Executive Summary
The study is mainly focused on the selection of the two industries which involves the car and the airline industry. From the car industry Ford and Audi has been taken and there has been the analysis of the global strategy for the expansion of the business has been understood and depicted in this study. The study is also focused on the next industry to be taken which is the airline industry and from the airline industry there has been the selection of the British Airways and the Air Asia. It is mainly laying emphasis on how the changes in the business model can be useful in the development of the global business strategy to be implemented by these companies from different industries chosen. The study will be further reflecting on the analysis and the selection of the target market, positioning of the companies, how they analyse and understand the market. It also depicts that how the companies should be entering the international market and the selection of the modes o entry and its justification as well.
Discussion
Global Strategy as Business Model Change
It is very much important that the change in the business model should be done in order to have the expansion of the business in the international market. The change in the business model which includes changes in the different components of a business model links with the global strategy of any organization under study (Zahra et al, 2000). The changes in the business model have led to the sustainability and creation of competitive advantage for the firms trying to enhance their business in the international arena. A business model has been shaped by the value of any firm strategy as the firm should be globalising their business operations. The main aim of introducing changes in the business model for any firm is to create, deliver and extracting value from it so that expansion and globalisation in the foreign market could be easily done.
Components of Business Model
There are basically four components of the business model. The business model is defined as the process and the purpose of developing and globalising the business operations in the business through the effective use of the resources, creation of the value, targeting and identifying the customers and the assessment of the capital involved. The components are the value proposition, market perception, value chain infrastructure and the model of management. In accordance with Zott and Amit, (2010) the value proposition should be focusing mainly on the tangible and intangible advantages which the firms should be providing it to the customers in order to gain competitive advantage through increase in the customer satisfaction. After that the market perception which is useful in identifying and evaluating the target customers and the target segment of the market. The market perception should be demonstrating that how the company should be promoting the value proposition to be given for the attraction of heavy loads of customers. The next component is the value chain infrastructure which is useful in determining that how the firms should be able to cater value to the customers with the effective use of the internal resources for the target market to be identified. The last is the management model where the firms should be analysing that how they should be managing and organizing their operations which includes the organizational structure as well the global product divisions.
Global Strategy of Ford
Ford has been one of the leading car manufacturers having their operations in the international arena and they would like to expand their business in this whole world now. Ford has been the market leader in the global car industry and they have been able to sustain their position or hold since the year 1994 (Chesbrough, 2010). They have taken the strategy of adaption which has been changed from standardisation. First of all Ford should be developing and sustaining its powerful brand image which is possible only through the creation and delivering value for the customers through its high quality products and services to be given and also providing safety to them as well. So Ford has been one of the greatest brand power by which they could be able to expand globally and strategically.
According to Zott and Amit, (2010) for the global strategy to be implemented the value chain infrastructure should be maintained and it should be done with the effective distribution network or channel to be developed. Ford should be having effective and efficient dealers as the customers have to be heavily dependent on the responses of the dealers, the information about the cars given to the customers and the persuasion potential as this will help in the proper decision making. The distribution network and the relation with the suppliers need to be made stronger and effective so that there should be low operational costs and the improvement in the geographical management of channel is to be done.
In accordance with Chesbrough, (2010) the capital involved in the car industry has been huge and the here has been heavy cost involved in this industry. Ford should be able to have high and huge capital and assets to be introduced by which they can be able to support their operational and inventory costing and the cash flow could be managed. They should be getting help or the finance from SBU by which they should expand their business globally and able to compete with the other car manufacturing firms in this international market.
The goal expansion of Ford is also from the technological innovation to be done. There should be high end technology to be applied in order to develop innovative cars with high tech designs by which customer value proposition could be achieved and for achieving competitive advantage over the other car manufacturing firms in the international arena.
Global Strategy of Audi
Audi has also been one of the reputed and leading car manufacturer firms having its operations in the international market. Audi has the global strategy of investing huge capital or cash flow for about 24 billion Euros for the next 4 years to come for enhancing the global production network and with the introduction of the two plants at Mexico and Brazil and the launching of the new models as well. Audi has the focus of developing innovation with their highly effective distribution network, the value chain infrastructure along with the newly equipped car designs creating value proposition for the customers (Zahra et al, 2000). The funding or the cash flow has been done from the operational tasks. There should be the development of SBUs as well and the inventory should be developed for the stocking of the raw materials taken from the suppliers. According to Johnson et al, (2008) Audi should be able to develop its internal resources with the recruitment and selection of more than 6000 employees across the different global markets they would like to expand their operations. Audi has been tremendously involved in bringing sustainability to their business operations so that the operations become globally effective and for this they would like to focus more ion automation. The automation as the global strategy which is included in the business model component of market perception Audi has been developing the cars for the rich segment and the individuals who have been trying to become urbanized as well (Demil and Lecocq, 2010). This car company has the incredible power of having 6 additional brands which is useful in making the company globally active. They have the VW regional procurement firms in Brazil, China, Mexico and South Africa. They have the leading technological innovation with huge investments in R&D helps in expansion for Audi in the international market with the effective and digital marketing needs to be done for the marketing of their products as well.
Impact of business model components on the business of Ford
Ford has been delivering high value products to the customers with the innovation in the design of their cars and the style they need it from the car designs and this creates and delivers value proposition for the customers. This is useful in enhancing customer satisfaction leading to enhanced value for them and for the company. Ford has been offering style, comfort and making the customers leading a luxurious life with the cars they have been manufacturing (Johnson et al, 2008). Ford has been highly effective supply chain and strong relationship with the dealers helps in making the business profitable by increasing the sales. Ford has been managing the operations and organizing it with the development of the digitisation or the CRM system by which strong relationship with the customers could be developed. They have been developing warehouses and the shift towards the digitisation helps in the effective marketing of the products helps in attracting the customers a lot.
Impact of Business model components on the business of Audi
Audi with the recruitment and selection of employees helps in improving the value chain infrastructure as with the talented employees to be recruited the human resources could be enhanced and there have been opportunities for providing better services and products to the customers (Osterwalder, 2004). Audi should be reaching teh customers through effective and digitized marketing so that they can be aware of the customer needs and demands helps in enhancing the sales of the firm. The development of the lean manufacturing technology in the future helps in reducing the wastes and this will help in reducing the operational costs by which better quality cars could be given to the customers with reduced price.
Target Market and Modes of Entry
Selection of Target market for British Airways
British Airways basically follows the multi segment where the company should be targeting the customer segments for the different levels of services they have been providing to the customers (Osterwalder, 2004). It includes the economy, premium economy, executive and the first class segments. It is said that for the economy class there should be the UK domestic market to be chosen. It is also seen that for the premium economy and the executive as well the first class the selected target market should be Europe and other countries in this world. They have been targeting basically the businessmen for the first class and executive and for the economy and premium economy should be the servicemen and middle class people having lower to mid high level of income.
Selection of Target Market for Air Asia
Air Asia has been one of the largest low cost airlines having its domestic operations in the Asian airline industry. Air Asia has the target market in entire Asian market where the customers having low salaries have earned the employment. They have been actually targeting the people having low income level and mostly the low salaried individuals or the customers. Air Asia has also been targeting the foreign workers and the contractors who have low salaries. They have been targeting mainly the young boys and girls which involves the college students.
Modes of Entry of British Airways and its justification
There have been various modes of entry to be taken place for the international expansion. According to Osterwalder and Pigneur, (2010) British Airways should be using the Joint venture or the JV as the international market entry mode as in this mode there has been access to the knowledge of the local partners with whom British Airways should be working in order to develop strong relationships with the local countries where they want to expand their business. They have been sharing the development costs and the risks have also been shared between them. There has been political dependency to be taken place as there has been huge support and influence from politics to be taken place. They have the disadvantage of using the same technology as it has been used by the local companies so there has been no control over the application of technology in BA.
Modes of Entry of Air Asia and its justification
Air Asia has been using the licensing as the entry mode for the international expansion. Air Asia is seemed to be the low cost airlines and they should not been afford to have huge capital loss so there has been low development costs and low risks involved (Osland et al, 2001). Air Asia need to have licensing of the patents as well the trademarks they would be using in order to have their business operations to be done internationally. So Air Asia has been using the licensing as the market entry mode in the international market.
Conclusion
From the study it has been evident that the business model has been the most important factor in creating and implementing global strategic change for the firms and the firms should understand that for the international expansion to be done business model needs to be changed (Osterwalder and aPigneur, 2010). There should be the development of the value proposition and the development of the value chain infrastructure as the most vital components of business model for bringing in the business operations in the global market. It is concluded that the licensing and the JV has been suggested as the international market entry modes for which the international expansion of the business is possible.
References
Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business model. Harvard business review, 86(12), pp.57-68.
Chesbrough, H., 2010. Business model innovation: opportunities and barriers. Long range planning, 43(2), pp.354-363.
Zott, C. and Amit, R., 2010. Business model design: an activity system perspective. Long range planning, 43(2), pp.216-226.
Osterwalder, A., 2004. The business model ontology: A proposition in a design science approach.
Demil, B. and Lecocq, X., 2010. Business model evolution: in search of dynamic consistency. Long range planning, 43(2), pp.227-246.
Zahra, S.A., Ireland, R.D. and Hitt, M.A., 2000. International expansion by new venture firms: International diversity, mode of market entry, technological learning, and performance. Academy of Management journal, 43(5), pp.925-950.
