hodgetts, 2011).
8 Conclusion
The foreign company will be able to invest in the country of England and perform its operations in a more successful manner, if it offers a distinguished product or service at an affordable price (Comfort, 2012). The foreign company will have more opportunities in the service industries. Though it is costlier, establishing a wholly owned subsidiary in England will be an appropriate way to achieve success in their business expansion in England (Johnson, 2011).