Global Marketing Assignment: Internationalization of Airdri Ltd in Europe
Question
Task: For this global marketing assignment, a small or medium (SME) UK manufacturing company is considering expanding into mainland Europe (one EU country) in June 2022. Identify &critically evaluate the 4 most immediate factors of the macro business environment it must take into account when assessing the decision to internationalize or not? You must use examples and academic models to illustrate your answer.
Answer
Introduction to the Global Marketing Assignment
The term business environment is a collection of all external and internal factors which are responsible for both the company’s growth and the company’s failure. These factors are owner, management, employees, customers, and expectations of the customers, suppliers, Government activities, creativity and innovation, implementation of technology, social trend, socio-economic changes, social responsibilities and many more (Hrechyshkina and Samakhavets, 2019). These factors are somehow interrelated with one to another. Any business organization’s present and future situation depends on the sum of these factors. These factors have impact on functioning of a business organization. According to Gaganis, Pasiouras and Voulgari (2019), it is important for any company to understand business environment by identifying these factors and how these factors can have positive or negative impact on the company. Business environment provides potential opportunities to the company and it is the responsibility of the company to know how to use these opportunities for the betterment of the company.
For instance Airdri Ltd. is a forty six year old Oxford based company having its main office in Witney. It is a commercial hand dryer manufacturing company (Cole, 2018). It is a listed company in macro business and therefore there are many factors macro business environment that are causing potentiality towards the company, Airdri Ltd. and some factors have been proved to be challenging for the particular company. The most common challenge that any macro business company has to face is regarding globalization or internationalize of the business.
Macro Business Environment Emphasizing on Airdri Ltd
Macro business environment is a condition that revolves around small or medium business organizations or companies that determines the economic stability of a nation, inflation, trends of Gross Domestic Products or GDP, decisions regarding monetary and fiscal policies and job creations. Moreover a nation’s economic stability and future economic condition depends mainly on macro business industries. There are some major factors of macro business environment that have direct impact on business organizations or companies. These factors are ecological factors, demographic factors, socio-cultural factors and local competitive markets (Hermina, RIZWAN and RIZWAN, 2020). All these factors play pivotal roles in the business environment of the dry air based hand dryer manufacturing company Airdri Ltd. This company focuses on ecological factors, made their strategies according to the factors and grabs the potential opportunities from them. By default this company is producing such products that are eco-friendly in terms of less carbon dioxide emission and still it continues uninterrupted research on creating more sustainable products that uses renewable energies. The company is also concerned about demographic factors and targeted its customers according to their geographical region and traditional habits. This company creates fast drying and quiet hand dryers and already grabbed an award from the UK Noise Abatement Society for meeting quiet mark decided by the UK Government. Naturally this incident mitigates the threat of local competitive market and increase the brand value of Airdri Ltd. If the company tries to expand their market beyond its current operational region and wants it to be internationalized then it would be the responsibility of the company to consider other external and internal factors such as political issues, labor laws and restrictions, demographic and social values, socioeconomic changes and other international challenges. Currently the company is dealing with the four most immediate factors of the macro business environment that are discussed below.
Ecological Factors
These days’ ecological factors influence any kind of business environment regardless of its products, service, size and financial or political support. Even some decades ago, business organizations used to deny the relationship between business and environment but these days society as well as all the business organizations have realized that environment is related with every business organizational activities (Hudrasyah, Briantono, Fatima and Rahadi, 2019). Ecological factors in business environment is not only about climate issues, rather it is also about society and all human beings residing into this. Ecological factor is a constant process of give and take cycle between business and environment. With the aim to get potential success any business organization or company needs to access the required information and resources from the society or directly from the environment. Therefore it would be the responsibility of the business organizations to repay these in terms of creating employment for the people or using sustainable products and renewable energies from the environment. According to (Kokodey, Gnezdova and Lomachenko, 2018), ecological factors are considered to be related with Corporate Social Responsibility (CSR). With the ethical consideration any business organization or company needs to maintain Corporate Social Responsibility. These days, consumers are more conscious about environment or climate change. They prefer to use ecofriendly products and are more attracted towards such companies who promote environment friendly or sustainable products. Therefore, it has become essential for any business organization or company to consider ecological factors as a pivotal one to achieve sustainable competitive success. For instance, Tesla is a brand famous for their sustainable and environment friendly products such as electric cars and their in house battery, Powerwall. Powerwall is a lithium ion battery that uses integrated system and stores solar energy for a longer time. This California based company promotes eco-friendly products and motivate customers to buy their products in order to save environment and the company has made it their business strategy (Ju, Lee and Kim, 2021).
This strategy upholds the company name as one of the CSR friendly company and it increases the brand value of the organization. Similarly Airdri Ltd. is an UK based leading hand dryer development brand. This company also manufactures their products considering ecological factors. They produce hand dryers that are known for user comfort, longevity, low energy consumption and reduced noise. The traditional hand dryers that are easily available in the market produce noise and noise pollution is one of the vital issues in present days. Especially if these noise producing hand dryers are installed in hospitals or old age homes then it can directly affect the patients.
Airdri Ltd introduces their new model of hand dryer, the Classic+ Mkll which produces less noise and thus mitigates the issues of noise pollution. This Classic+ Mkll is fast drying and energy efficient dryer. Besides this model, Airdri Quartz is a classic, fast dry model and its major feature is that it is super quiet (airdri, 2021). This particular model, Airdri Quartz of Airdri Ltd. is awarded the UK Noise Abatement Society’s Quiet Mark. This award is given for the excellence of the quiet machines (Drever, 2017). Other than this issue of noise pollution, there is another issue related to the methods of hand drying that is Carbon dioxide emission. According to the report of the Climate Conservancy, each hand dryer causes emission of nine to forty grams of carbon dioxide in the environment. On the other hand paper towel causes almost fifty six grams of carbon dioxide emission on an average basis (Moomawet al., 2018). It is also proven that hand dryers of Airdri Ltd have the capacity to eliminate ninety eight percent of airborne micro organisms and ninety six percent of surface micro organisms. Recently Airdri Ltd launched ultra violet lights and air purifiers in Bradford schools to combat the contagious Covid- 19 (airdri, 2021).
Therefore it is clear that this particular company produces environment friendly products from its very first day in the market and it continues technological innovation to create more such products. The main operating region of this company is UK, however there is a possibility to expand its market region beyond the UK and enter into European Union market. The EU countries such as Poland, Finland, Greece, Denmark, France are very much conscious about climate change and are taking preventing measure to mitigate the factors that cause environmental issues. Therefore, ecological factors of business environment plays a potential part for the particular hand dryer manufacturing company, Airdri Ltd. to expand its business towards the EU countries and thus the leaders can take a decision to internationalize their business.
Demographic Factors
According to Yilmaz-Ersan, Ozcan and Akpinar-Bayizit, (2020), demographic factor is one of the important factors of macro business environment which determines the company’s customer base according to their sex, age, location, ethnicity and income level.
Generally traditional companies or business organizations focus only on quantity and quality of the product, skills and production rate. However, demographic factors demand a little attention from the business organizations to improve or modify their products and services according to the customers’ preferences and expectations. Demographic factors are also about the socio economic condition of the customers as economic stability determines individual’s choice and purchasing capacity.
Other than this, individual’s location and ethnicity plays as the determinants of their habit, preferences and expectations. Customer’s habit, preferences and expectations have great impact on the purchasing behaviors and thus on the business organization directly (Dunn et al., 018). It is often noticeable that same brand have different types of products manufacturing for different region and for different ethnicity of customers as acceptance of same products are not same in every corner of the world. For instance, Airdri Ltd. manufactures fast and quiet hand dryers and operates in the UK region. Majority of the British people and other public or private organization of the UK prefer to use hand dryer in their washrooms or beside their wash basins as a method of drying their hands after washing it. However, this practice of drying wet hands by using electronic hand dryers is not that much popularized in many countries, rather they prefer to use paper towels or cotton towels.
In such cases it is an obstacle for any hand dryer manufacturing company to enter and capture that market region. With the aim to expand their business, companies like Airdri Ltd. first needs to make people aware regarding environmental issues and then motivate them to purchase and install electronic hand dryers as its carbon dioxide emission rate is lesser than the methods of using paper towels or cotton ones. In the UK, people are using electric hand dryers for both washrooms and shared public spaces such as airports, offices, hospitals, educational institutions and traffic areas. Besides, customers using hand dryers as their households, the major clients of Airdri Ltd. Are Birmingham Airport authority, McDonald, Tesco, Bombardier, Roadchef, Vinci construction and others (airdri, 2021). The target customers of Airdri Ltd. are environmental conscious and prefer to use time efficient products. Being fastest hand dryer producing company the products of Airdri Ltd. are proved to be very useful especially in the shared public spaces such as traffic areas and airports where time is the vital factor. The British people prefer to use wall mounted electronic hand dryers even in their personal washrooms. With the aim to reach into the household washrooms and extend their business from public areas to individual’s home the hand dryer manufacturing company Airdri Ltd. launched their ultra slim, wall mounted model Airdri Quad. The pivotal feature of this particular model is being ultra slim and wall mounted so that it can be fit perfectly in the washrooms having limited space. The company Airdri Ltd. has tried to give a contemporary look to this model, Airdri Quad so that it would suit with any type of interior decoration regardless of being traditional or modern looking (airdri, 2021). This type of contemporary design tends to be neutral looking means it would be preferable to everyone regardless of their sex, age and ethnicity. From this designing strategy of this new model it is clear that the company focuses on the demographic factors of macro business environment.
However, according to Agbim, (2019), in order to internationalize the company, first they need to understand customers residing their target location, make them aware about the eco-friendly nature of their products and motivate them to purchase their products in order to save environment. Other than this, the company needs to produces such contemporary looking products to increase their demand to every type of customers regardless of their class, age, sex and ethnicity.
Local competition
Business competition is the process through which the companies that manufacture the same products compete. The local competition is not a negative aspect as it will encourage the organization to manufacture better products to meet the needs of the customers (Kleer and Piller, 2019). Positive competition in business is necessary to evaluate the position f the company in the market.
The company Airdri ltd is trying to learn some factors from its competitors which us positive aspect as they will get to know a lot of factors which would increase the sales of the organization. No matter how successful a company is it is very much necessary to make certain alterations in the business activities to cope up with the growing demands and the changes of the market.
It would help the top competitors of Aidri ltd are World Dryer, Med clinics, Excel Dryer, Hokang industries and many more. It is logical factors that every company like Airdri will have competition in the market (Bortolini et al., 2018). Every organization which sells the same product in the market is considered a competitor.
Three factors affect the competition in the market which is desire competition, brand competition and also product forms competition. The desire competitors of the company Airdri Ltd are the companies and the organizations who offer the product and the service which is desired by the customers immediately.
The customers will be much more inclined to buy those products as they will get access to them much more easily. To ensure these factors local suppliers should be found out so that the product could be obtained much more easily.
The products have to be manufactured according to the new trends and the demands of the market. Brand competition is the competition that takes place between the companies that offer the same products and services in the target market.
The organizations World Dryer, Med clinics, Excel Dryer, Hokang industries are giving brand competition to the company. There are many companies whose sell is at their peak because of the brand name which they are possessing and due it which they have grown in the market. Product form competition is those in which the companies who manufacture the same product compete. They provide much better services and products to the customers at the same prices (Ghobakhloo, 2018). The factors with which they could out stand their local competitors are if they try to eliminate that entire product that is not in demand in the market.
They should try to avoid manufacturing all those products which do not sell. This also prevents losses that occur due to the manufacturing of the products. The company Airdri LTD should also try to avoid certain activities which lead to delay in manufacturing like they are having suppliers very far away which lead to delay in the manufacturing of the products hence leading to losses. If the market is not stocked up with the products, the customers will buy a similar product manufactured by some other brand (Mehrpouya et al., 2019).
This will increase the competitor they have in the market. So the company should try to avoid such circumstances when the local competitors tend to get a place in the market. This will lead to a drastic reduction in the sale of the company which would affect the growth.
Socio-Cultural Factors
The term socio-cultural factors imply the combination of the interaction of the socio-cultural elements which are associated with the interaction of the people. It is a very prominent fact that socio-cultural factors could affect the company' interaction with other cultures (Aytug et al., 2018). The socio-cultural factors which are affecting the organization Airdri Ltd are the growth rate of the population.
The growth of the population affects the demands of the market. The age profile of the customers also affects the needs of the market. The requirement of the new regeneration will be different from that of the old generation (Chiacchio et al., 2018). The new generation would always try to buy products which would meet their market needs. The health of the population, education, attitudes of the customers and the educational qualification of the people who buy the products, are some of the important socio-cultural factors which affect the growth of the organization.
Some more factors which are considered as macro-environmental factors are the opinion of the common public, social taboos and social attitudes (Govindan, 2018). The lifestyle choices also adversely affect the socio-cultural factors of the organization Airdri ltd. A lot of people from different ethnicity works in the company and it’s according to the rules and the regulation of the company to treat everyone equally. The organization has been in the market for a very long time and is a popular hand drying company.
The company has to abide by certain rules and regulations like they have to follow rules regarding labour, taxes and minimum wages. The company should also ensure the fact that they pay equal wages to each and very workers of the organization without any bias (Christians and van Apeldoorn, 2018). The needs and the expectations of the customers associated with Airdri ltd could be determined by the only platform. The employees will also have to be treated equally.
They could analyze the perspective and the views of the customers well and could mend those features in which the customer requires changes. Some points which the company laws need to feature are the less damage from heat. These factors will increase the attention of the customers and they will be inclined to buy the products. Socio-cultural risk at the organization is a factor that could be a major challenge for the organization is Airdri ltd.
The most important approach to focus upon is the suppliers who are engaged with the supply chain and are prone to socio-cultural issues. The lifestyle choices of the customers also affect the company drastically like the company has to focus on meeting the needs of the customers in terms of the new trends of the market (Schot and Steinmueller, 2018).
Social mobility also plays a crucial role in determining the changes in the organization as they have to amend changes according to the needs of the customers.
Conclusion
Macro business environment is the sum of some major factors such as ecological factors, demographic factors, local competitive factors and sociocultural factors. These factors are responsible for any business organization’s competitive success and its growth. The leaders and the managing committee of any company must focus on these factors and set their strategies according to these to gain sustainable competitive success in this aggressive market. Besides this, if any company tries to expand their market region and wants to be globalized then it would be the responsibility of the company to consider other external and internal factors such as political issues, labor laws and restrictions, demographic and social values, socioeconomic changes and other international challenges. The UK based hand dryer manufacturing company; Airdri Ltd is mainly focusing on the four immediate factors of macro business environment and able to get a sustainable success in the UK market region.
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