Analyzing International Business Strategies for A.S. Watson

This report provides a comprehensive analysis of international business strategies for A.S. Watson, a leading health and beauty retail group. It begins with an introduction to international business, emphasizing the importance of understanding international perspectives and the implications of globalization. The report then delves into the economic drivers of globalization, including technological, political, market, cost, and competitive factors, and their relevance to A.S. Watson's operations. It examines regional economic integration, the impact of cultural differences on business, and the characteristics of emerging and transition economies, particularly the BRIC nations. The report concludes with an overview of the three basic decisions in international expansion, offering insights into A.S. Watson's potential for global growth and strategic recommendations for business operations.

International Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Better understanding of international perspective .................................................................1
Regional economic integration...............................................................................................3
Culture of society and forces that leads differences in social culture....................................4
Emerging and transition economies and characteristics of BRIC economies........................4
Three basic decision in expansion at international level........................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
International business mainly consists of all commercial business activities which has
taken place in countries to promote the transfer of products, services, resources, individuals,
ideas and technologies across the boundaries of nation. It many occurs in every different formats
like movements of goods from one parent country to another Host country inform of export,
import and trade etc (Hirst, Thompson and Bromley, 2015). It is also occurs in contractual
agreements in order to permit the foreign enterprise to utilize the products, services and
processes for other host countries inform of franchise and licensing etc. Further, the development
and regulations of sales, manufacturing research and development and the facilities of
distribution in foreign market. Present report is formulated in for the CEO of A.S Watson which
is the largest health and beauty retail group in Hong Kong, with over 12,000 stores in 25 markets
worldwide serving over 28 million customers per week, in order to gain good understanding of
international perspectives for analysing the implications of process on internationalization for
development of business strategies and operations (Beck, 2015). Moreover, implication of
changing the environment of international business for strategies and operations of business to
analyse the A.S Watson group and its operations in order to formulate its international business
strategy.
Better understanding of international perspective
As per the analysis, International business has provided an overall perceptive on the
business which is grounded at global level. In this context, Business operations of Multinational
health and beauty retail group, A.S Watson are analysed in order to assist the CEO in
formulation of internationalization strategy. Globalization is mainly analysed as direction a
larger towards the greater technological, political, economical and cultural interdependence
between the institutions, companies and economies (Wild, Wild and Han, 2014). It is also
considered as process of interaction as well as integration among the people, companies and
government of various nations, process that is driven by the investments, international trade that
is supported by information technology (What Is Globalization?, 2017). Further, there are
various economic drivers of globalization and international business which is also related with
the operations of A.S Watson and should be concerned in formulation of international business
strategy. These drivers are basically separated in to five different groups.
1

 Technological drivers: The major resource technology has built and established a
foundation for the modern globalization. Innovations in the transportation technology has
revolutionized the retail industry. There are major inventions has been done in the area of
micro processors and telecommunication enabled the highly effective computing and
service of communication at lowest level (Cavusgil and et.al, 2014). In present context, it
is also major international economic drivers which has provided major support to A.S
Watson organization in regulations and expansion of there retail business globally. Political drivers: There are various liberalized rules of trading leads to decreased in the
tariff on movement on products and services of A.S Watson and also permitted Foreign
direct investments in their operations which are situated across the countries. There are
some important decisions have been made by the political parties and government of
country in order to enhance the tax free trade between the countries which provides
support to A.S Watson to expand there business operations across the countries. Market drivers: Rise in competition in domestic market has made it more saturated for
A.S Watson group, opportunities of growth are tends to be limited therefore, company
has find out the way of expanding the business globally in order to resolve this situation
and its implications (Beamish, 2013). Opportunities to utilize the marketing channels at
global level and movement of marketing greater extent are also considered as benefits for
company in selection of internationalization. By using various channels of
communication like social media networking, digital advertisement and newspaper etc.,
company will able to provide information about its new product and services to people
across the countries. Cost drivers: There is always difference in sourcing efficiency and costs between in
every country therefore the Global organization like A.S Watson has opportunity take
advantage of this fact (Dunning, 2013). They have the chance to build economies ta
global level and increase the cost of product development in order to gain more and more
profits at international market. These cost drivers will support the company to increase
there growth in business and operations within economy.
 Competitive drivers: There is major fall in barriers in international trade and FDI. With
the rise in globalization, the major competition in inter firm global has been increased
2

therefore A.S Watson group is forced to regulate at international level (Forsgren and
Johanson, 2014). The major dependency between the countries and actions of foreign
direct investment has also provided major support to these drivers. Impact of competitors
on business operations have been removed by the company through adoption of various
business strategies.
In addition, the company has high potential to expand its business operations in global
market and they are able to provide there products and service to the people in Foreign countries
by having wide channel distribution. A.S Watson has financial position and support in market in
tangible form and they have also established the best economic financial services to the customer
(Enderwick, 2013). Potential of A.S Watson Group is measured from its strong financial
position, highly intangible resources primary resources like technology, Qualified personnel with
effective skills and understanding and also consist of cross functional abilities like Innovation,
Marketing and coordination among the business units etc.
They have various keys to successful as they differentiated there product from other
rivals through application of continuous innovation and providing extra benefits has added more
values to their business. Further, company has also understood its formal and informal
institutions through targeting there customers at global level. Further, they also have needs to
provide there products which are more preferred by the customers at across the countries Britain,
USA, India and other countries (Penrose, 2013). A.S Watson 's global potential can also be
analysing the degree of globalization in retail industry of china which is 77% as they have their
own resources by which they are less dependable on other countries. IN the export of products in
retail sector, Economy of China mainly stands at 1st position. Cited organization needs will enter
in to new market by using the similar models of retail which they have used in Hong Kong,
China. For the expansion of business they will also develop specialization by offering the
products as per demands of customers. Products and services of A.S Watson will be purchased
from the suppliers operating in different locations. They can also specialize in the component of
manufacturing in Bulk. Stage four, Firm will redesign its selling process and also take local
factors or people in consideration in order to develop effeminacy and cost saving. At last stage, t
due to globalization new products will offer by A.S Watson group at lowest prices in order
sustain in new market and geographical areas. Company mainly provides concentration on
3

reducing the cost (Meyer and Peng, 2016). Through this they will be able to gain more profits at
low prices of products. There potential benefits for company like High economic value, less
impact of globalization, Further, there major have provided by globalization on EU economy by
reducing income and jobs, Increase in transition cost.
Regional economic integration
It is considered as growing the increasing financial interdependency between two or more
than two countries within a geographic region for example: India and china are two major
countries in same geographical region of Asia which have major economic interdependence and
formed a major alliance for reducing the barriers of trade ans investments (Zander, McDougall-
Covin and Rose, 2015). Further there are various levels of economic integration like Political,
economic, common, customs and free trade unions that company works at different levels in
economy. In international business, A.S Watson can also take advantage of Regional integration
by transferring there products and service in other regional countries in Asia. It will provide them
benefits in increasing market size, gaining economies of scale, increasing productivity, attracting
direct investment from shareholders in other countries by developing effective business
strategies and operations (Kumar, Srivastava and Chauhan, 2017). Further, there are some
implication like Trade diversification, Decrease free global trade and loss of national identify has
to be faced by A.S Watson in region integration. Further, in order to remove these implications,
company will need to use portfolio strategy in which they establish and acquire operations
outside china. It is beneficial in providing high growth in other regions like India, Singapore,
Thailand, Japan, North Korea etc. With this strategy, company has become a able to remove
implications and challenges faced by them in past business operations. They will also be able to
expand there business operations continuously in order to achieve high economic growth as
compared to other business rivals. Company will also lead to raise their operations in regional
areas of country where they have achieved positive response by continuously making
innovations in product and services.
Culture of society and forces that leads differences in social culture.
From critical review, It is considered as set of values, beliefs, assumption and rules which
are developed by a particular group of people (Kay, 2018). Different in culture may posses
serious challenges in success of A.S Watson group's business operations in international market.
There are various ethical and social issues have been analysed which are as follows:
4

Employment generation is considered as wide issue when the organization is moving to new
markets and they have qualified with all legal matters. Then they will have needs of qualified
employees to fulfil the gaps and have to provide high salary if they hire from home country.
Thus, It is suitable for A.S Watson to provide employment to people of host country and provide
them training dealing with target audience in Asian countries (Cieślik, 2014). They need to pay
amount that is fixed by government which is high in companion to other home country. The next
issues is laws and regulation related to sustainability of environment which needs to be followed
by A.S Watson group ethically which will increase there cost and capital investments. Other
issue is considered as protection of human rights in home country. There are various implications
have to be faced by company if they will not provide freedom to their employees at workplace as
they have the right to put their feelings and thoughts in front of management. Further, customers
also have the rights to get the product as per their demand. Thus, company needs to fulfil
requirement of its employees and customers ethically so that they will not face any restrictions in
business operations in the future.
Emerging and transition economies and characteristics of BRIC economies
It implies with to the same form of change is underway and also considered as low or
economies which may be small or big like BRIC economies (Genc and Basar, 2017). There are
some characteristics of these economies like experiencing the transitions from developing to
develop like Singapore from dominated to liberal market economy and they are also engaged in
introduction of their own economies they are tends to exhibit As compared to developed
countries, the growing of emerging economies like India in retaining relatively large retail sector.
Thus, it will great opportunity for A.S Watson to grow stronger and buoyant than in most OECD
countries since the 1990s. In addition to this, company also has various options to expand its
business operations in these countries by making collaboration with other business corporation in
these countries. The main characteristics of these BRIC is considered as continuous rise in their
economic growth as compared to other nations as they are allowing foreign direct investments in
various industries in order to make the economy financial strong and creation of various
employments opportunities for the people. Further, availability of skilled and qualified personnel
in BRIC countries is also considered as major opportunity for company to expand there business
operations and government of these countries have also reduced trade restriction for foreign
companies within economy.
5

Three basic decision in expansion at international level.
As per the given scenario, there are three basic decisions that A.S Watson needs to make in
internationalization of its business operations like Place of enter: In this stage, the company develop its strategic goals like increasing
market demand and customers willing to pay in order to select the country. Other than
this, they will also make external analysis of country's environment, then select the
market (Makrevska Disoska and Nenovski, 2014). In present analysis, A.S Watson has
selected emerging nations like Japan, Russia and India where will establish there business
to accomplish there strategic goal by marketing and sales of consumer Health and beauty
products. Appropriate time: This stage involves analysis of advantage in first movers like
Availability of scarce resources, development of barriers for late entrants and
development of relationship with key stake holders (Dunning, 2013). Whereas advantage
of late movers like resolution technological and market uncertainty and difficulties of
first movers etc. In this A.S Watson has selected the position of first movers in order to
develop relationship with key stakeholders which is beneficial for them in getting
success.
 Mode of entry: There are various modes entries in global or international market has been
available for A.S Watson like Exporting of products and services, turn key contracts,
licensing, Franchising, joint ventures and sole proprietorship e. In this, there is one
method which will considered as beneficial for enterprise (Beamish, 2013). First is
Franchising in which they will provide authority to other subsidiaries and individuals to
use their brand name and identity for selling there products in return of royalty and
profits on sale of products benefits. It is beneficial as it contains low development costs
and risks.
CONCLUSION
A.S Watson needs to use differentiation strategy as its major internationalization strategy
in order to deliver high values to their customers through its innovative brands product in Asian
countries. With this, they will be able to develop a strong market share in overseas nations. It
needs to use this strategy in order to make differentiation in offering of products and services
6

across nations boundaries (Penrose, 2013). Major reason behind recommendation of this strategy
are Wide acceptance of their products of health and beauty products by their target customers at
international level which reflects the justification for requirement of this strategy. Company has
also developed its brand values in overseas nations as compared to rivals. Further, this strategy
will also provide them competitive advantage and ability to face challenges posed by different
competitors in Asian countries. These emerging economies will USA, RUSSIA, North Korea,
UK Korea and India etc. Apart from they, A.S Watson also gets major advantage in opening
international business within BRIC countries like Brazil, Russia , India and China. As its parent
country is china where they wide market share therefore they will tend to expand in other three
nations.
7

REFERENCES
Books and Journals
Beamish, P., 2013. Multinational joint ventures in developing countries (RLE International
Business). Routledge.
Beck, U., 2015. What is globalization?. John Wiley & Sons.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014.
International business. Pearson Australia.
Cieślik, A., 2014. Globalization and Human Development in Post-Transition Countries:
Empirical Evidence from Panel Data. Oeconomia Copernicana. 5(3). pp.7-27.
Dunning, J.H., 2013. Multinationals, Technology & Competitiveness (RLE International
Business) (Vol. 13). Routledge.
Enderwick, P. ed., 2013. Multinational Service Firms (RLE International Business). Routledge.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
Genc, E.G. and Basar, O.D., 2017. The Impact of OECD Countries’ Macroeconomic Factors on
Turkey’s Foreign Trade. Research in World Economy. 8(1). p.24.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Kay, A., 2018. International Policy Coordination and its Impacts. In Public Policy in the'Asian
Century' (pp. 293-314). Palgrave Macmillan, London.
Kumar, S., Srivastava, A.K. and Chauhan, K., 2017. Globalization and Opportunities for
Investors in Emerging Stock Markets. FIIB Business Review. 6(3). pp.51-60.
Makrevska Disoska, E. and Nenovski, T., 2014. Competitiveness of the European Union: Pre-
crisis Trends and Impact of the Financial Crisis. Economic analysis. 47(3-4). pp.20-34.
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
Penrose, E., 2013. The Large International Firm (RLE International Business). Routledge.
Wild, J.J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Zander, I., McDougall-Covin, P. and Rose, E.L., 2015. Born globals and international business:
Evolution of a field of research. Journal of International Business Studies. 46(1). pp.27-
35.
Online
8

What Is Globalization?, 2017. [Online] Available
through:<http://www.globalization101.org/what-is-globalization/>
9