Managing across borders

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Executive summary
This report is discussing the factors of globalization and internationalization in the context of the
selected automotive industry. the impact of globalization on the business and the economic
condition of related country are discussed in this report. This report also showing the challenges
of doing business in the context of different socio-cultural environment of different country. The
challenges faced by the business organization’s that are willing to expand their operation in the
Middle East is also shown. Finally, the importance and usefulness as well as the implications of
strategic alliances are discussed in this report.

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Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Analyzing the strategies and process the Ford Motors has used to expand into Asian market...5
Defining challenges and problems that Ford Motors has faced as it expands into the Asian
market..........................................................................................................................................6
Discussing the impact of globalization in today’s business and the work plans that the managers
must know to face those challenges.................................................................................................8
Identifying and discussing outsourcing and offshoring concepts and identifying challenges,
opportunities and problems relating to globalization in the context of Ford...............................9
Analyzing the socio-cultural implications for managers in doing business between Australia and
India in the context of Ford Motors...............................................................................................10
Identifying the key differences in negotiation and decision-making process used between
American and Middle Eastern business organization....................................................................11
Identifying and discussing the changes that the American managers need to consider in
expanding their business in the Middle East.............................................................................11
Analyzing IKEA’s business opportunities and challenges in Russia............................................13
Discussing the ways by which IKEA can adhere to its own ethical standards both in Russia
and in the global market............................................................................................................14
Identifying the intricacies of strategic alliances as well as merging two companies in the same
industry in the context of Fiat-Chrysler.........................................................................................15
Anticipating the growth of the Fiat-Chrysler Automobiles in the automotive industry............15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

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Introduction
Ford Motor Company in an American automobile company which was established by Henry
Ford in 1903 at Michigan in the United States of America. It is multinational company with its
13-manufacturing area around the world. It is the 5th largest automobile production company in
the world. According to the FY of 2017-18, its net income is $7.602 billion. The company has
operated well in all over the world. The management of Ford Automobile has always tried to
ensure to cope up with the recent globalization theory. They are trying to implement new
strategies for expanding their market in Asia and the Middle East. They are also trying to
producing the best car in the reasonable price so that their brand can be available to more people
around the world.

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Defining an automobile business that has expanded across borders
into Asia.
Ford Motor is an American automobile company which was established in 1903 in Michigan in
the United States of America. It is a multinational automotive company which is considered the
5th largest car manufacturing company in the world (Ford Motor Companies, 2019). Ford has its
production operation in 11 countries across the world. Ford motors entered into the Asian market
in 2001 by forming a joint venture in China by making its first passenger vehicle. After than it
has expanded its operations through Thailand, Malaysia, Singapore Hong Kong and the
Philippines.

Analyzing the strategies and process the Ford Motors has used to expand into
Asian market
There are several entrance strategies that can be exercised by a company to entering into a new
business region. Some of those are given below:

Licensing: It is an agreement by which one business organization can use the licensors property
for a particular period of time.

Franchising: It means doing an agreement with a company that is already operating in the
marketplace and allow it to use the company’s identity to sell the company’s products.

Direct entry: Directly entering to the market.

Joint venture: Agreement of doing business in a combination company. It is a well-recognized

entrance strategy to expand a business in outside its origin country’s border (Bartlett and
Beamish, 2011).

When the Ford entered into the market of Asia, in China they had started to doing their business
in joint venture of local companies. In Taiwan they have started business in joint venture with
Lio Hu. In Thailand they have started their business in joint venture with Mazda. After that they
have doing well in Asian market that have given them opportunity to do business by applying
direct entry in the market.

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Defining challenges and problems that Ford Motors has faced as it expands
into the Asian market.
Ford is the 5th largest automobile company in the world. It has produced world’s best quality cars
since its establishment and expanding its market place across the whole world. In 2001 by
entering in the Chinese market, Ford Motors had Launched in the Asian market. For entering
into the Asian market, the management of Ford Motors had analyzed its market by using several
popular theories about market expansion beyond the country’s border. Here the Porter’s Five
Forces are analyzed based on Ford’s entrances in the Asian market.

Competitive
rivalry

Threat of Threat of
substitution new entry

Supplier
Buyer power
power

Figure: Porter’s Five Forces. Sources: Self-designed.

Competitive Rivalry: Competitive rivalry occur when different companies offer same type of
products or indifferent products or services in the same market segment. It is the most important
matter of concern for a business that is trying to enter into a new market area (Plunkett and
Rattner, 2010). When Ford entered into the Chainees market in 2001, there are two world class
car manufacture brands were there. Ford’s own country’s the general Motors was there in the
China in 1995 and Garman company VW was there from 1991. So, at the very beginning of
there business, they have to face acute competition with that two-world class brand.

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Threat of new entry: Threat of new entry happens when a new business come to the market.
After entering into the market in 2001, several small and middle-sized company as well as
world’s giant car manufacturer entrance in the market. Again, several Asian companies are
introduced in the market. That create problems in there marking strategy in the context of the
Asian market.

Supplier power: It means the strength of suppliers to manipulate prices in the market place. It is
composed of numerous groups. Mainly in the Asian countries the Ford Motors get their labor
forces very easily and in a cheap price. That is an important factor in expand their business.

Buyer power: It is the power of buyer or customers in the market place to manipulate price of
the products. Buyer’s income, their buying mentality have great impact on the business. Growing
economic growth in Asia make its people capable of earning more money and sending more on
buying on luxuries products like cars. So, Ford has a great opportunity to expand its business in
Asia by using its people increasing financial growth.

Threat of substitution: It means some other products those can substitute current product of the
market. There are a lot of companies in the market. every year new companies are coming into
this industry. Asian own companies like Tata, Hyundai, Suzuki and so on are doing business
successfully in this market. This threat of substitute products has to give more importance but the
management of Ford.

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Discussing the impact of globalization in today’s business and the
work plans that the managers must know to face those challenges.
Globalization is the process by which people of different countries can connected with each other
for many purposes mainly for business. By the concept of globalization, borderless market
concept has come in this world. It is a business process where one country can easily enter into
another countries market like there are remaining no borders or boundary. Some of the impacts
of globalization on the business are discussed below:

 Due to globalization, more and more foreign company can enter into the market segment
of a country. It creates heavy competition among them in resource collection and selling
their products.
 Many large foreign companies have invested in the market for expanding their business.
This huge amount of investment creates rapid economic growth.
 Globalization make people aware of different kinds of new invention. This new invention
can help business to expand rapidly.
 In the process of globalization, companies can sell their products in various market. This
will enable them to achieve economy of scale.
 Globalization helps business to use scarce resources from around the world. That can
ensure the best use of resources.
 Globalization also increase business merger, combination process.

To cope up with the challenges offered by globalization, managers need to be high skilled in
their decision-making process. Accurate decision based the situation of the market must be taken
by the managers to ensure their business’s success in the long run (SALONER, 2018). All the
managers need to be efficient in the use of latest information technology and all the relevant
information about the business to make it profitable. Globalization offers huge number of
competitors in the market. It will also make the manager’s ability to work among competitors
who are offering the same products for their customers.

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Identifying and discussing outsourcing and offshoring concepts and
identifying challenges, opportunities and problems relating to globalization in
the context of Ford.
Outsourcing: Outsourcing is the process of giving outsiders the opportunity to do a company’s
or other institute’s work (Doh and Luthans, 2018). To reduce the quantity of paper work, work
load in the office hour, giving huge time in the low importance bearing paper work outsourcing
is done by most of the giant companies. Outsourcing is blessing of globalization. It can reduce
the cost of the company and make the whole operation effective and efficient.

Offshoring: Offshoring means obtaining work or producing products and services by the people
of different locality or the foreign country (Williams, 2011). Globalization has created great
opportunity for offshoring. In the context of Ford, they have done huge number of works by
offshoring. Ford is an American company. In America, production cost of a car is much higher
than producing the same car in Malaysia or Thailand. So, they have adopted the concept of
Offshoring. It will help them to reduce their cost of production, increase its production methods
flexibility and help them to gain economies of scale.

For globalization concept, a multination business like Ford will have lots of opportunities in their
business. Ford can easily access in the market of foreign country. That will increase its target
market area. So, the company can earn a huge amount of profit. But they will also face some
challenges and problems like facing huge amount of competition in resource collection and
continuing business operation. Sometimes globalization create market imbalance because in the
borderless concept anybody can enter into the market and easily manipulate the market.

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Analyzing the socio-cultural implications for managers in doing
business between Australia and India in the context of Ford Motors
Socio-cultural implication of a certain area is consisting of the belief, customs and tradition of
the people of that region (Deresky, 2010). The main components of the socio-cultural
environment of a business that should be maintained by the managers are the detail information
about the demographic information about the people of a country like their taste of choice, age,
gender, law, politics, technologies and so on.

Ford Motors had started its journey in Australia in 1925 as a subsidiary company of Ford
Automobile company. Ford is the leading automobile company in Australia. In Australia they are
the largest automobile company which has invested $2 billion in research and development work
of the company’s new model cars. In Australia, their market has moderately increased over the
last few decades. Ford Motors had started its business in India in 1995. It is the 6 th largest
automobile company in India.

In both of the country Ford Motors are operating with great success. But there are some socio-
cultural issues which are separate from one another. In the context of Australia, Ford is the
largest automobile company. The buying power of a car is higher in Australian people than
Indians. The per capita income rate of Australian’s is 45,780 PPP dollars. The per capita income
of Indians is 7,060 PPP dollars which is almost 6 times lesser than the per capita income of
Australians. So, the Ford company can launch their most luxuries cars model in Australia than in
India. Population is another important socio-cultural factor. The population of India is the second
highest in the world almost 120 crores. It may give the Ford better opportunity to expand their
market in India. Again, the Indian people are relying on their own car brand Tata which offer the
cheapest car in the world. So, this matter needs to be concerned as well.

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Identifying the key differences in negotiation and decision-making
process used between American and Middle Eastern business
organization.
In the context of America doing business is easier than Middle East. In America for launching
and operating a business innovative idea is must. Historically Americans are developed risk
taking attitudes that make them world’s best in entrepreneur business. So creative, innovative
and life changing business decision are appreciated by their customers. Legal documentation of a
business is much easier in America. America is considered world’s 7 th best country in doing
business (World Bank, 2019). So, decision making process in quite easier in business context.

In the context of Middle Eastern countries, doing business is much difficult. From the past
decade, in most of the Middle East countries have experienced war and increasing number of
crime activities. All this activity is causing huge damage in the business environment in Middle
East. Many legal restriction, unwillingness of people in doing business have created huge
problems in Middle East countries in doing business activities. It can be identified quite easily by
looking at their business ranking. Bahrain is a Middle East country which has the most business
friendlier environment in Middle East but it is in the 62 position in world ranking. So, it creates
huge problems for the business managers to take important business decision in Middle East.

Identifying and discussing the changes that the American managers need to
consider in expanding their business in the Middle East
As an American business organization Ford Motors has to faced a lot of challenges in operating
their business in the Middle East. Traditionally Ford’s market portion in the Middle East very
small due to the Arab countries boycott of companies which have business relation with Israel
(Kumar, 2014). So, to expand their business in the Middle East Ford Motors have to develop
some new strategies that may be appreciated by the customers in Middle East. Traditionally the
Middle Eastern people are rich and they want to use luxuries products, so Ford can launch
lucrative luxuries cars in the Middle East region. They should be very careful in doing any types
of business contract with the local people of the Middle East. Any thing that can go oppressed
with their thought should be avoided. In the Middle East business decision may take long time to

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implemented and the American managers should consider this. Finally, the rules and regulation
should be obeyed strictly to survive and success in the Middle East market.

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Analyzing IKEA’s business opportunities and challenges in Russia
IKEA which is one of the retail furniture giants in the world, started their first business operation
in Russia in 2000. Its business journey in Russia is not going on smoothly from the beginning of
its operation. They have to face a lot of challenges in doing business in Russia (Icmrindia.org,
2019). It had faced several problems like fire in the store, various government restriction
regarding health and safety, electricity, tax purposes and so on. IKEA’s business challenges can
be analyzed by the SWOT analysis. Relevant discussion is given below:

Strengths Weaknesses

SWOT
Opportunitie Threats
s

Figure: SWOT analysis. Source: Self -designed.

Strengths: It is an internal factor of a business organization. AS IKEA is one the best furniture
retailer in the world their main strength is their previous experiences in doing the same type of
business in several market place around the world. Innovative design is also another core
fundamental strength of the IKEA.

Weaknesses: It is the second internal factor. IKEA’s main weakness was their internal governess
and managing process. They had faced difficulty in reading the market of Russia as well.

Opportunities: Russia had offered the IKEA a huge market for their furniture business.
Capitalism acceptation was another big opportunity for them in the context of Russia. Again,

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they can collect their necessary raw materials easily from Russia. All of these opportunities
attract them in investing in the Russian market.

Threats: The business path of IKEA was not smooth since they had entered into the Russian
market in 2000. Various obstacle including different government policies go against their
business policy. That’s why the had also faced corrupt bankruptcy in Russia.

Discussing the ways by which IKEA can adhere to its own ethical standards
both in Russia and in the global market.
IKEA can adhere to its own ethical standards both in Russia and the world market by obeying
the following procedures,

 The management of the IKEA is very proactive. They should be maintaining zero
tolerance principle to prevent corruption and illegal business. When the company can
prevent corruption from their business operation, they will surely become successful in
adherence to their ethical standards.
 The IKEA follow rules and regulation strictly. In their factory there are no room for
employing children as worker. It should be maintained.
 They should not offer or accept any kinds of bribe to get some extra benefit from a
particular business market region.
 The management of the company as well as the employees should follow company’s
corporate coherence guidelines strictly.

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Identifying the intricacies of strategic alliances as well as merging
two companies in the same industry in the context of Fiat-Chrysler.
Strategic alliance means an agreement that happens between two or more parties to achieve
common business objectives (Lynch, 2018). It is not like legal joint business such as partnership,
joint venture corporations. Strategic alliance occurs when one company has some resources and
expertise and another company has some others. when they want to share those resources with
each other than they can form strategic alliances. Strategic alliance can be formed various ways
and the most popular ways are merger and acquisition. When two companies from the same
industrial sector merge with each other like Fiat- Chrysler, they can easily share their resources
with one another. In the highly competitive automobile, Fiat-Chrysler can be become successful
by sharing their resources and working jointly. There are some others possible intricacies relating
this merger. Some points are identified below:

 When they have started their business jointly, they can share their resources and expertise
to achieve their common goal, leading the automotive industry.
 As both of the companies are from the same sector, they have vast experiences about this
business.
 They can use most modern technologies relating their business because merger ensure a
very strong capital base for the Fiat-Chrysler.

Anticipating the growth of the Fiat-Chrysler Automobiles in the automotive

industry
Fiat-Chrysler is the 8th largest car manufacturer in the world. It is established in 2014 by merging
Fiat and Chrysler. According to the FY 2017-18 the company’s net income is $4.215 billion (The
Economist, 2019). This rapid growth of the business is become possible after the merger
happens. The management of the company think that they can take their net income to $5 billion
dollars within the ending of 2019. Though their current market position is the 8 th amongst all
other car brands in the world, they have planned that they may become the wordlist leading car
manufacturer company within the next two decades.

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Conclusion
Globalization and internationalization play vital role in the context of todays business. The
borderless marketing concept has gained much popularity worldwide. World’s leading
companies’ managers are always thinking about how to cope up with this phenomenon. Different
region offers different types of business opportunities and challenges for the business
organization. some countries are more business friendly and some countries are not. Strategic
alliances can help businesses a lot to survive in the competitive business world. Finally, the
managers should have posses enough knowledge to become successful in complex business
situations.

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Deresky, H. (2010). International management. 7th ed. Upper Saddle River, N.J.: Prentice Hall
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Doh, J. and Luthans, F. (2018). International Management. New York, NY: McGraw-Hill

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Kumar, B. (2014). Economic and Financial System in Middle East: An Examination. Middle

East Journal of Business, 9(4), pp.21-25.

Lynch, R. (2018). Strategic Management. Harlow, United Kingdom: Pearson Education Limited.

Plunkett, W. and Attner, R. (2010). Introduction to management. Belmont, Calif.: Wadsworth.

SALONER, G. (2018). STRATEGIC MANAGEMENT. [Place of publication not identified]:

JOHN WILEY.

The Economist. (2019). The Economist - World News, Politics, Economics, Business & Finance.
[online] Available at: https://www.economist.com/ [Accessed 17 Jan. 2019].

Williams, K. (2011). Strategic management. New York, N.Y: Dk Pub.

World Bank. (2019). World Bank Group - International Development, Poverty, & Sustainability.
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