Blundstone Footwear: International Business Environment in Ethiopia

This report provides a comprehensive analysis of the international business environment for Blundstone Footwear, focusing on its potential market entry into Ethiopia. It begins with an executive summary and introduction, followed by an overview of Ethiopia, including its economic growth, current position, advantages, and disadvantages as a business location. The report then delves into Blundstone's market strategies, specifically exploring strategic alliances and direct export methods for entering the Ethiopian market. It identifies key advantages such as a growing market and lower labor costs, while also addressing disadvantages like political instability and unskilled labor. The report concludes with recommendations and a conclusion, providing a strategic roadmap for Blundstone's expansion into Ethiopia, supported by relevant references.

International Business
Environment

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................1
INTRODUCTION...........................................................................................................................2
Country Overview ......................................................................................................................2
Economic growth........................................................................................................................2
Current position...........................................................................................................................3
Advantages..................................................................................................................................4
Disadvantages.............................................................................................................................5
Market strategies of Blundstone Footwear.................................................................................6
RECOMMENDATION & CONCLUSION....................................................................................8
REFERENCES................................................................................................................................9

EXECUTIVE SUMMARY
A business environment is a highly dynamic filed, no matter if its within national
boundaries or international market. For any company it is very vital to ensure that each task is
completed in a set period of time so that it is able to tackle different elements that are present in
the environment. A company working in any industry has to choose a market very carefully, if it
is not done with prior evaluation then it will have massive losses. In international business
environment, multinational companies are offering their products. They use various type of
strategies for influencing market forces and consumers in a effective manner. The marketing
managers use different tools and techniques to enhance their organisation productivity and
effectiveness.
1

INTRODUCTION
International business is the large relevant concept of modern economy. It is simply the
summary of all commercialised dealing which occurs between various countries. International
business environment also affects multinational organisation in which they choose strategic for
attracting large number of customers in all the world. The global business is grow and expand by
increasing production and sale in large market and it cover whole country market.
In this report, Blundstone is a footwear company which is presently expanding into new
markets. Its competitors are exploring African market which are still unexploited (Cantwell,
Dunning and Lundan, 2010). The company has to make its move for making sure that do not lose
opportunity to grow bigger and better. It will have to prepare a market strategy as per the chosen
country as to influence consumers and environmental forces more effectively.
Country Overview
Ethiopia capital is Addis Ababa which is situated in centre of the country. It is the oldest
country of Africa which is independent and it has second largest population rate. Its population is
approx. 3.38 million. The prime minister of this country is Hailemariam Desalegn Bosche since
2012. This is most stable country Africa's nation and it has one reserved leading economy
growth. Ethiopia is the suitable country for expanding Blundstone Footwear business in the
world.
Economic growth
Ethiopia has high emerging economy growth in agricultural sector with approx. 43%
GDP and almost 84% is their total employment rate (Wild, Wild and Han, 2014). The country
tries to rise their growth by 8.2% in 2017 and in 2018 they assume to increase the economic
growth by 3.2% Ethiopia takeover Kenya as economic competitor of East Africa. The annuls
economic output in 2017 was predicted as 78 billion and in previous year it is almost 72 billion.
In 2015, the economic growth of this country is approx. 10.8% marked.
2

(Economic growth rate of Ethiopia, 2017)
As shown the above image, the economic growth rate of Ethiopia is highest in 2011with
11.39% and lowest in 2016 which is 6.49%. Recently, in 2017 economic growth rate is 7.5% and
country's annual GDP growth rate is 11%.
Current position
Ethiopia is the oldest independent country of Africa and it has second large population
rate. This country has unique cultural tradition place named as Ethiopia Orthodox Church that is
one of the oldest Christian church since 1974. It is one of oldest civilization and it is also world's
poorest countries (Dunning, 2012). The per capita income of this country is almost $500.
Recently, there are some development challenges of Ethiopia country such as preserving positive
economic growth, reduction in poverty rate which create hurdle in job opportunity. They also
implement accurate government practices which help country people. The government share
3
Illustration 1: Economic growth rate of Ethiopia, 2017

some fund in the program of pro-poor and invest money. This situation is suitable for Blundstone
Footware manufacturing company for start their business and growth with them.
Advantages Major part of GDP- Market of footwear products in Ethiopia country is assumed by
12% and its growth in all over the Africa is approx. 35%. The manufacture of shoes are
provide benefit to cover major part of GDP of the country. There are methods which help
in increasing economic growth rate of Ethiopia country in effective manner. Its current
gross domestic product rate is approx. 11% in 2017 and they tries to rise by 2.6% in the
year of 2018 (Forsgren and Johanson, 2014). The country give permission to establish
footwear company who have invest large in this economy. This provide higher growth
rate and also arise chance of job opportunities to their unemployed people. Higher growth rate in industry- The growth rate of this company must be higher for
providing effective investment in the large market. Blundstone company can establish
their business in this country for expanding it and earn maximum profit from well settled
individuals. Every company tries to enter in manufacturing industry for expansion of
their business operations and functions with proper manner. So cited company will also
invest huge money for start the business, and then provide growth in the country
economy. Lower cost/cheap labour- In this country, the cost of worker is very to compare with
other country. It is beneficial for cited firm to appoint maximum labour in minimum
salary amount. They will manufacture high quality products and offer to the large market
whch is important for the organisation. The low cost labour are produce more products in
minimum resources. This is the main growth structure of each country and it help in
reducing unemployment rate within the country (Kolk, 2016). The base of every
organisation are labour or workers who manufacture various types of products and if
Blundstone company establish their business in this place this will provide huge
profitability and productivity. Less rules and regulations for establishing units- Ethiopia is the country where
government can not intervene in any industry manufacturing process. There are less rules
and regulations in this country which assist in producing any type of products and can not
change commodity size, design and shape according to the government. Without
4

interference of government company can make their own rules and regulations which are
suitable for them. They can not force to change any plan and policies which are not
match with their business functions and activities. Blundstone footwear firm can make
different types of commodities and offer in any market and customers. Resources abundance- In this country, there are limited resources which are not satisfy
every consumer need and demand. The company will regularly develop more resources
which help in manufacturing various products and services. This is the advantage for
cited firm to make effective products by using collective resources in the organisation. It
is appropriate place for establish footwear company in the Ethiopia which is best for
consumer market location where most of the company sell shoe products.
 More market opportunities- It is important for every company for analyse opportunities
in the country where they may be start their business (Czinkota and et. al., 2010). They
should research on various market goods and try to find out more opportunities which
they can expand their company growth and gain success in effective manner. An
organisation need to analyse market risk, fear, competitors information, technical issues,
external and internal environment factors. Cited company can target goal and try to reach
that objective within specific time period. They requires to predict the competitors
products features and should attracts their customers by making effective goods.
Disadvantages Political instability- This factor directly affects company's business operations an
functions. In the Ethiopia, there is lack of stability in political term and it is most
dangerous aspect for the Blundstone footwear firm. Government can not develop
effective rules and regulation due to instability in political. The production of products in
Ethiopia country is low because of the lack of salary amount and also provide very
limited incentives by government which affected on political stability. Ethiopia footwear
companies suffers from low discrimination in the global market due to lack of
competitors in terms of marketing and selling price. Unskilled labours- The major issue which is faced by Ethiopia country is unskilled
labour who are not educated properly (Kolk, 2016). Firstly, cited organisation deal with
lack of knowledge employees who can not take part in making various techniques and
methods. This will create major problem for the company because they can not develop
5

attractive products which demand by customers. It is an ef It provide midrange goods
due to limited design skill and low quality products to their customers in the market. Poverty and Illiteracy- It is major problem of every country and in Ethiopia approx. 51%
people were illiterate in 2017 according to the analysis. In this country. There are
maximum poverty and illiteracy among people so if company may assume to offer a shoe
product to them then they do not understand their benefit and it increase research cost of
Blundstone company (Dunning, 2013). There are large number of poor people who
suffers from food and shelter in this country and their poverty rate is approx. 33%. Lack of technologies- A company need to use technical methods which are very
expensive in nature and by this their cost of techniques were enhanced rapidly. Ethiopia
face many problems which are related to manufacturing of footwear goods such as lack
of managerial skill, quality and design issue, technical issue, high manufacturing cost,
lack of proper training, limited number of transportation, lack of accurate productivity
and poor infrastructure. Higher rate of investment- There are many poor people in Ethiopia country who can not
afford expensive goods and services which are developed by cited firm. Then their
manufacturing cost is increasing for production of products for these people who are not
purchase any expensive goods.
 Logistic issues- The country face many transportation problem and issues which affects
delivery of products and services. It is most effective issue that affects countries growth
in major way. Company can face these problems which directly impact on transportation
facilities (International business environment. 2017). They can purchase bus or truck for
providing products and services. Blundstone footwear firm can not supply their
commodities from train or air plane because airlines tickets are too much costly and train
can not protect goods properly.
Market strategies of Blundstone Footwear
Blundstone Footwear company will adopt substantive strategy for expansion of their
business in the country. This strategy will help in earning in short term and entry in large market.
Achieving effective growth and target large market area which should be required by cited
organisation.
6

Phase 1-Form strategic alliance- Blundstone Footwear company will use strategic alliance for
expanding their business in the chosen market and create awareness among customers. It is an
agreement between two parties who joined together and one party agree on selling their products
and services in the market (Dunning, 2012). This is a legal agreement in which one company
pursue to agree on spread goods information among potential buyers. So cited firm will choose
strategic alliance for earning maximum profit and create awareness in between more customers.
They need to supply all their finished goods and another company sale them in the large market.
This is partnership alliances in which two company work together for achieving target objectives
and get mutual benefit. In this an organisation can share information, capabilities, data, resources
and try to reach this. A firm basically adopt strategic alliances for getting other companies
innovative product advantage without making any investment in new research and development
project. The strategic alliance is based on direct export.
Phase 2-Direct export- After formation of strategic alliance company will export their products
and services directly to their customers. Organisation's distributors who spread awareness among
buyers they will direct export goods from Australia to Ethiopia. And also they provide all
commodities to their potential retailers who sale their products to their customers. This phase
provide positive image to firm and buyers will know that it is a new company whose goods are
effective and efficient. By this direct exporting, Blundstone company's customers provide direct
feedback of their products and performance in market. This will assist in developing
understanding in the market environment and also analyse external and internal factors.
Phase 3-Marketing- It is an effective tool of an organisation which help in promoting various
types of products and services in the market. Marketing includes advertisement, personal selling,
public relation, sales and promotions. This will help company in introducing best good in the
marketplace (Cantwell, Dunning and Lundan, 2010). There are many methods which assist in
promoting different products and services of firm among buyers. They used advertisement for
attracts large number of customers towards their products and services. Some source which is
used by firm in doing advertisement such as television, radio, internet, newspaper etc. Personal
selling is rarely used by Blundstone because it is not possible for them. But they always maintain
public relation which assist in attracting buyers.
Phase 4-Establishing manufacturing units- Company should establish manufacturing units
which requires to promote logistic facilities and also help in assuming demand of customers. The
7

cited organisation should manage their transportation units which help in supplying expected
goods among customers. They need to travel their commodities which supports to establish more
units that provide growth to the firm.
Phase 5-Acquisition and merger- After all these phases, the company will adopt substantial
growth strategies which help in expansion of business operations. Then organisation will merge
and acquire their distributors who sell the products directly to the retailers in the market. This is
the suitable strategy which help in expanding company's goods information among potential
customers. By this phase firm will joint their all distributors and sell all products together and
gain mutual benefit (Economic growth rate. 2017). This will provide effective growth in
Ethiopia country. They need to sell commodities directly to their retailers and buyers purchase
by them.
It can be conclude that substantial strategy is effective strategy which should be used by
Blundstone footwear company for expansion of their products in Ethiopia countries market. By
this they should acquisition and merger their all small distributors firm and sell goods together
with them. It will provide secured position in the market of Ethiopia country and they do not
need to export products from Australia.
RECOMMENDATION & CONCLUSION
It can be recommend that Internal business environment is effective for distribution of
effective products and services. In Ethiopia country, the Blundstone company will adopt
substantial strategy for expand the business operation in selected marketplace. There are many
phase which help in making market strategies for cited firm such as direct export, formation of
strategic alliance, marketing, establishing manufacturing units and merger and acquisition.
As per the above report it can be concluded that international business environment is
crucial for modern economy. It help in exchanging various products and services in global
market. It is simply the summary of all commercialised dealing which occurs between various
countries The global business is grow and expand by increasing production and sale in large
market and cover whole country. There are some advantages and disadvantages of Blundstone
company which help in identify positive and negative impact of economy and growth towards
organisation profitability and productivity. Also Ethiopia economic growth rate is 11% and they
will try to rise by 2.6% in 2018. There are many poor people whose rate is approx. 33% in this
country and illiterate persons are almost 51% in Ethiopia country.
8

REFERENCES
Books and Journals
Cantwell, J., Dunning, J. H. and Lundan, S. M., 2010. An evolutionary approach to
understanding international business activity: The co-evolution of MNEs and the
institutional environment. Journal of International Business Studies, 41(4), pp.567-586.
Wild, J. J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Dunning, J. H., 2012. International Production and the Multinational Enterprise (RLE
International Business). Routledge.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Czinkota, M. R. and et. al., 2010. Terrorism and international business: A research
agenda. Journal of International Business Studies, 41(5), pp.826-843.
Dunning, J. H., 2013. Multinationals, Technology & Competitiveness (RLE International
Business) (Vol. 13). Routledge.
Beamish, P., 2013. Multinational joint ventures in developing countries (RLE International
Business). Routledge.
Online
International business environment. 2017. [Online]. Available through:
<https://www.edx.org/course/international-business-environment-iimbx-im110x-1>.
[Accessed on 6th October 2017].
Economic growth rate. 2017. [Online]. Available through:
<https://www.slideshare.net/tutor2u/economic-growth-and-development-in-ethiopia>.
[Accessed on 6th October 2017].
9