Management Principles Case Study

Pages: 6 (1692 words)  ·  Bibliography Sources: 6  ·  File: .docx  ·  Level: Master's  ·  Topic: Business - Management

¶ … Management Principles

The modern day community enjoys the benefits of globalization, one such benefit being the ability of people and resources to transcend the boundaries of one country into another state. This situation is best revealed at the level of David Ricardo's theory of the comparative advantage, according to which each country is characterized by its specific features, which lack in other regions. In such a context then, it would be globally efficient to exchange the comparative advantages within the international community (Brown and Goldin, 1992).

Today, the most important manifestation of Ricardo's theory in the context of globalization is represented by outsourcing and offshoring. The phenomena refer to a process by which economic agents take work outside their company or country and have it completed in other regions, in more efficient manners. The most common reason as to why organizations would outsource is represented by cost efficiencies obtained as a result of a cheap foreign labor force. In more recent periods nevertheless, outsourcing is becoming more popular due to other reasons as well, such as an increased access to technologies, operational efficiencies or an ability to focus on core operations.

China is traditionally recognized as the number one destination when it comes to outsourcing operations. Nevertheless, other global regions are also emerging as attractive outsourcing destinations. One relevant example in this sense is represented by India. In order to reveal the ability of an economic agent to support outsourcing operations in India, an analysis would be conducted through four specific lenses, namely:

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The external environment of organizations

The nature of international business

The external environment factors, and Control challenges.

2. The external environment of organizations

Case Study on Case Study of Management Principles Assignment

The external environment of an organization is an extremely complex setting which presents the economic agents with both opportunities for growth and development, but also threats to their stability. At a general level, the external environment is composed from the market and the industry. The market is represented primarily by customers, with their continually changing demands, whereas the industry is represented by the competing firms in the industry.

The most common means of assessing the external environment of firms is through the lenses of the PEST analysis, in which the acronym stands for political, economic, socio-cultural and technological (Allen). At a political level, challenges for economic agents are often raised by taxes as well as other regulations which are imposed upon the organizational operations. At the level of the opportunities, these are often revealed by relaxations of the taxation and other regulations.

Then, at the level of the economy, this impacts the firms based on its stability and general state. In essence, in times of economic prosperity, organizations enjoy the opportunities as a result of large purchasing powers of customers. On the other hand, in times of economic hardship, firms lose as a result of restricted purchasing power of customers.

At the socio-cultural level, the majority of the issues are raised by social and cultural changes and trends, which create both opportunities as well as threats. Finally, the technological field raises challenges and opportunities through the sustained developments which characterize the it community, and which can be integrated to create efficiencies and competitive advantages, but which also raise additional costs and intensify competition.

3. The nature of international business

In the setting of globalization, more and more economic agents focus on international operations. These operations are extremely complex and they raise a wide array of issues. For instance, international operations imply a need to comply with at least three specific sets of regulations, namely the regulations in the origin country, the regulations in the destination country and the regulations established by the international community.

International operations are generically engaged in with two specific goals -- which can be independent or co-existent. On the one hand, the economic agents seek financial gains and efficiencies through operations of outsourcing. On the other hand, they strive to increase their organizational size and to as such access wider consumer markets, increase their sales and generate more profits.

In either scenario, the complexities of the international community have to be thoroughly researched, understood and addressed. In a general note, it is compulsory for the economic agent to first understand the particularities of the foreign market / industry before launching operations in the region. Nevertheless, aside from this general specification, other more precise recommendations can be made. In other words, success within the international community is pegged to the following:

A strong branding strategy (Czinkota and Ronkainen, 2007)

Strong strategic alliances (Haahti, Hall and Donckels, 1998)

The entrepreneurial network and the networking capabilities of the firm (Lloyd-Reason, 2007).

4. The external environment factors

Based on the analysis so far conducted, it could be assumed that numerous forces would have impacted Leethal Fashion Accessories upon its first attempt to penetrate the market. Similar to the observation of the external environment through the lenses of the PEST analysis, the forces which would have impacted Leethal Fashion Accessories can also be processed with the aid of the four distinct categories of environments. In this order of ideas:

a) at a political level, Leethal Fashion Accessories would have had to cope with the different legislation applicable in India, and which would be expected to differ from the Australian legislation. In order to cope with this pressure, the recommendation would have been that of developing a strategic partnership with an attorney specialized in commercial law in India and capitalizing on their expertise.

b) at an economic level, the main element would have been constituted by the cost considerations. In this order of ideas, it would have been expected that the personnel expenditure be lower than its values in Australia, but specific sums would have had to be discussed, agreed and established. Additionally, the firm representatives would have had to compute the additional costs with logistics, risks and so on.

c) at the socio-cultural level, it would be expected that Leethal Fashion Accessories faced several barriers. The most relevant examples in this sense would be constituted by the inability to efficiently communicate in English or by the inability to comprehend the negotiation process. In India for instance, people do not like to be rushed or pressured, and such an approach could easily reduce the chances for a collaboration (Williams, 2008).

d) Finally, at a technological level, Leethal Fashion Accessories would have had to recognize the differences between the technological equipments in India and those in Australia. In this sense, it would have also had to accept the possibility of different production capabilities and adjusted delivery times.

5. Control challenges

In the context in which Leethal Fashion Accessories has decided to launch operations in India, it has to recognize the fact that its control function would suffer decentralization. In other words, the power held by Leethal Fashion Accessories would disperse (Brown, 1990). In essence, the executive at the firm -- Gail Lee -- has to recognize that she will no longer be able to control all operations from Australia, but it will have to accept the loss of full control and the fact that control would also be detained in India. While she would not be able to fully control the organizational operations from one location, she would nevertheless be able to exert her functions through ongoing travels back and forth to India and Australia.

In order to resolve the control issues, it would be recommended for Leethal Fashion Accessories to appoint a highly skilled and trained plant manager to supervise the operations in India. This local manager would have to possess previous expertise in outsourcing contracts and would also need to be highly skilled from the technical standpoint of the job.

It is also necessary that the local manager appointed to be in charge of the operations in India is able to efficiently and… [END OF PREVIEW] . . . READ MORE

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