Global Management
Discussion Board Posting from Classmates
Integrative and Analytical Tools
Integrative and analytical tools are varied and can be utilized for a myriad of different things, from internal business practices and processes to external forces at work in the market. However, when looking at the big picture of global expansion a few specific business tools come to the forefront. These are the tools Ferrer needs to be successful in their Global Strategy.
What Are the Best Tools to use in This Situation?
By far the best tools Ferrer can utilize for their entrance into the Chinese furniture market are the SWOT and PEST. SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or organization identify the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning (Wikipedia, n.d.) PEST stands for Political, Economic, Social, and Technological factors. Some have expanded PEST to PESTLE, to include Legal and Environmental (Wikipedia, n.d.). For the time being we will not. Initially, I was focused on benchmarking; however, I now see benchmarking is incorporated into these two analytical tools. Benchmarking will be a part of the process rather than a separate thing.
Why Do You Think These Are the Best Ways to Analyze the Market?
These tools combine all factors to reveal a total picture and I believe give Ferrer the best information to make an informed decision. Really this is about much more than making an informed decision. This is a lot of people’s jobs and really the future of the company. Other analytical tool may not include the political spectrum or the social. These are very important when considering China. The political environment is not the same as the U.S. The culture is very different. There many social faux pas such as bowing and being polite which come into play in business dealings. These are beyond resourcing and benchmarking. Technological Factors will be of the utmost importance to Ferrer in this endeavor. Ferrer is looking to manufacture a very similar product faster, better, cheaper. Therefore, a certain amount of technology is needed and a skilled labor force to go with it.
How Will You Use These Tools in Your Plan?
I will utilize these tools to analyze the spectrum of concerns Ferrer has about China and relieve those concern. I also think while the PEST gives a lot of information and detailed information about business practices and the total environment in China, the SWOT Analysis will really lay out the overarching decision matrix that top level management will need to make a decision. It can be very powerful to have everyone in the room to discuss the core strengths and weaknesses of a strategy (Investopedia, n.d.). With this company being family owned, it could be very easy for the owners to get down into the finer details of things and lose sight of the overall picture.
Can we really do this? Will we make money? Do the threats to our business outweigh the opportunities? These are the solid top level decisions that need to be made. This is how I will present my Plan, as a sort of two tiered approach. I believe utilizing the PEST for in depth business analysis and folding it into the SWOT for the final decision matrix is the best approach.
Conclusion I would highly recommend the SWOT and PEST as the best Integrative and Analytical Tools. SWOT will lead to an analysis of partnering possibilities as well. I believe this is a viable course of action that needs to be pursued further. There is no doubt these tools will giver Ferrer the information needed to make the best business decision possible
Second Student
Having determined the region and resource considerations for expansion, the next step for Ferrer Furniture is to thoroughly analyze the market environment. An analysis of both the local industry, as well as potential competitors, will provide Ferrer valuable information as it continues to craft its global strategy. While there are numerous analytical tools available to Ferrer, it is important to choose only those that will deliver the most pertinent data. As such, two frameworks in particular have been selected to assist in this effort: PESTEL analysis and Porter’s five forces model (McGraw Hill Create, 2018, pg. 115).
For Ferrer, PESTEL analysis will provide awareness of the external factors it may face in China. For example, the external factors related to resources in China can be identified using this method. Chinese tariffs imposed on imported resources could be considered a political factor and the current exchange rates between the U.S. and China considered economic. The PESTEL framework will not provide detailed strategic solutions, but in identifying potentially impacting factors of the external environment, Ferrer will have a better foothold in the market should expansion be approved.
The second analytical tool is Porter’s five forces model. Developed in 1979 by Michael E. Porter, the five forces model is a tool that analyses the five competitive forces that influence an industry (Martin, 2017). The five forces as outlined by Porter are: (1) the level of competition from rival companies, (2) the entrance of new competitors in an industry, (3) threats derived from substitute products, (4) the strength of buyer bargaining power, and (5) the strength of supplier bargaining power (M.U.S.E., 2018). Although the five forces model assists companies in determining their position in the marketplace among rivals, it should be noted that this tool is more beneficial when evaluating the market as a whole, as opposed to just select competitors (Hanlon, 2016). For Ferrer, all five of these forces are of concern as it looks to expand in China. The barriers to entry in the region may present Ferrer with some issues, including but not limited to: intense competition from already established manufacturers, limited pricing power of goods, location of low-cost raw material suppliers, and the product loyalty of customers. Wherein most of the research regarding these forces can be obtained through internet sources, some of this analysis may require assumptions (Hanlon, 2016). Though not a perfect analytical tool, the five forces model continues to be the most widely used framework in assessing competitive pressures in an industry and one that will benefit Ferrer greatly.
As stated, PESTEL analysis and the five forces model are but two of the many analytical tools available to Ferrer. Though other tools such as driving forces, strategy group, and competitor analysis are useful, the implicit uncertainty and unknowns of global expansion require the most detailed and focused data (McGraw Hill, 2018, pg. 115). It is believed that the two aforementioned frameworks will provide greater granularity in Ferrer’s decision-making process.
References
Claessens, Maximilian. (2015, February 26). The Macro Environment – Six Forces in the Environment of a Business. Retrieved from https://marketing-insider.eu/macro-environment/
Dcosta, Amanda. (2017, March 8). Components of a PESTLE Analysis. Retrieved from https://www.brighthubpm.com/project-planning/51754-components-of-a-pestle-analysis/
Hanlon, Annmarie. (2016, December 18). How to use Porter’s five Forces. Retrieved from https://www.smartinsights.com/marketing-planning/marketing-models/porters-five-forces/
Jurevicius, Ovidijus. (2013, February 13). PEST & PESTEL Analysis. Retrieved from https://www.strategicmanagementinsight.com/tools/pest-pestel-analysis.html
Jurevicius, Ovidijus. (2013, May 27). Porter's Five Forces. Retrieved from https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
Martin, Marci. (2017, June 26). Porter's Five Forces: Analyzing the Competition. Retrieved from https://www.businessnewsdaily.com/5446-porters-five-forces.html
McGraw Hill Create. (2018). MGMT 690: Strategic Management in Dynamic Environments. Retrieved from https://online.vitalsource.com/#/books/9781309054956/
M.U.S.E. (2018). Porter's Five Forces. Colorado Technical University. Retrieved from https://class.ctuonline.edu/_layouts/MUSEViewer/Asset.aspx?MID=11190537&aid=11190544