Small to medium sized business Essay

Executive Summary

A little to medium sized concern considers its concern venture into the GCC ‘s country, Gulf Cooperation Council, State of Qatar. The concern is a turning oil company and is sing this country due to its recent expansive growing and its big country of resources readily available for geographic expedition, processing, and exporting. This reappraisal will detail the procedures and facets to see to assist the company make a better determination about come ining the market. The concern will necessitate to do strategic determinations and explicate a scheme for come ining the market so an analysis of scheme, strategic direction, and cardinal international concern factors will necessitate to be analyzed and considered. Last, the study will do recommendations on come ining the country, the method and manner of entry, and cardinal concern countries to concentrate on such as trade and exportation.

Introduction

This study will detail the advise the little concern on its possible first concern entry into the State of Qatar, which is one of the Gulf Cooperation Council ( GCC ) based states. This study will place challenges and chances of shiping on such a concern venture and detail the possibility of continuing. The study will strategically analyse the general concern environment, the oil industry sector, the GCC, and advice on how to come in the market successfully. First it is of import to understand scheme and strategic direction as two such nucleus facets must be understood as they will be the cardinal anchor of sing such a concern venture. Once these rules are understood, an analysis can be conducted utilizing several strategic direction tools. We will analyse the GCC, the agencies of international trade, supply several strategic direction tool reappraisals, and supply recommendations on proceeding.

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Gulf Cooperation Council

The cooperation exists to, “ consequence coordination, integrating and inter-connection between Member States in all Fieldss, beef uping ties between their peoples, explicating similar ordinances in assorted Fieldss such as economic system, finance, trade, imposts, touristry, statute law, disposal, every bit good as furthering scientific and proficient advancement in industry, excavation, agribusiness, H2O and carnal resources, set uping scientific research centres, puting up joint ventures, and promoting cooperation of the private sector ” ( GCC, 2010 ) . It is of import to see the above statement when finding the possibility of come ining one of the associated provinces within this cooperation, the State of Qatar. The council will so assist in such move, nevertheless, it does hold policies and processs that will necessitate to be followed. As a possible concern venture, the company must see these policies and follow them as criterions for its organisation within this country.

The GCC country is a prime country for concern ventures in the oil industry. Goldman states, “ As is normally known, the GCC part is exceptionally bosomy with rough oil and natural gas militias and, as such, it will go on to play a important function in planetary energy production in the coming decennaries. ( Goldman, 2010 ) . Goldman goes on to province, “ The cardinal inquiry is whether this potency will be realized or non. We believe that of import challenges will hold to be overcome, and we besides see certain macroeconomic and institutional failings that could sabotage the part ‘s long-run growing potency. However, we believe that, with some attempt and good economic direction, the part can do a leap forward and emerge as one of the most comfortable parts of the universe in the coming decennaries ” ( Goldman, 2010 ) .

Scheme and Strategic Management

Scheme can be defined as “ the art, scientific discipline and trade of formulating, implementing and measuring cross-functional determinations that will enable an organisation to accomplish its long-run aims. It is the procedure of stipulating the organisation ‘s mission, vision and aims, developing policies and programs, frequently in footings of undertakings and plans, which are designed to accomplish these aims, and so apportioning resources to implement the policies and programs, undertakings and plans ” ( Business Intelligence, 2009 ) . Strategic direction aligns the different concern maps and organisational aims into a solid company altering program. “ Strategic direction is the highest degree of managerial activity. Schemes are typically planned, crafted or guided by the Chief Executive Officer, approved or authorized by the Board of managers, and so implemented under the supervising of the organisation ‘s top direction squad or senior executives. Strategic direction provides overall way to the endeavor and is closely related to the field of Organization Studies ” ( Business Intelligence, 2009 ) . Strategy and strategic analysis coupled with strategic alteration are of import facets that help an organisation range its ends. If a company can methodically plan its scheme to aline its concern aims with its operational aims, the company should be able to offer something better than its rivals. This could be cheaper operating expense costs, better operational or production efficiency, higher safety evaluations, lower turnover rates, and much more. Ideally, a company or organisation has achieved a competitory advantage when it makes more net income that its rival in the same market. Using scheme to assist obtain this can non merely assist a steadfast range a competitory advantage, but help it prolong a competitory advantage. For this concern, analysing the GCC, the environing country, and the possibilities for trade and exporting are cardinal factors to explicate scheme and make a sustainable competitory advantage.

International Trade

A cardinal portion of the determinations to come in the State of Qatar is the apprehension of international trade. As a strong concern chance is showing itself in continuing into this part a cardinal fiscal backup in the oil industry is that of exporting and international trade. The dictionary definition of free trade provinces it as a policy of leting people of one state to purchase and sell from other states without limitations. There are two basic ways to supply protection to domestic import-competing industries ; a duty or a quota. The pick between one or the other is likely to depend on several different concerns. One concern is the gross effects. A more common intent of duties is protection against foreign competition. By raising monetary values of imported goods comparative to the monetary values of domestic goods, duties encourage consumers to purchase domestic instead than foreign merchandises. An ad valorem duty is a fit per centum of the value of the good that is being imported. Sometimes ad valorem duties are debatable because when the international monetary value of a good falls, so does the duty, and domestic industries become more vulnerable to competition. A specific duty is a duty of a specific sum of money that does non vary with the monetary value of the good. A gross duty is a set of rates designed chiefly to raise money for the authorities. A protective duty is intended to unnaturally blow up monetary values of imports and “ protect ” domestic industries from foreign competition. A prohibitory duty is one so high that no 1 imports any of that point.

Public pick besides affects the pick between production subsidies, import duties and import quotas as ways to protect import viing industry. The public assistance loss per unit of protection to the protected industry from quotas by and large exceeds that from duties which exceeds that from subsidies. Thus consumers should rank the three policies in the indicated order. Home manufacturers, people that would wish protection, are cognizant that quotas are less seeable than subsidies or duties, and accordingly are likely to rank quotas above the other two. Those who benefit from authorities disbursement are likely to prefer the gross raising duty to the impersonal quota, and both are preferred to the gross absorbing subsidy. The strategic trade policy statement states that although competition exists in the universe, its non perfect, therefore authoritiess should step in and switch extra returns from foreign to domestic houses.

Excessively frequently can economic exposures cause issues with trade protectionist Torahs. Maruqardt provinces, “ The economic exposures exploited through current free trade patterns have helped to further widen the spread between the rich and the hapless in the decennary of the 1990s. An International Monetary Fund appraisal showed that “ the comparative spread between the richest and the poorest states has continued to widen. ” Despite supplications from hapless states, current trade patterns show no mark of slaking. The election of the Bush disposal brought hope to many free trade theoreticians that the disposal would work to badly restrict subsidies to local industries and force a free trade docket on the universe. Alternatively, the disposal verbally came out in favour of free trade, while in pattern took actions that amounted to monumental misdemeanors of the free trade theory ” ( Marquardt, 2003 ) .

First of wholly, it is of import for us to set up what the theoretical additions from free trade are, and we will make so by taking a closer expression at the rule of comparative advantage. Harmonizing to Ricardo, a state has a comparative advantage in the production of a certain good or service when its chance cost of bring forthing that peculiar good or service is lower than in other states. Therefore, if states all focus on their productive attempts in activities that they possess comparative advantages in and trade, the entire universe end product of these goods and services will increase and all states will go better off done trade as their ingestion possibilities will be expanded. Furthermore, take parting in international trade exposes domestic manufacturers to more competitory force per unit area than faced internally, and this could take to greater efficiency of domestic houses through reorganisations and inventions. Technological diffusion between merchandising spouses can besides lend to the advanced procedure, and in bend boost economic growing of the states that are unfastened to free trade. Furthermore, regular communications among states will let more chances for cultural exchange and acquisition, and this can be extremely good in advancing greater understanding between disparate states with historical feuds. Conversely, curtailing free trade will merely take to new policies that lead to revenge between states and more protection.

Strategy Formulation and Approaches

As stated with the old recent challenge confronting Gulf Cooperation Council, the demand for appropriate strategic planning and scheme preparation is required. There are several procedures that can be performed to explicate scheme. Performing a state of affairs analysis, self-evaluation and rival analysis: both internal and external ; both micro-environmental and macro-environmental. Concurrent with this appraisal, aims are set. These aims should be parallel to a timeline ; some are in the short-run and others on the long-run. This involves crafting vision statements ( long term position of a possible hereafter ) , mission statements ( the function that the organisation gives itself in society ) , overall corporate aims ( both fiscal and strategic ) , strategic concern unit aims ( both fiscal and strategic ) , and tactical aims. These aims should, in the visible radiation of the state of affairs analysis, suggest a strategic program. The program provides the inside informations of how to accomplish these aims.

Strategic Management Tools

A SWOT analysis is by and large the most recognized tool used for doing strategic determinations. A SWOT analysis is by and large used in determinations about the way a company is taking. It is a tool besides used on a regular basis to develop a strategic program for an organisation. The major focal point of SWOT analysis is to ‘recognize chances and avoid menaces, while weighing an organisations strengths and failings ‘ ( Morris, 2005, p53 ) . It has besides been explained that it ‘achieves right interaction of concern direction with its internal and external environment ‘ ( Mayer, 2008, p36 ) .

Another cardinal tool in strategic direction determinations is the balanced scorecard. “ The Balanced Scorecard has become a widely known direction tool and recent studies have indicated that many organisations use, or intend to utilize, the Balanced Scorecard ” ( Chan & A ; Ho 2000 ; Speckbacher et Al. 2003 ) . “ Since the debut of the balanced scorecard ( BSC ) by Kaplan and Norton in 1992, it has become really popular among faculty members and practicians. Many organisations, both in the private and public sectors, have embraced the construct and implemented it in an effort to better public presentation ” ( Chan & A ; Ho 2000 ; Hoque & A ; James 2000 ; Ittner & A ; Larcker 2003 ) . The company can use the balanced scorecard to see its current concern aims to see if a concern venture into the State of Qatar is executable and if making so would make net incomes and a competitory advantage.

Balanced Scorecard

The Balanced Scorecard has become a widely known direction tool and recent studies have indicated that many organisations use, or intend to utilize, the Balanced Scorecard ( Chan & A ; Ho 2000 ; Speckbacher et Al. 2003 ) . Since the debut of the balanced scorecard ( BSC ) by Kaplan and Norton in 1992, it has become really popular among faculty members and practicians. Many organisations, both in the private and public sectors, have embraced the construct and implemented it in an effort to better public presentation ( Chan & A ; Ho 2000 ; Hoque & A ; James 2000 ; Ittner & A ; Larcker 2003 ) .

Customer Perspective

The client position addresses the inquiry of how the house is viewed by its clients and how good the house is functioning its targeted clients in order to run into the fiscal aims. In the client position of the balanced scorecard, directors identify the client and market sections in which the concern unit will vie and the steps of the concern unit ‘s public presentation in these targeted sections. These sections represent the beginnings that will present the gross constituent of the company ‘s fiscal aims.

Internal Business Process

Internal concern procedure aims address the inquiry of which procedures are most critical for fulfilling clients and stockholders. These are the procedures in which the house must concentrate its attempts to stand out. Aims and steps for this position are typically developed after explicating aims and steps for the fiscal and client positions to enable companies to concentrate their internal concern procedure prosodies on those procedures that will present the aims established for clients and stockholders.

Invention

The invention procedure highlights the importance of, foremost, placing the features of market sections that the organisation wishes to fulfill with its hereafter merchandises and services, and, so, planing and developing the merchandises and services that will fulfill those targeted sections. This attack enables the organisation to set considerable weight on research, design, and development procedures that yield new merchandises, services, and markets.

Operationss

The operations procedure represents the short moving ridge of value creative activity in organisations. It starts with reception of client order and coatings with bringing of the merchandise or service to the client. This procedure stresses efficient, consistent, and seasonably bringing of bing merchandises and services to bing clients. It remains of import and organisations should place the cost, quality, clip, and public presentation features that will enable it to present superior merchandises and services to its targeted current clients.

The Learning and Growth Perspective

The 4th position of the balanced scorecard, larning and growing, addresses the inquiry of how the house must larn, better, and innovate in order to run into its aims. It identifies the substructure that the organisation must construct to make long-run growing and betterment. The enablers for larning and growing come chiefly from three beginnings: people or employees, systems, and organisational processs.

Firm Level Factors

Firm degree factors can hold an affect on a organisation ‘s scheme as each factor does play a conducive function to its preparation. Hardy, Currie, and Ye province, “ Having gained entry through brownfield or greenfield acquisition, ABB had to consequence alterations in or suit to the deep-seated informal establishments inside the workplace. This can be understood either at the general degree of corporate apprehensions about the behavior of concern in the vicinity or in the behaviour, modus operandis and norms in the workplace of SOEs ” ( Hardy, Currie, and Ye, 2005 ) . Such steadfast degree factors include the staff, or internal clients, office apparatus and engineering, rewards, benefits, or other fiscal facets. Many organisations implement organisational scheme alterations to act upon or impact the steadfast degree factors in the company. Many leaders of such alteration effort to aline the organisation ‘s internal environment along with its concern aims. This was discussed in deepness by Mazzucato and her statement about organisational alteration. It is really insightful to understand the construct of alteration and to make so skilfully and carefully so that its successful. Too frequently companies implement organisational alteration ( civilization, scheme, etc ) in hopes of alining the company better with its concern enterprises, merely to acquire bitterness from the employees and go even more negative than the company was earlier. “ Rapid and uninterrupted alteration is one of the prima causes of… negativeness. It is non the alteration itself, but instead how the companies introduce and manage the alteration… ” ( Tophick, 2000, 95 ) . Sometimes employees resent the alteration out of effort of the unknown or new procedures that will come. “ For many of us our fright of our failings seems to dominate our assurance in our strengths ” ( Buckingham and Clifton, 2001, 56 ) .

Last, one must see that alteration occurs as a consequence of development and invention through clip. As Grant inside informations in chapter 5, industries adjust, evolve, and alteration over clip. This so can be equated to the industry life rhythm and an organisation ‘s scheme must alter every bit good to compliment and heighten its scheme as the company changes. “ As more and more sophisticated work takes topographic point interactively on-line and new coaction and communications tools emerge, companies can outsource progressively specialised facets of their work and still keep organisational coherency. Much as engineering permits them to deconcentrate invention through webs or clients, it besides allows them to parcel out more work to specializers, free agents, and endowment webs ” ( McKinsey, Roberts, and Sprague, 2007 ) .

Analyzing every item, explicating a scheme program which aligns with the company ‘s aims, and implementing the alteration was non merely needed, but was done so successfully. A cardinal factor in implementing the alteration is that of employee attitudes and negative reactions to the alteration. It is of import when alterations are taking topographic point within an organisation is the staff and their attitudes toward the on-going workplace passage or structural alteration. Meeting the outlooks of the employees will be spotlighted. The outlooks are often based on past and mute outlooks and these will rule efforts to renegociate the employment relationship. “ The organisational challenge is described as how to keep employee committedness and public presentation criterions at the same clip as implementing alterations in services and resources ” ( Harris & A ; McGrady, 1999 ) . Attitudes could be defined as an person ‘s certain feelings, ideas and behaviour towards an object. Attitudes toward alteration in general consist of the person ‘s feelings about, reactions to, and behavioural inclination toward alteration. This means that the person could either be positive toward the alteration and thereby back up it, or have a negative attitude toward the alteration and thereby defy it.

Previous findings indicate that about 70 per cent of all alteration enterprises fail, with opposition to alter as the chief ground ( Vakola & A ; Nikolaou, 2005 ) . This implicates that the execution of a scheme or structural alteration might run into obstructions from within the company, really from those that are bound to transport it out. Several surveies besides suggest that the organisational alteration attempts could ensue in stressed employees, which could hold a negative consequence on factors as public presentation, occupation satisfaction, quality and service. Harmonizing to Kraatz and Zajac ( 2001 ) it is besides possible to see the human resource gifts as an plus that can actively advance a strategic alteration. From this point of position, the organisation consists of legion and assorted resources that have a great capacity in advanced alterations. Due to the great capacity within the organisation, the experience becomes of import. Therefore, selling expertness, fiscal financess, research and development capableness, production capacity and general direction experience can all be considered as of import facilitators of strategic alteration.

Environmental Factors

The environment of the company can besides be divided in two wide classs depending upon the degree of influence exerted by the environment. Some facets of the environment can be classified as the immediate or close environment of the house. Such close environment has more impact on the houses runing within this environment, as compared to impact it has on other houses. Factors outside their close environment constitute the general environment impact all signifiers in the environment every bit. The close environment consists of entities like the industry within which the the house operates, the rivals, providers and the clients. A cardinal component in the external environment is that of overall globalisation and political relations. Keohane and Nye province, “ Globalization psychiatrists distance, but it does non do distance irrelevant.And the filters provided by domestic political relations and political establishments play a major function in finding what effects globalisation truly has and how good assorted states adapt to it ” ( Keohane and Nye, 2000 ) .

Industry specific factors, closely related to environmental factors, can hold an influence on a company ‘s scheme. Aspects of production or operating costs for its goods or services produced can hold a direct consequence on the house ‘s offerings. As an illustration, see the automotive industry. Fuel costs can lift, autumn, or degree out. Automobile makers can explicate scheme to assist pare costs when fuel costs are high or analyze methods for utilizing alternate fuels. Another industry to analyse would be that of the current US fishing industry. The current Gulf oil spill has a direct affect on the states angling industry and its estimated that due to the less available merchandise that fish monetary values are traveling to lift. A seafood eating house will see this cost and demand to explicate scheme to suit the rise costs and still keep profitableness. A company that does this well can obtain and prolong a competitory advantage of its rivals and hence finally help increase its bottom line. Other industry specific factors such as oil supply, demand, importing and exporting are to be considered. A concern must see other country rivals and states as a agency of sing its venture. “ The displacement in comparative advantage will non take topographic point in one spell but will happen bit by bit. As China and India move up the productive hierarchy through increasingly more sophisticated export activities, this will make an chance for other developing states to spread out their labour intensive exports to the rich states ” ( Rowthorn, 2006 ) . WTO provinces, “ the impression that trade, investing, and the growing of concern detracts from non-economic aspects of human rights is the reverse of the truth ” ( WTO, 2004 ) .

Decision and Recommendations

This study has detailed several facets to see in the concern venture into the State of Qatar. Specifically the study has analyzed the demand for understanding strategic and strategic direction as these are the foundation to sing such an chance. Using strategic direction tools, such as the PESTEL and SWOT analysis the consequences show that the part and GCC are favourable to continue with the concern venture. The country is politically developed and has economic stableness. With its rich and huge sum of oil resources, a concern venture in this country would decidedly be deserving continuing. There are legion benefits that outweigh any possible issues in continuing with early market entry as there are few open uping costs in this industry and country and would therefore let you to do significant net incomes in the beginning phases. Bing that this reappraisal is for a little to medium sized concern, it is of import to see a little graduated table entry as it does cut down exposure hazards and allows you to see partnerships and other strategic determinations that will assist you obtain and prolong a competitory advantage. Along with a little graduated table entry, the concern should see a non-equity manner of entry. This allows the company to concentrate on exports and other contractual understandings. This besides allows the company to concentrate strategically and allows for continued growing. In reexamining the study, the company should be able to do an informed determination about the great possibility of come ining the State of Qatar market. Continuing would be a wise and sound, yet strategic concern determination for the company, and making so with the proposed methods, allows the company to make and prolong a competitory advantage.

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