Strategies for Sustainable Overseas Expansion: A Case Study of NZ Organic Food Limited
Verified
Added on  2023/01/19
|8
|3108
|30
AI Summary
This article explores three methods for sustainable overseas expansion, inventory management, and quality management using the case study of NZ Organic Food Limited. The focus is on the company's expansion into the United Kingdom and India, and the strategies it can implement to sustain in the market.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: OPERATIONS MANAGEMENT OPERATIONS MANAGEMENT Name of the Student: Name of the University: Author Note:
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1 OPERATIONS MANAGEMENT Table of Contents Introduction:................................................................................................................................................2 Answer 1.Location strategy:........................................................................................................................2 KSF 1. Profit generation:.........................................................................................................................2 KSF 2. Talent acquisition:.......................................................................................................................3 KSF 3. Capital acquisition:......................................................................................................................3 KSF 4. Technological advancement:.......................................................................................................3 Answer 3. Inventory management:..............................................................................................................3 a. Eliminate wastes:.................................................................................................................................3 b. Remove variability:.............................................................................................................................3 c. Improve throughput:............................................................................................................................4 Answer 4. Concept of quality:.....................................................................................................................4 Conclusion:..................................................................................................................................................4 References:..................................................................................................................................................5
2 OPERATIONS MANAGEMENT Introduction: Overseas expansion is one of the most formidable business strategies which multinational companies use to sustain in the market. This is because all small and medium scale companies face competition from multinational companies which challenge their sustainability even in their very own home countries. This stiff competition forces the SMEs to expand overseas to minimise the competition they face from multinational companies. The aim of the paper would be exploring three methods which SMEs can implement to sustain in the market namely,foreign expansion, inventory management and quality management. The substratum for the research would be provided by NZ Organic Food Limited or NZOFL which is listed on the New Zealand Stock Exchange (as per the case study). The company as per the case study markets organic chocolate bars, breakfast cereals, tea, coffee and dairy products. The business of the company is restricted within New Zealand, a market which is already dominated by Unilever. The flagship product of NZOFL are chocolate bars available in three variants namely, dark chocolate, milk chocolate and white chocolate. The product already receives strong competition from Green & Black’s, brand of premium organic chocolate owned by Unilever (Greenandblacks, 2019). The paper would aim to show how NZOFL could use the three aforementioned strategies to sustain in the market. Answer 1. Location strategy: The two cities which would be considered by NZOFL would be London, the United Kingdom and Mumbai, India. The choice of the two cities can be justified on the fact that London is the headquarters of Unilever and Mumbai is the headquarters of Hindustan Unilever, one of the biggest wholly owned subsidiaries of Unilever. NZOFL should take into account six factors before selecting these two cities. The first factor which the company should take into account are gross domestic product figures of the countries to which these two cities belong namely, the United Kingdom and India. The second factor which the company should take into consideration is population of the United Kingdom and India. The third factor which the company should take into account is availability of financial resources in these two nations. The fourth factor which the company should take into account would be the supply chain conditions prevailing in these two countries. The fifth criterion which the company would take into account would be purchasing power of the people while the sixth factor would be further overseas business expansion opportunities which each of the selected cities namely, London and Mumbai would provide.
3 OPERATIONS MANAGEMENT Fact or nos Factors London, the United Kingdom IntextsMumbai, IndiaReferencesAssump tion 1 Gross Domestic product(as in 2016) £408 or $765 billion(approx)(Ons.gov.uk, 2019)$368 billion (Economictimes.india times.com., 2018) 2Population(2011)81.4 lakh(Ons.gov.uk, 2019)1.84 crs (Mumbaicity.gov.in., 2019) 3 Domestic purchasing power85.3(Statista.com, 2019)20.3(Statista.com, 2019) 4 Global Peace Index (2018)57136 The indices of the respecti ve nations would be assigne d to the cities 5Area1,572 km² (Cityoflondon.gov.uk., 2019)157.0 sq km (Mumbaicity.gov.in., 2019) 6 Human Development Indicators(2018) 14(Rank)0.922(i ndex)(Hdr.undp.org., 2019) 130(Rank)0.64 0(Index)(Hdr.undp.org., 2019) NZOFL would be required to consider fourkey success factors(KSF) to achieve competitive advantage in the market which would include its home country New Zealand and its two host countries namely, the United Kingdom and India. The four key success factors are: KSF 1. Profit generation: NZOFL should take into account the amount of profit which it would be able to generate post expansion into the United Kingdom and India. It must be noted that while the UK is a developed economy, India is one of fastest growing economies in the world. Both these countries have immense population of buyers which can create huge demand for products of NZOFL. The company would be able to take advantage of the demand to market its products and generate high revenue.NZOFL should market its products like chocolate bars, breakfast cereals and dairy products. The company should use two three main distribution channels to market its products to generate profits. The company should open its own outlets in different areas in London in the United Kingdom in the initial phase. As far as India is concerned, the company should open its outlets in Mumbai. The company would in the initial earn high revenue by serving the customers in London and Mumbai since both are commercial hubs of their respective countries as well as hub to Unilever, the biggest competitor to NZOFL. The company should simultaneously market its products using third party distributors and retail chains. This third party distribution chains should aim to market goods in markets beyond London and Mumbai within the UK and India respectively. This would enable the company to acquire customer bases in other local markets as well. Then the company should open its outlets in the metropolitan cities to generate immense profits. The company should use the ecommerce platform to market its products. This would enable the company to serve large number of customers and generate high profits (Porter & Kramer, 2019).This combination of own outlets, third party channels and ecommerce would enable NZOFL to market its goods among an immense base of customers which would generate immense revenue. This would enable the company to make its host market operations capable of sustaining themselves.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4 OPERATIONS MANAGEMENT KSF 2. Talent acquisition: The second key success factor which NZOFL should take into account would be availability of manpower. It should be taken to account that both the United Kingdom and India are strategic markets to several food companies including Unilever. Thus, it is evident that these two markets are capable of providing talents to NZOFL while operating in these two markets(Porter & Kramer, 2019). This availability of manpower in these two markets would enable NZOFL to operate at economies of scale because it would not bring to relocate personnel from New Zealand which would reduce foreign operation costs greatly. KSF 3. Capital acquisition: The second KSF which NZOFL should ensure to operate successfully in the United Kingdom and India would be capital acquisition in order to make both the host country operations financially sustainable. The company is a public limited company listed on New Zealand Stock Exchange. This means that the company can get listed in the stock exchange of the UK and India, LSE and NSE This would enable the British and the Indian divisions to generate capital from the respective capital markets and attain financial self-sufficiency (Rao-Nicholson, Khan & Stokes, .2016). KSF 4. Technological advancement: The fourth KSF which the company should take into account in order to operate in India and the United Kingdom would be technological advancement. This is because technology would come into play in every aspect of the business right from transferring funds, processing of organic food products to warehousing of the finished products (Frank et al., 2016). Thus, technological advancement would be one of the KSF which the company should take into account while operating in these two countries. Answer 3. Inventory management: It can be suggested that NZOFL should eliminate wastes throughout the course of its operations in both home country, New Zealand and the selected host countries namely, the UK and India.The company should implement total quality management tactics like just in time and lean management to eliminate wastes from its process. a. Eliminate wastes: The New Zealand food manufacturing company, NZOFL should use operational management to reduce wastes, The operations managers employed with the company in New Zealand, the UK and India should consider the demands and expectations of customers. They should align the entire production process to ensure that the finished product quality and attributes should match the expectations of the consumers. This alignment of the finished products and in fact the production processes as a whole would enable the firm to generate more demand in the market (Meyer,et al., 2018). This increased demand for the finished product would enable the firm to mobilise its inventory like raw materials and work-in- progress faster into the process. This would lead to reduction in the wastage of inventory and liquidity to the firm. b. Remove variability: The marketing department, manufacturing departments, the purchase management departments and the inventory management of NZOFL should operate in a streamlined manner to remove variability. The marketing department should communicate the future possible demands for finished products to the manufacturing department. The manufacturing department should estimate the amount of raw materials and WIP required to fulfil the demands of the customers and communicate the same to the inventory management department. The inventory management department should find out that actual stock available against the demanded amount and locate shortage if any (Frank et al., 2016). The inventory management department should inform the purchase department to acquire the stock from suppliers.
5 OPERATIONS MANAGEMENT c. Improve throughput: NZOFL should install modern machinery to improve throughput rates. The modern machinery would be able to manufacture goods faster and save fuel. The new machinery would also enable the company process more inventory towards production and reduce wastage.The rate of throughput can be improved by eliminating wastes by using lean management. The company can also train its employees to enable them to larger higher rates of production (Rao-Nicholson, Khan & Stokes, 2016). Answer 4. Concept of quality: NZOFL should consider the four categories of cost of quality which it may encounter while operating in the UK and India. They are prevention costs, appraisal costs, internal failure costs and external failure costs. Grover, Chopra and Mosher (2016) defineprevention costsas expenditures which companies incur into minimise quality problems in order to avoid consumer grievances. NZOFL in order to ensure minimum prevention costs should ensure procurement of high quality raw materials like premium quality cocoa powder. Modhiya and Desai (2016) defineappraisal costsas costs which companies have to incur to monitor the quality parameters of the products. As far as NZOFL is concerned, the management of the company should have quality audit done at regular intervals (half yearly or yearly) to ensure high quality parameters for its products. Eckel et al. (2015) defineinternal failurecosts as costs which are used to deal with products which are detected prior to sale of products to consumers. NZOFL should adopt an efficient management to recycle wastes in order to waste generation as the outcome of product manufacturing in both the UK and India. Borges Lopes, Freitas and Sousa (2015) defineexternal failure costsas costs which companies have to incur to offer after-sales services to customers. NZOFL in order to prevent quality related issues should ensure that it acquire superior raw materials from suppliers. It can be suggested that NZOFL should implement quality planning and waste management. The first strategy would enable the company to minimise prevention costs while the second strategy would minimise internal failure costs (Anderson, Sutherland & Severe, 2015). Two TQM concepts and their uses (two concepts of quality to reduce cost of quality): Just in time: In order to implementjust in timethe company should align its inventory management with orders received from customers. First, the marketing teams of NZOFL based in Mumbai, India and London, the UK should obtain business leads of the possible future orders. The marketing department should submit a report on the possible demand for finished goods in all the four segments namely, chocolate bars, breakfast cereals and dairy products. The inventory management should consider the inventory already in hand and the inventory which would be required to fulfil the future demands. The inventory should prepare a report which it would communicate with the purchase department. This would lead to acquisition of sufficient amount of inventory for production of goods (Porter & Kramer, 2019). This would simultaneously ensure that the firm does not acquire excess inventory which would lead of reduction of wastage of materials. This would also lead to reduction in variability of supply of inventory. Lean management:
6 OPERATIONS MANAGEMENT As far as application oflean managementis concerned, the company should consider customer expectations as quality parameter in manufacturing products.The management of the company should bring about continuous improvement in the operations to eliminate inefficient steps within the process, thus reducing wastes (Meyer et al., 2018).The company should time to time restructure its production process to ensure that minimum time is reduced to produce goods. The staffs should be trained on regular to improve their skills and efficiency. Thus, they would be able to manage higher volume of production without much intervention from their senior employees.It can also be pointed out that the company should use inventory control management software to achieve higher level of inventory control. The firm would be able to detect those steps which are with the production process which are unprofitable. This would enable the firm to restructure its production process to reduce production cost. Thus, lean management would enable the company reduce its costs of production and boost its profitability. Conclusion: It can be concluded from the description that NZOFL should enter the UK and India to market its food products. The company would be able to take advantage of factors like strong capital markets and revenue base in these two markets. It should also aim to expand into the neighbouring countries at a later stage.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7 OPERATIONS MANAGEMENT References: Anderson, J., Sutherland, D., & Severe, S. (2015). An event study of home and host country patent generationinChineseMNEsundertakingstrategicassetacquisitionsindeveloped markets.International Business Review,24(5), 758-771. Borges Lopes, R., Freitas, F., & Sousa, I. (2015). Application of lean manufacturing tools in the food and beverage industries.Journal of technology management & innovation,10(3), 120-130. Cityoflondon.gov.uk. (2019). Retrieved fromhttps://www.cityoflondon.gov.uk/Pages/default.aspx Eckel, C., Iacovone, L., Javorcik, B., & Neary, J. P. (2015). Multi-product firms at home and away: Cost- versus quality-based competence.Journal of International Economics,95(2), 216-232. Economictimes.indiatimes.com.(2018).Retrievedfrom https://economictimes.indiatimes.com/news/economy/indicators/mumbai-12th-richest-city- globally-total-wealth-at-usd-950-billion/articleshow/62870741.cms Frank, A. G., Cortimiglia, M. N., Ribeiro, J. L. D., & de Oliveira, L. S. (2016). The effect of innovation activities on innovation outputs in the Brazilian industry: Market-orientation vs. technology- acquisition strategies.Research Policy,45(3), 577-592. Greenandblacks.co.uk.(2019).Retrievedfromhttps://www.greenandblacks.co.uk/our-ranges/g-b- organic-range/bars.html Grover, A. K., Chopra, S., & Mosher, G. A. (2016). Food safety modernization act: A quality management approach to identify and prioritize factors affecting adoption of preventive controls among small food facilities.Food Control,66, 241-249. Hdr.undp.org. (2019). Retrieved fromhttp://hdr.undp.org/en/countries/profiles/IND Meyer, K. E., Ding, Y., Li, J., & Zhang, H. (2018). Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad. InState-Owned Multinationals(pp. 211-251). Palgrave Macmillan, Cham. Modhiya, S., & Desai, D. (2016). A review on cost of quality methodology and hidden costs in manufacturingindustries.RESTJournalonEmergingtrendsinModelling& Manufacturing,2(4), 87-94. Mumbaicity.gov.in. (2019). Retrieved fromhttps://mumbaicity.gov.in/ Ons.gov.uk. (2019). Retrieved fromhttps://www.ons.gov.uk/economy/grossdomesticproductgdp Porter, M. E., & Kramer, M. R. (2019). Creating shared value. InManaging sustainable business(pp. 323-346). Springer, Dordrecht. Rao-Nicholson, R., Khan, Z., & Stokes, P. (2016). Making great minds think alike: Emerging market multinational firms’ leadership effects on targets’ employee psychological safety after cross- border mergers and acquisitions.International Business Review,25(1), 103-113. Statista.com. (2019). Retrieved fromhttps://www.statista.com/statistics/262825/worldwide-gross-wage- index/