Global Environment of Business

Discuss about the Global Environment of Business.

Introduction

In the global business landscape, the entrepreneurs are focusing more on the international operational aspects like supply chain management system, team management, multicultural interaction, production and the examining the marketing channels. In the background of the existing concept, Anderson et al. (2010) denoted that the textile industry in India holds a significant status. Although the specific sector was predominantly unorganised initially, yet, the scenario started changing after the economic liberalisation of the Indian economy. The revolution in the economic margin has increased the scope of the textile industry in the Indian market. The current statistics forecast that the India has become one of the largest regions in dealing with the textile division successfully.

However, Hinterhuber and Bertini (2011) determined that in 2008, the Indian market experienced a sudden downfall in its economic margin along with the global financial crisis. The specific scenario had led the GDP (Gross Domestic Product) of India to slow down to a margin of 6.5%. The Indian governing authority has abandoned its deficit target and increased its margin by 6.8% in 2010 (Saikia, 2012). The present study attempts to identify the current condition of Welspun Group and the challenges faced by the similar group. Furthermore, the study evaluates on the sustainability of its growth rates and the strategies adopted by the management to serve the brand as a ‘role model'. Finally, the project recognises the factor that has created the significant impact of the company’s growth trajectory.

The challenges faced by Welspun Group

The transformation into a global entity in a short time span has been the major challenge of the Welspun Group. In the framework of the existing subject, Ying Zhang (2012) asserted that the Welspun group has targeted on the product and geographical diversification strategy for its further growth. The brand has embarked on the product diversifying range, which led the brand to its expansion to the leading geographical market. In 2006, the brand initiated an acquisition strategy with Christy, the leading towel brand in the UK market. The acquisition had helped the group to make a smooth penetration into the European market.

In 2007, the management took its second acquisition policy with Sorema, the bath rug enterprise of Portugal. According to Conklin (2010), Mexico produces the decorative bedding lines that are majorly supplied to the retailers of US. Thus, the brand has targeted to capture the Mexican market as well for increasing its product lines. Furthermore, the management has taken the risk of increasing its operational capacity by focusing on the industrial sector of India (Thackeray et al. 2007). Inference can be drawn from the latter context that the management has taken a quick decision of hopping into the different market with indifferent product categories. Thus, high product and market shifting frequency often increase the risk factor of the brand. Hence, the brand has experience the primary challenge of allocating its internal resources and assigning the new job roles to the employees. The acquisition and the product increasing measures with a short time tenure often misleads the brand to experience a slaughter in the market due to a sudden impulsive reaction.

Identification regarding the potency of high growth rate

The condition of the Welspun Group states that the brand might fail to convert its high growth rate into its sustenance. The product switching actions are done with a high frequency margin. Thus, the quick actions have a high chance of getting converted into impulsive decisions (Kumar and Steenkamp, 2007). Therefore, the inclusion of the risk factor for the brand is relatively high, which decreases its sustainability rang in its growth high margin. 

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Steady growth

The Welspun Group was penetrating into different product diversification ranges to increase the growth margin of the firm. Considering the opinion of Markey et al. (2007), the management of a brand needs to take a considerable time span to get settled with its new product categories. The specific scenario often misleads the enterprises to channelize the new product lines in the correct direction. The chosen brand has made the mistake of hopping into several sections and product categories within the short time tenure (Hinterhuber and Bertini, 2011). Thus, the sudden rapidity in the operational criteria often increases the chances of hampering the executive actions. Therefore, the management of the particular organisation is highly necessitated to make a steady initiation in the product diversification aspects.

Understanding of the market scenario

Welspun Group has initiated several acquisition policies with different multinational enterprises to initiate a smooth penetration in the international market. According to Grefen (2013), the Welspun Group aims at expanding its brand present in the global scenario. Thus, the quick and random initiation has been taken by the management to serve the brand expansion purpose. On the other hand, Hinterhuber and Bertini (2011) claimed that the product lines of the organisation are not overstretched. Thus, it remains to a margin of limited resources. The brand specifically emphasised on establishing a strong brand presence in the US market. In the context of the similar statement, Anderson et al. (2010) denoted that the two flagships of the enterprise are textile and pipelines and the cotton and steel. The brand needs to identify the accurate market scenario to continue its flagship in the sustainable growth margin.

Developing the potential base in the new segment

Markey et al. (2007) stated that with the acquisition initiations, the brand has already included certain new product lines. Thus, the primary action of management needs to be creating wider prospects for its new product lines. However, Welspun Group is focusing majorly on the brand expansion in the global market. Thus, it is not providing sufficient time to the new product base to generate its authentic customers. Due to the specific scenario, the brand failed to attain competency in the market, which had simultaneously decreased its sustainability margin (www.welspun.com, 2016). Therefore, it can be assessed that the brand needs to increase time span to provide adequate time to the new products to create a strong customer base.

Identification of the conditions that lead the group to serve as a ‘role model.'

Diversification into the new line of business

Hinterhuber and Bertini (2011) claimed that emerging into the diversified lines of business is not a common action of the Indian brands. The management of Welspun Group has tapped into the opportunities of wide spreading its product lines and brand presence into different geographical context. According to Conklin (2010), the strategically planning includes the factors like overcoming the risk possibilities, creating a new manufacturing plan into the foreign property and creating a unified set of the prospective customers. The specific aspects differentiate the enterprise from the other relative brands operating in the similar industry.

Business initiation with the famous international retailers

The particular group has capitalised its growing trend and become a key supplier of retailers of the US textile market. In the opinion of Anderson et al. (2010), the retail giants line Walmart and Target prefer getting into business with the brands that are typical that are situated in the low-cost regions. The specific actions serve the enterprise to retailers to produce the individual product lines with a minimum investment (Hinterhuber and Bertini, 2011). Since Welspun Group has a wider brand present in the international market, therefore, the brand remains in the beneficial position of receiving the contract orders from the retailers.

Factor creating an enormous impact on the company's high growth trajectory

The first international venture the enterprise in 2000 has been the first trajectory for Welspun Group. The brand specifically has an exclusive interest of creating a strong business action in the US market. Therefore, it has moved into the action of exporting sales to the US enterprises. The specific action has benefitted the organisation to increase brand prospect before the targeted clients. Moreover, along with the supplying the export materials, the brand have also increased its product range into diversified categories. Therefore, the product expansion policy often facilitated the enterprise to increase customer base. The specific aspect has been the major criteria that helped the brand to reduce the chances of product stagnancy.

Conclusion

The current study emphasises on the present market scenario of Welspun Group in the Indian market. It further determines on the other regional criteria where the brand has penetrated and initiated a brand expansion. Evaluating the study, an inference can be drawn that the management of the emphasised majorly on the brand development. Thus, frequent product diversification and brand acquisition policy have been undertaken. The quick decision regarding the brand extension policy has been the major slaughter for the enterprise, where the new product lines failed to receive sufficient time to create its unified customer base. Moreover, the brand till far has managed to sustain its growth rate in the international regions. Thus, an inference can be drawn that a matured and the steady decision would be the effective criteria to uphold the steady profit margin of the enterprise.

References:

Anderson, J., Kupp, M. and Vandermerwe, S. (2010) ‘Good Business Makes Poor Customers Good Customers’, Business Strategy Review, 21(4), pp. 46–51.

Conklin, D.W. (2010) The global environment of business: New paradigms for international management. Thousand Oaks, CA: Sage Publications (CA).

Grefen, P. (2013) ‘Networked business process management’, International Journal of IT/Business Alignment and Governance, 4(2), pp. 54–82.

Hinterhuber, A. and Bertini, M. (2011) ‘Profiting When Customers Choose Value Over Price’, Business Strategy Review, 22(1), pp. 46–49.

Kumar, N. and Steenkamp, J.-B.E.M. (2007) Private label strategy: How to meet the store brand challenge. Boston, MA: Harvard Business School Press.

Markey, R., Ott, J. and du Toit, G. (2007) ‘Winning new customers using loyalty?based segmentation’, Strategy & Leadership, 35(3), pp. 32–37.

Saikia, D. (2012) ‘India’s outward foreign direct investment’, International Business Management, 6(1), pp. 55–59.

Thackeray, R., Neiger, B.L. and Hanson, C.L. (2007) ‘Developing a promotional strategy: Important questions for social marketing’, Health Promotion Practice, 8(4), pp. 332–336.

WELSPUN: (2013) Available at: http://www.welspun.com/ (Accessed: 30 August 2016).

Ying Zhang, k (2012) ‘A new automatic image segmentation method based on combined strategy’, International Journal of Advancements in Computing Technology, 4(21), pp. 445–451.

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