ABP International Assignment sample

ABP International

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Introduction of Suzuki.............................................................................................................1
2. Evaluating the events that currently dominating international business environment............3
3. How have the Company’s IB activities developed over time..................................................4
4. Describing how the organization constructs its value chain globally......................................5
5. Recommendations for adjustment to the organization's operations.........................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
International business mainly describe to that trade of goods and services, technology and
knowledge across national, global as well as transnational level. Moreover, it also involves the
cross- boarder dealing of goods and service between many countries. In the same way, report
main purpose is to gain knowledge and understand different aspect of international business
which may affect the business in positive as well as negative way. The chosen firm for this
report is Suzuki which is the multinational corporation and also consider 11th biggest auto-maker
in the term of production at global level. The firm manufactures automobiles, four wheel drive
vehicles motorcycles etc. The report introduce the firm by describing the range of transaction
modes it use and further, study also evaluate the events that currently dominating international
business environment. Then it also describe how have the Company’s IB activities developed
over time and present how the organization constructs its value chain globally by providing
recommendations as well.
1. Introduction of Suzuki
Suzuki is one of the top multinational corporation whose headquarter in Hamamatsu,
Japan and it serve its unit at international level. Currently the firm has around 45000 employees
and Suzuki also has 35 production facilities in 23 countries with approx 130 distributors at world
level. It is also concluded from the reports that Suzuki is known world's tenth largest firm as per
worldwide sales volume of automobiles and third largest in country as per domestic sales.
Currently, the quoted firm deals with automobile, engines, motorcycles, ATV's, outboard motors
and among all, Suzuki's total production output for automobiles is approx is 2,878,000 and for
Motorcycles, it is around 2,270,000 (Masuoka, 2019). Currently the firm is operate at
international level and because of its best quality products, the firm is more preferred by people
at global level.
Apart from this, Suzuki also transact its product through dedicated trains when it has to
transfer the product from one state to other. This trains are specially designed to carry more cars.
It is so because it not save the cost, such that company can transport around 310 vehicles in
wagon instead of 10 in truck. Further, the bikes of Suzuki is also transported through trucks in
which bulk of bikes are transported and it reasonable and safest way for transaction at global
level by roads. Beside this, it is also evaluated that Suzuki is also planning to transport the
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vehicles via waterways and even the collective impact is positive as well (Sharma and Singla,
2019).
In the same way, Suzuki has different subsidiaries such as:
 Maruti Suzuki: It is also known as Maruti Udyog Ltd which is an automobile
manufactures in India and it is also realized that 56.21% are owned of Japanese car and
the motorcycle manufactures which is Suzuki Motor corporation. From 2018 onwards, it
also had a good market share in India that is 53% and also sells some popular car such as
Ciaz, Ertiga, Wagon R, Alto K10 etc.
 Magyar Suzuki: It is another subsidiary of Suzuki which is an automobile
manufacturing plant located in Hungary an also had more than 6000 employees. At the
end of 2005, It has production volume around 849000 vehicles and 46500 Suzuki Swift
of first generation.
 Suzuki IndoMobil Motor: It is one of the most popular subsidiary which is a joint
venture between Suzuki Motor Corporation and Indomobil group. It is located in
Indonesia and also specialize in manufacturing specially Suzuki vehicles for the local
market.
 Pak Suzuki Motors: It is the Pakistani organization of automaker Suzuki and also a
distributors of car which is manufactured by Suzuki and also has the subsidiaries as well
as foreign divisions. Presently, the Pak Suzuki is consider one of the largest car assembler
in Pakistan whose net income is Rs. 5.840 billion (Bown, 2019).
 Suzuki Motorcycles India Ltd: It is another subsidiary of Suzuki which is wholly
owned by India. Further, in India it is the third largest Suzuki automotive venture. Further
in 1982, there is a joint venture between Suzuki Motor Company which is incorporated
as well as started the production of two wheeler in India. Then it is establish at Gurgaon
in Haryana with the annual susceptibility of around 500000 units.
Beside this, there are different subsidiaries of Suzuki such as Bari Suzuki, Suzuki
Canada, American Suzuki Motor, Suzuki China, Suzuki Motor Gujarat Private Ltd, Suzuki GB
Plc. Thus, it shows that the quotes firm has global market reach and this subsidiaries also assist
the business to reach further level of success.
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2. Evaluating the events that currently dominating international business environment
There are so many events that affect that dominate the business performance in negative
way such that sometimes it creates positive impact upon the business performance, while
sometimes it may affect the business in negative way as well. Therefore, this events are as
mention below:
Trade war between nation: Trade war impact the international financial and business
ecosystem but in this situation, the ecosystem seems weak in front of trade wars. The latest
example, the US and China in which the market is lose and it create negative impact upon the
consumers. These trade war always dominate the company and as a result, the firm is not attain
towards success. In this trade war, Japan and Korea also observe smaller increase in US import
relative in 2017 (Wang, Pang and Li, 2019). Thus it is realized that when there is a war between
two countries, other countries are almost benefited and in the same way, Suzuki is also get
benefited for the same and as a result, there is a slightly increases in US import. On the other
side, China is the second biggest supplier of car part in US and due to this trade war between two
nation, the market is lose and US follow through new duties in automotive sector.
Proposed changes in the relationship between the European Union & UK: In 2018,
there is a slightly changes in the trade relationship between the country which also affect the
business such that there is a free trade area for goods between UK and EU and for future, the
Economic Partnership also establish new free trade area as well as a rule book for goods and new
arrangements on some financial services which further mutually benefited to market and also
protect the financial stability too. Further, there is a new proposal from UK in which the country
is agree a new Facilitated Customs Arrangements with European Unions (Pisani-Ferry and et.al.,
2016). Even UK's proposal also includes committing to high regulatory environmental standards.
It is also analysed that security partnership is the core pillar for future partnership between UK
and EU. Therefore, it shows that there is a both share the objective of an ambitious future
relationship that also protect the safety of citizenship. Moreover, UK also promise that it follow
all the standards of environment so that it will help to protect the environment in positive way.
Moreover, it is also realized that the international business also include the political
stability that may also affect the Suzuki's overall performance. Such that tax and tariff rates
varies from country to country and therefore, if there is sudden increase in the tax rate of the
offered products then people are not spending high amount of money. Thus, it creates negative
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impact upon the business performance and as a result, the firm looses its market share as well
(Claeys, Darvas and Leandro, 2016). Moreover, technological factor also affect the business
performance. For instance, if Suzuki uses advance techniques during its product process then it
will help to attract wide range of customers towards it and therefore, it also leads to maintain
financial stability as well that helps to expand the business at global level.
3. How have the Company’s IB activities developed over time
In order to increase the Suzuki's International business activity develop over time, the
firm must use the Progress model of incremental internationalisation. The model also states that
as a firm choose new foreign country so that it will start from the low resource commitment
mode which helps in experimental knowledge n the foreign market. Moreover, by using Uppsala
Internationalization model, the work has probably been inspired for the development of
innovation related international models. Therefore, there are four different modes of entering in
an international market in which there are successive stages which are present the higher degree
of international involvement. Such as:
 There are no regular export activities (Varró and et.al., 2016).
 There are agents who export through independent representative
 There is a need to introduce the overseas sales subsidiary.
 Manufacturing units
This model also states that in order to enter into new business, the company has to choose
variety of entry modes such as licencing, joint venture. Therefore, this method will helps Suzuki
to explore the market and maintain the financial stability as well. It is further realized that in
order to explain the internationalization across the country market, the firm should also have the
different new market with best physic distance. On the other side, the concept, physic distance
also defined as a factor that prevent disturb the flow of information between a firm as well as
market (Uppsala Internationalization Model, 2018). The model also states that if Suzuki has
foreign entry mode which also includes some basic decisions such that it is necessary to
determine whether the product belongs to home country or host country. At that time, the firm
takes a decision to export the products through exporting as a foreign marketing mode. Next
decision is such that who should control the production and this involves full control or sole
ownership or share control ownership such as licencing, franchising, joint venture etc.
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On the other side, it is quite necessary for the firm to choose one entry mode over the
another with an aim of gaining or adjusting the return on investment. Therefore, it is realized that
Suzuki by choosing joint venture as a market entry mode will help a business to leads at further
level of success. Therefore, the firm should not choose the high risk adjustment into its working
place so that it will not creates any negative impact. Further, Suzuki should also depend upon the
each variable by using different entry modes and so that the chances of expanding the business
may increases (Schürr, 2017). On the other side, the basic assumption is that market knowledge
as well as market commitment also affect commitment decision as well as the way current
decisions are performed so that the business may comply with the sudden change. Thus, if the
market situation are stable then it will help a business to share the relevant market knowledge.
And when Suzuki also has better experience from the market which are similar to conditions,
then it may also able to generalize the experience for the specific market too.
4. Describing how the organization constructs its value chain globally.
Value chain -
The term value chain is defined by Michael Porter. Value chain refers to various types of
activities that are essential to perform by an organisation to bring the products from initial stage
to the stage of marketing and utilization of end product. Value refers to the amount customers
are ready to pay for what a company is offering to them. A firm is profitable only when the value
it is providing to customers through its products is more than the cost incurred in developing the
product (Mudambi, R. and Puck, 2016). Value chain analysis of Suzuki is as follows -
Inbound logistics –
It refers to the process of receiving the raw material and placing them in warehouse and
distributing them for manufacturing products for supplying to the customers. Main inputs that are
used as a raw material by Suzuki to sell its products in different countries are rubber, aluminium,
glass etc. Features of value chain of the company are as follows -
For improving the quality of products at global level and to gain the benefits of
economies of scale, Suzuki has implemented Just-in-time and tierization of suppliers etc. To gain
these benefits, company has reduced the number of suppliers in India. This has resulted in
improvement in supply chain efficiency of the organisation and the cost of defects in items are
borne by suppliers.
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Company has made efforts for linking the suppliers through network. It helps to maintain
details regarding order and delivery of items. It has resulted in maintaining optimum level of
inventory and lead time which is required for supplying the parts of vehicle.
Suzuki has taken initiatives with the support of vendors for reducing the cost of operations. It has
take initiative called “One Component One Gram” that aims to reduce one gram weight for every
product.
 The value chain of company at global level starts with the development of a new product
that helps to create conditions for the product. Marketing and sales department of Suzuki
helps to create demand of the vehicle in different geographical areas.
 On the basis of specifications of the product, operations department transforms the raw
material into output for developing vehicle.
 Suzuki distribute the products with the help of wholesalers, retailers and ultimately
retailers sell the vehicles to customers.
 Customer service department performs an important role in responding towards the
queries and requests of customers at domestic and international level during or after the
products are being sold to buyers (Luthra, Garg, D. and Haleem, 2015).
 Finance, marketing, and human resource department of Suzuki are responsible for
performing core functions for successful sale of the vehicles at various locations.
 As, level of competition has increased between the value chain of auto-mobile
companies, Suzuki has entered into supply chain partnerships so that, cost of operations
will reduced and it will help the firm to gain competitive advantage over competitors.
Collaboration between companies through e-business network will help the firm to
improve its performance at global level.
5. Recommendations for adjustment to the organization's operations
In order to improve the the Suzuki operation, it is recommended to the firm to first
establish the SMART goals so that it will help business operations to leads a firm towards further
level of success. In order to explore the business at new market, it is also recommended to firm
to use best market entry mode such as using Joint venture, Suzuki can easily access to new
market as well as distribution network, further it also increase the capacity and share the risk as
well as profit with the partners. Apart from this, using this as a market entry mode will also help
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a business to access the greater resource which includes specialised staff, technology and finance
(Tyabji, 2018).
In addition to this, it is also realized that company may faces some issue while
collaborating with companies such that physical distance, cultural issue and there is a need to
cope up with these issues. For that it is recommended to the firm to have a team who speaks the
local language as well as have a knowledge of different languages that help a business to cope
up with the problem of language as well as cultural barrier. Further, Suzuki should also find the
right partner and also build the relationship with local business in order to enter into new
business (Ionascu and et.al., 2017). Thus, it is also analysed that if company expanding its
current business at international level, then there may be chances to face an issue related to tax,
fees and tariffs. At that time, it is recommended to the firm to comply all the tax rate as well as
legal requirement so that the chances of negligence will be minimized and business will easily
establish its new unit as well.
On the other side, Suzuki may also faces supply chain risk and in order to improve this,
the business should have proper planning as well as develop the strategy with effective budget.
So that this problem is minimized and company may also grow to further level of success.
Moreover, there is a need to analyse the external environment factor such that political factor,
environmental factor and Suzuki should also develop the strategy in order to cope up with the
issue. Apart from this, it is also recommended to the firm to provide the product at reasonable
rate so that the customers are keep attracted towards it and if Joint venture is used by Suzuki,
then the firm should also develop the strategy in order to mitigate risk and increases the sales
production (Schürr, 2017). Overall, the firm should determine the best strategy as a foreign
market entry mode so that company may easily explore the business as well as increases the
financial performance too, and then the business will easily sustain the brand image at
international market.
CONCLUSION
By summing up above report it has been concluded that international business is the
broad concept and it also support the business to establish the brand image at international level.
In the same way, report concluded that Suzuki is also establish at 33 different countries and also
wants to develop further unit as well. Therefore, it can be done by analysing the international
business environmental factor that affect the business in negative way. Moreover, report
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concluded that there some events that also dominate the international business environment such
as trade war between two nation affect the overall industry in both positive as well as negative
way and the proposed changes in relationship between UK and European Union also sometimes
dominate the business. In addition to this, it is also concluded that by using Progress Model of
Incremental internationalization, the business will easily developed as per the time and it is also
recommended to Suzuki to use joint venture so that company will easily explore the business at
further level of success.
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REFERENCES
Books and Journals
Bown, C., 2019. The 2018 trade war and the end of dispute settlement as we knew it. Trade
War: The Clash of Economic Systems Endangering Global Prosperity.
Claeys, G., Darvas, Z. M. and Leandro, A., 2016. A proposal to revive the European fiscal
framework (No. 2016/07). Bruegel Policy Contribution.
Ionascu, M. and et.al., 2017. The Value Relevance of International Financial Reporting
Standards: Evidence for an Emergent Capital Market. In Conference paper, Accounting and
Audit Convention, September.
Luthra, S., Garg, D. and Haleem, A., 2015. Critical success factors of green supply chain
management for achieving sustainability in Indian automobile industry. Production
Planning & Control. 26(5). pp.339-362.
Masuoka, N., 2019. Reconsidering Race: Social Science Perspectives on Racial Categories in
the Age of Genomics. Edited by Kazuko Suzuki and Diego von Vacano. New York: Oxford
University Press, 2018. 328p. $65.00 cloth. Perspectives on Politics.17(2). pp.587-589.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies. 53(6). pp.1076-1093.
Pisani-Ferry, J. and et.al., 2016. Europe after Brexit: A proposal for a continental
partnership (Vol. 25). Brussels: Bruegel.
Schürr, A., 2017, July. Leveraging Incremental Pattern Matching Techniques for Model
Synchronisation. In Graph Transformation: 10th International Conference, ICGT 2017,
Held as Part of STAF 2017, Marburg, Germany, July 18-19, 2017, Proceedings (Vol.
10373, p. 179). Springer.
Sharma, S. K. and Singla, V., 2019. The Effects of Implementation of Kanban System on
Productivity: A Case Study of Auto Parts Company. IUP Journal of Operations
Management. 18(1).
Tyabji, N., 2018. From the Linear Model to Incremental Innovation Research and Industry in
India. Economic & Political Weekly. 53(18). p.43.
Varró, D. and et.al., 2016. Road to a reactive and incremental model transformation platform:
three generations of the VIATRA framework. Software & Systems Modeling.15(3). pp.609-
629.
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Wang, P., Pang, S. and Li, G., 2019, February. An analysis of the causes of the Sino-US trade
war. In 2019 4th International Conference on Financial Innovation and Economic
Development (ICFIED 2019). Atlantis Press.
Online
Uppsala Internationalization Model. 2018. [Online]. Available
through:<https://link.springer.com/content/pdf/10.1057%2Fpalgrave.jibs.8490230.pdf>.
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