MGT 340 Embraer Report

This report examines Embraer's international expansion strategy, focusing on market entry modes, multinational organizational structure, and human resource management challenges. It analyzes macro-economic issues in Australia, Embraer's international strategies, and the importance of cultural sensitivity and effective communication in a global workforce.

MGT 340

EXECUTIVE SUMMARY
Embraer is a company situated in Brazil which manufacture commercial, executive and
agricultural aircraft. Its headquarters is located in Sao Jose Dos campus. This company is third
largest manufacturer for civil aircraft. Embraer has become privatized because of economic
crisis. Government provide support towards growth and development of this organisation by
providing them with production contracts and subsidies. This organisation is operating alone in
the domestic market.
This report cover about various modes of entry to choose from like exporting deals with
selling of domestically produced goods and services across boundaries of the country, when they
want to make their operations international. Selection of entry mode depends upon size and
objectives of business. Further, it discusses about Multinational organisations that have their
production units in other countries. Due to globalisation, it faces a lot of challenges and problems
in the expansion procedures. Leadership and motivational theories are significant to maintain
commercial activities across the countries.
There are generally three types of exports like indirect, direct and cooperative.
Organisation uses different techniques to enter foreign market. Licensing is used to reduce
potential profit of overall business.
Project emphasis on Leadership and motivational theories is significant to
maintain business operations across the countries. It becomes difficult to coordinate with
workers in video conference and calls. End of this report discusses about recommendations
given by Human Resource Management to control and manage all business activities globally. It
is essential to spread awareness about different cultures and organisation should quickly respond
to changing environment to maintain sustainability. They implement different strategies and
procedures to assure safe and positive working facility in order to retain employees and reduce
turnover rate.
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TABLE OF CONTENTS
Executive Summary ........................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Macro issues related to Australia...........................................................................................1
Modes of entry for international market.................................................................................3
International strategies for Embraer.......................................................................................4
Multinational structure for the company................................................................................5
Motivational strategies and methods used in international companies..................................6
Human Resource recommendations ......................................................................................8
Marketing considerations.......................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Macro environment reflects economic conditions of a country. This project discusses
about various modes of entry to choose from, when they want to expand their operation
internationally. Embraer is a Brazilian company which manufactures commercial, executive and
agricultural aircraft (McColloch, 2015). Government of Brazil has invested huge sum of money
to develop domestic aircraft industry. This project discusses about expansion between both the
countries with factors affecting viability of performance. This report shows benefits of
partnership which has positive impact on economy. Macroeconomics issues directly affect
overall health of the economy, reserve bank implements monetary policy with an objective to
improve economic condition of a country. Good management of interest rates and money supply
can create sustainable low inflation environment.
Embraer is a Brazilian aerospace, that manufactures commercial, military and agricultural
aircraft. It has its headquarters in Sao Jose Dos campus. It has a turnover of 19.8 billion and
19,119 employees working in it. Further, this project emphasis on how company follows all
corporate responsibilities in the process of expansion. This law is required by country for
fulfilling all requirements of society. This report covers macro issues of Australia, modes of
entry for international market, Modes of entry for international market, international policy for
Embraer, Multinational structure for the company, Motivational strategies and methods used in
international companies. End of this project discusses about marketing strategy which is
considered as the most interesting and important part of international business
MAIN BODY
Macro issues related to Australia
Embraer is the third largest manufacturer for civil aircraft. it has become privatized
because of economic crisis. In other words, the company was not earning enough profits and
government has taken decisions to sell it. Economy has experienced downfall because of falling
GDP, and prices were continuously increasing, this has led to privatisation to the company
Government has supported growth and development by providing them with production
contracts. This organisation was operating alone in the domestic market.
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Macroeconomics issues directly affect overall health of the economy and provide some
measures to deal with its impact on future. Macro indicators can be divided in three types such as
pro cyclic, counter cyclic and cyclic (Abdullah, Aziz & Ibrahim, 2014). Direction of economic
movement of Australian country is defined by pro cyclic. For example, GDP. Counter cycle is an
indicator, which is inversely proportional to performance; example is unemployment. A-cyclic is
an economic indicator which is directly related to economic productivity of the country.
Some macro issues related to Australia are as follows:
Monetary policy and inflation: Reserve bank implements monetary policy with an objective to
improve economic condition of a country. Good management of interest rates and money supply
can create sustainable low inflation environment. Efficient use of resources that are available in
the society will improve financial conditions. Maintaining price stability and proper monetary
policy will lead to economic growth and development (Austin & Fozdar, 2018). Australian
Reserve Bank plays crucial role in implementing and formulating monetary policies. Inflation
can be used as indicator in framing policy of a country. Consumer price index measures upward
and downward movement of price of a product or services. It is the result of increase in price of
products, which will lead to fall in purchasing power of customers. Inflation rate of Australia is
continuously fluctuating from 5 to 6 percentage.
Fiscal policy: It is the backbone of government policy which directly affects expenditure and tax
policy. Main objective is to maintain price stability, economic growth and full employment in the
economy (Ball McColloch, Minor, McNett, 2012). This policy regulates flow of money and
monitors disposable income, which are available to customers. Execution of Fiscal policy has
slow impact on income distribution, aggregate demand and supply.
Gross Domestic Products: This helps in determining market value of final goods and services
that are produced with boundaries of country. GDP is generally divided into four parts such as
expenditure, investments, government purchases and net exports.
There are three ways of calculating GDP and that is as follows:
1. Expenditure approach which calculate end payments made on goods and services
2. Product approach calculates market value of goods and services
3. Income approach is defined as sum of all income received by manufacturer of a
country
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GDP is an indicator, which reflects true economic growth and development of Australia.
It has been found that its GDP has increased up to 0.8% in last quarter. Agriculture and mining
sectors are major contributor of country economy. Availability of natural resources make a
country more competitive.
Unemployment: Economy of Australia is always full at employment, main reason behind
unemployment is switching of jobs which is purely frictional. Wages of workers help in
determining productivity of products and service of a country (Berger, Pukthuanthong & Roll,
2016). This is an economic indicator which determines operating capacity of a country. Global
recession has increased unemployment level in Australia. There is an inverse relationship
between unemployment and GDP of the country, increase in Gross Domestic Product decrease in
the rate. Employees those who are assigned with challenging work and satisfying, which in tend
to reduce workers’ turnover. Reduced rate of unemployment has resulted in economic growth,
which has increased overall aggregate demands of Australia.
Modes of entry for international market
An organisation has various modes of entry to choose from, when they want to make
their operation international (Baum, 2016). Selection of entry mode depend upon size and
objectives of business.
There are various types of entry foreign entry modes.
Exporting: It deals with selling of domestically produced goods and services across boundaries
of the country. There are generally three types of exports like indirect, direct and cooperative.
Indirect exporting is associated with moderate risk because it has no exposure to foreign market
and their risk. Organisation offer their products and services to an agent working in foreign
market and they sell that product to the mediator. This is the most common method adopted by
business when they primary enter the market. This is the most effective method because it
requires less commitment and lower risk. Exporting helps them to grab attention of customers by
establishing good brand image. Direct export is similar to indirect export but it does not involve
any intermediaries (Modes of entry, 2018). Organisation use this method to directly explore
current foreign market. Corporative exports are an agreement between foreign and domestic
market to use their distribution network.
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Licensing: International Licensing is an agreement between the countries to use property of
licensor. It is mandatory for licensee to pay money in exchange of property like trademarks,
patents, and production techniques. This is associated with lower risk because it has minimum
exposure to economic and political conditions. Organisation use this technique to enter foreign
market. Licensing has been used to reduce potential profit of overall business.
Franchising: Semi-independent business organisation use company trade mark in order to sell
their products and services. They pay prescribed fees and royalty to the franchiser for using
company brand name and symbol (Boer, Berger, Chapman & Gertsen, 2017). Franchise
packages depend on the terms and condition of the contract which include equipment and
management operations. This is the most common technique used by new business to capture
cross border market. Franchising has both negative and positive impact on the organisations.
Joint venture: An organisation can use this strategy to divide work and risk between
other parties. Two or more companies come together to achieve common goals and targets. This
helps in capturing new market with the help of products and services.
It is recommended to follow export as a mode of entering new market because it provides
direct exposure to foreign market and minimum amount of risk is associated with this strategy. It
provides mutual benefits to both the countries (Buffel & Handler, 2018). Exporting has become a
common mode of entry worldwide; due to this, the government has reduced trade barriers and
transportation that has become cheaper and efficient. This helps in maximising sale and
increasing profitability of an organisation. Exporting directly deals with clients all over the world
which help to capture the global market share.
International strategies for Embraer
This refers to plans and guidelines related to commercial transactions which take place
between two different countries. This strategy provides plans for growth and development of
organisation to increase overall profitability and productivity. Business operations vary in
different countries like entrepreneurs find difficulties in understanding political and legal factors
of the country.
There are various types of international strategies, some of them are discussed below.
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Multi-domestic strategy: a company sacrifices their efficiency to gain importance and quick
reactions from local market. Organisation design their products and services according to the
custom and culture of the other countries (Cole & Parry, 2017). They offer products to match up
with local demands of customers. This is an effective strategy used to meet up demand of
customers.
Global strategy: an organisation surrenders positive reactions of local market and customers.
They target on improving the efficiency and effectiveness of each market segment. Organisation
critically evaluate market situations and modify existing products according to customers’
requirement. Global strategy helps in capturing market by doing minor modifications in
products. Organisation offers same products and services globally and they stress on economies
of scale.
Transactional strategy: This is combination of multi-domestic strategy and global strategy. It is
significant for organisation to maintain balance between desired efficiency and local preferences
of customers (Cronin, 2016). They offer same products and services all around the world and
also consider the demands of local customers.
Managers are required to address four basic components which are related to
international strategic planning.
They are briefly discussed below.
Distinctive competence: organisation refers to some important components that help in
representing better position of business as compared to competitors. Managers of business
assures quality products that are delivered to customers and they select effective distribution
channel Multinational organisational structure. (2017). This provide guidelines to foreign
business to compete with local organisation. Organisation plan to expand their business on the
basis of resources.
Scope of operations: organisation should focus on expanding business in terms of geographical
regions like countries or cluster of countries. All organisation has limited number of resources;
managers are required to decide the type of market in which they wish to operate. They identify
key areas of improvement of a specific product and organisation focus on those particular areas.
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Resource development: organisation decide their competitive strategies and policies and
allocate resources according to it. Firm do not have enough resources to operate in different
countries as it is significant to divide original investment in different parts.
Synergy: This is among the fourth and last component of international strategy. There are
different business elements which mutually benefit each other.
Embraer can follow Transactional International Strategy to grab the attention of new
customers (Henckel & McKibbin, 2017. They can offer same products and services to different
countries according to preferences of local countries. This will firm in satisfying customers'
requirements along with local traditions.
Multinational structure for the company
Multinational organisation is an organisation which has their production units in
different countries. Due to globalisation, establishment face lots of challenges and problems in
the expansion procedures. There is complexity in maintaining multinational relationship and it
plays crucial role in delivering key information and messages to different organisations. They
design their structure which help in maximising share of profits in long run (John Daniels 2013).
Local organisation grows and expand their business operations all around the world. It is
significant to maintain organisational structure for multinational companies.
Some organisational structures are given bellow
to operate globally. Large organisations can follow this type of structure but in a decentralised
way. It is significant to coordinate various activities of business to increase productivity and
profitability of the organisation.
Export only: organisation exports goods and services to targeted market outside the country. to
become international company, it is significant to change organisational structure (Khilji,
Tarique & Schuler, 2015). A company offer related products to export manager and afterwards,
they sell that products to marketing supervisor. Export manager directly report to CEO of the
company. It is important to have coordination between various divisions of products like
production and marketing.
Establishment of International division: to grow and establish in foreign market, it is required
to get involve in specific areas. International division deals with dividing location overseas
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known as foreign location and they have to report direct to CEO of the company (Lovett,
Dempster & Flückiger, 2015). Foreign department have control over their services and products
and respond in effective manner to geographical challenges.
Global structure: Multinational organisational structure effects the growth and development. to
establish identity worldwide; it is important to have complex and established multinational
organisational structure. Foreign market is dynamic in nature and it changes continuously,
company’s design their structures to cope up with changing environment. Structure of
multinational reflects the image and identity of the business. Multinational companies
accomplish global structure by dividing it into large and broad groups. Groups or divisions are
formed according to product or territory.
Groups: Organisation which offers wide range of products and services, need a structure that
focus on production division (Pintér, Hardi, Martinuzzi & Hall, 2018). Products are grouped
according to market area and further, it is divided in various functional areas like production,
marketing, etc. If a company has broad product division, CEO is required to follow a proper
hierarchy system.
Motivational strategies and methods used in international companies
Leadership and motivational theories is significant to maintain business operations across
the countries. to maintain coordination and cooperation between different divisions, leader must
understand personality differences among people (Schaltegger, S. & Burritt, R., 2017). Due to
transformation in globalisation, people from different culture work together so it is important for
leaders to understand cultural difference. To work effectively with clients and suppliers’, leaders
should be capable to decode culture and value differences.
Given below are some methods and strategies that are used to main effective cross
country working relationship.
Flexibility: People from different backgrounds and culture work together to accomplish common
goals of organisations (Schaltegger & Burritt, 2017). Flexible working environment help in
serving various division worldwide. Understanding the key differences between employees’
culture will motivate them and avoid confusion. Leaders must show interest in individuals’ job
and carrier and provide them with opportunity to learn and develop skills.
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Give rights to employees: Leaders should motivate employees to actively participate in every
activity of business. It becomes difficult to coordinate with workers in video conference and
calls. Team members should be present and accounted in a specific location, they should be
aware of agenda in advance (Uhlmann, 2016). Leaders should represent thoughts and opinions of
their group people. Participation of employees in organisational activities will create positive and
good working environment.
Provide training to employees according to corporate norms and policies: Cultural norms of
different countries and locations discourage active discussions of team members due to their
diverse thinking process. Leaders should train employees on how to perform in business
meetings. Behaviour of employees depend upon their background and culture so it becomes
important to train staff according to cooperate norms.
Encourage employees to communicate with each other: People from different culture are
coming together to work in single organisation. Managers of organisation should motivate
employees to have casual interaction with each other. In order to strengthen bonds of
employees’, the company can offer tea breaks, happy hours etc. It is significant to have mutual
interaction at work place to avoid confusion and duplication of work.
Effective listening: Managers should stop their work and listen carefully to employees’ problems
and issues. They might have cultural issues which affects productivity of workers (Griffin &
Pustay, 2015). They are required take concern of every staff member before implementing any of
organisational changes.
Communication: it is significant to have good communication between various divisions and
departments of organisation. complete work on time with minimum wastage, departments are
required to deliver right information on right time (McColloch, 2015). Effective communication
avoid duplication of work and resources are effectively utilised by every division which are
operating globally.
Human Resource Recommendations
Human Resource Management play crucial role in managing all business activities
globally. Managers are required to spread awareness about various cultures and should quickly
respond to changing environment. They implement different strategies and procedures to assure
safe and positive working facility. Managers motivate and influence employees working in
international business to collaborate their efforts.
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Connectivity: It is essential that workforce of an organisation should know each other to
effectively perform business operations. Human resource provide training to staff in order to
assure productive working environment. Managers encourage employees to use their
communication skills to interact with each other (Abdullah, Aziz & Ibrahim, 2014). Every
individual has some specialised skills which remains uncovered, human resource management
identify that skill. This will be beneficial for both subordinates and employer.
Retaining culturally diversified staff: it should properly manage and understand requirements of
workforce. This will help organisation in retaining and controlling old staff. Managers can
recognise employees for their loyalty and service to minimise staff turnover (Human Resource
recommendations, 2018). Management should take time to evaluate performance of employees
and appreciate them inform of others.
Cross cultural management team is required to create effective organisational structure: in
order to achieve success in international business, it is significant to create positive working
environment. Organisation is required to follow clear hierarchy for communicating with
employees. Human resource management is required to monitor every task efficiently (Human
Resource recommendations, 2018.). Right organisational structure will help in reducing chaos
and work is completed in a prescribed time.
Managing cultural differences of the teams: As an organisation tend to become international, it
is responsibility of human resource management to manage and control all operations and works.
Managers influence behaviour of employees to assure personal efficiency in it. They are more
concerned about competitive advantages in this dynamic economic culture. They train employees
to behave professionally and actively participate in community.
Create corporative rules and maintain them: Every employee has different working style and
skills, human resource management draft common rule and regulations for people working in an
organisation. Managers assure that employees follow all standard policy (Austin & Fozdar,
2018). They select best opportunity from the available alternates in order to assure efficiency and
effectiveness in the work.
Resolving disputes and issues immediately: Human resource management motivate employees
to work together as a team. Managers motivate workers to accept the cultural differences and
direct their efforts towards strategic goals and objectives. Human resource plays crucial role in
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solving differences and issues of workplace. They spread awareness about importance of team
and their functions across the borders.
Marketing considerations
Marketing strategy is the most interesting and important part of international business.
This help in delivering quality products and services to customers by fulfilling all requirements
of clients. Expanding business operation overseas is a complex and lengthy procedures (Ball DA
and et.al., 2012)). There are different strategies, which an organisation can follow in order to
capture new market.
Cultural factors
Languages: While planning international marketing strategy, it is important to consider language
of the country. International advertisement helps company in increasing sale and improving
brand image. Packaging of product must consist of a display with a clear picture, and detailed
description of inside ingredients and contents.
Taste: it is significant for international business to identify taste and preferences of the countries
(Berger, Pukthuanthong & Roll, 2016). Organisation should design their products according to
customers’ demands and requirements.
Regional values: if a business wish to sell their products in extreme regions, then regional
differences should be considered in drafting marketing strategy.
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Economic factors
Per capita income: To capture potential market for new product, it is important to consider
wealth and resources of the country.
Class structure: Organisation should consider the class of customers before drafting marketing
policy and strategy. Country has different classes of people such as upper, middle and lower.
Number of people in each class may vary from country to country
Demand and supply: It plays crucial role in designing marketing policy and strategy of new
products and services.
Political and legal factors
Laws and legislation: rules and regulations of different countries will all together affect business
operation (Baum, 2016). Government of the country will provide licence to organisation for
selling and manufacturing products and services.
Taxes: government implement tax according to economic situation of the country. Tax has direct
impact on profitability of business operating in a foreign country.
CONCLUSION
This project concluded about Macroeconomics issues like monetary policy, fiscal policy,
gross domestic products' unemployment affecting the business operations. Further, this project
explains about various modes of entry available to organisations to expand their activities
globally. Exporting became one of the common modes of entry worldwide due to this
government has reduced trade barriers and transportation has become cheaper and efficient.
International strategies provided guidelines to perform all commercial transactions of
organisation. This report concluded that multinational organisation divides their structure to
perform business operations globally.
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