Executive Summary
This report is developed in the continuity of the previous report, which was conducted to analyze the possibility and probability in terms of the macro environment for Oporto to enter the flourishing Pakistani fast food market. This report is aimed to recognize and address the possible issues and problems that Oporto may face while expanding their business in a foreign market like Pakistan that has an opposite cultural and ethnic background as of Australia. The issues that were highlighted and addressed in this report are the foreign market entry modes, international strategies, both corporate and business, methods, and approaches for the motivation of the team and the approach to lead the team especially in a cross-cultural environment. Besides these methods, human resource recommendations and marketing strategies that should be adopted are also discussed in this report.
In review and context with the previous report, current company profile, abilities and business status of Oporto, this report highlights a prime opportunity for the company to enter into the Pakistani fast food market. Despite being a huge difference in both culture and economy of Australia and Pakistan, Oporto still has a vibrant chance to enter into Pakistani market. Its authentic Portuguese style cuisines will soon be the favorite of Pakistani peoples. To have a good market share and position in Pakistan Oporto have to follows these recommendations that are solely based on the company’s background analysis.
Since the company is only willing to expand its market hence it is recommended to continue its current corporate mission of providing the friendly environment with unique and authentic Portuguese food. The franchising system is the recommended option as the only foreign market entry mode for the Oporto to pick since the company already owns multiple franchises around the globe. Starting a franchise business or searching for new franchisee will certainly be not a problem for the company.
Based on the diversity in the cultural dimensions of Australia and Pakistan, it is highly recommended to have a leadership that is relationship oriented in nature because it will bring the members of the cross-cultural teams easily together and will feel them safe. Since Pakistan has a high score on “Uncertainty Avoidance”, in Geert Hofstede’s six cultural dimensions as compared to Australians therefore to motivate them not only extrinsic rewards will be required but also intrinsic rewards will have a major impact on the stakeholders in Pakistan.
As for human resource recommendations, there is not a major issue that needed to be handled or considered before entering into the market because of the franchise nature of the operation that is recommended in case of Oporto venture in Pakistan. However during the proposal phase or during initials meeting there will be need of some human resource considerations.
The strategies for corporate and business will be respectively horizontal growth strategy and differentiation. Since the company is not willing to change its products, therefore horizontal growth strategy, in which the company only wants to expand its business into new geographic location, will be best suitable. Similarly, since there is no Portuguese cuisine franchise currently working in Pakistan, hence the differentiation business strategy is the one that will have promising effects on the company business.
These recommendations are crucial for Oporto entering Pakistani fast food if the company is willing to exploit the worlds blooming fast food markets in an appropriate and efficient manner, assuring a successful business ahead.
Introduction
Oporto is an Australian company fast-food company that offers a diverse range of authentic Portuguese cuisines with a philosophy of providing unique modest and appetizing food to the locals. The company has started expanding its business all over the world through franchising system in 2002 by opening its first international franchise in New Zealand. According to PwC (2017), Pakistan has a booming economy that, despite being politically in the past, continues to flourish at a stable rate. On the basis of current macro environmental evaluation of the country’s economic and considering the purchasing power of Pakistani people, it is clearly visible that Pakistan is going to be the 16th largest economy in the world by 2050.
This report summarizes the possible issues analyzed in the previous report and continues to outline different marketing and business strategies and methods needed by Oporto while entering the fast food market of Pakistan. The main issues that may arise are cultural difference retaining Oporto from a direct entry in Pakistan fast food market.
The recommendations made in this report are the most suitable international marketing and business strategies, foreign market entry mode, human resource recommendations and motivational and leadership approaches for cross-cultural teams. For Oporto, these recommendations, methods, and approaches, which are selected on the basis of the company’s current profile and capabilities, will be highly helpful in the company’s new foreign venture.
Summary of Key Macro Issues Relevant to Pakistan
The macro environmental analysis, done in the previous report, highlights an attractive marketplace for Oporto in Pakistan. The macro-environmental aspects that were studied in previous reports were political, legal, economic and cultural analysis of the Islamic Republic of Pakistan.
Politically Pakistan was an unstable country in past. According to 2016’s data on political stability by The World Bank, Pakistan’s political position is not good because of it 191st position worldwide. However, the successful completion of the last two democratic regimes displays the improvement in Pakistan political stability.
Furthermore, the derived from the amended Common law of England and Wales, Pakistan’s constitution has specific laws to protect foreign investors. Pakistan with a low General Sales Tax rate of 17% also provides grants, low-interest loans and tax concessions to investors willing to expand their business in Pakistan. The economy of Pakistan was also unstable once, like its politics, yet Pakistan is in one of the world’s fastest-growing economies. The current GDP show a possible 16th position in world economies by 2050. The uprising in Pakistan’s economic growth has a positive effect on Australia’s Pakistan trade relationship. In terms of cultural analysis of Pakistan, things are not so favorable due to vast diversities in Australian and Pakistani cultures, as visible in Geert Hofstede’s six cultural dimensions report. Despite the difference, the high score on “Uncertainty Avoidance” shows the hard-working nature of Pakistanis and their love for work. The previous report also describes the areas of interest for Oporto where ethical and corporate social responsibility Issues may arise.
In short both the reports provide a better understanding of issues and their solutions that may be faced by the Oporto if it is willing to enter the uprising fast food market of Pakistan.
International Strategy
It is crucial for companies opting for expansion clear of domestic markets to settle on strategies as the act as a broad frame to guide the companies to acquire set goals and targets (Griffin & Pustay, 2013). A company planning to engage and develop worldwide learning, worldwide flexibility and spirited returns of global efficiencies, one of the four calculated options are adopted; these options play the role of overarching directive viewpoint. However, in this particular case, the “home replication strategy” is the most efficient viewpoint to adopt as the firm adopts to utilize its core-competence in the domestic market and applies its ideas to the fresh foreign environment it plans to target (Griffin & Pustay, 2013).
It will be best for Oporto to execute a calculated business and corporate level strategies when entering the Pakistani fast food market. Since Australia and Pakistan both enjoy a long-standing relationship with a common legacy and shared interests, the bilateral trade agreement between them worth $1.83 billion as of 2017. These huge trade agreements along with proper international business strategies will provide an outstandingly marketplace to the Oporto for if successful proving in Pakistani fast food market.
Corporate Level Strategy
Chand & Sanjana (2013) studied that corporate strategy is considered as a structure empowering companies with the ability to coordinate their specific means and ideas in a bid to offer stakeholders a sense of identity. The corporate strategy also helps the company to explain a business domain and it plans and target
There are three main types of corporate strategies, Growth strategy, stability strategy, and diversification strategy. When the organization increases its market and products, either through the same brand or the new one, the strategy is called growth strategy since it results in the growth of the organization. Diversification, on the other hand, is the corporate strategy that took away the corporation from their products and market (Kumar, 2016). The stability strategy is the strategy when the organization remains on the same page doing what it was doing while maintaining the market share.
The growth strategy is further divided into two sub-strategies, vertical and horizontal. In vertical growth strategy, the company tries to expand by taking over multiple components of the operations whilst in horizontal growth strategy the company extends its business by delivering its services in a new geographical location.
As described in the previous report, and based on a company’s work philosophy of providing unique, modest and appetizing food, business structure and capabilities, a horizontal growth strategy should be adopted by Oporto as their corporate strategy. This strategy is the most commonly-used strategy and will let them dig out the potential shares in Pakistan’s growing fast food market.
Business Level Strategy
A business-level strategy is defined as the set of pledge and actions that a company uses in order to gain an advantage in their business by utilizing core competencies (Hitt, Ireland and Hoskisson, 2015). A business-level strategy is all about the concerns with the organization’s position in the market relative to its competitor. Customers are the base of the business level strategy. There are four generic business strategies that revolve around the customer. Cost leadership, the very first type of the business strategy in which the organization keeps the cost low for attracting the higher number of customers. Focused low cost; the second type of the business strategy that focuses primarily on specific customers while keeping the cost low. Differentiation: is the strategy in which the companies are the sole provider of unique products in the industry. Focused differentiation is the strategy that allows companies to focus on smaller specific audience.
In a bid to support the corporate strategy, the business strategy should primarily focus on the specific unit. Here, the company should be aiming to answer queries like how the firm should be competing in markets they plan to operate in the future (Griffin & Pustay, 2013). While studying the case of Oporto it is crystal clear that a differentiation business strategy should, therefore, be adopted by the company in order to make its path in Pakistan uprising fast food market. Since there is no other Portuguese fast food chain present in Pakistan, hence targeting the consumers with a new and unique product will provide a potential to the firm in improving its overall performance effectively and efficiently.
References
Armstrong, M. (2005). Handbook of Human Resource Management Practice. 10th ed. London, GBR: Kogan Page, Limited.
Borneck, T. (2015). Evaluation of Franchising as a mode of entry by analyzing Subway’s expansion strategy. Munich: GRIN Verlag.
Chand, M., and Sanjana. (2013). The relationship between business environment and corporate strategy: Evidence from indian hotel industry. International Journal of Hospitality and Tourism Systems, 6(1), pp. 31-36.
Griffin, R. and Pustay, M. (2010). International business. 6th ed. Upper Saddle River, NJ: Prentice Hall.
Hitt, M., Ireland, R. and Hoskisson, R. (2015). Strategic management. Canadá: Cengage Learning Editores.
Hudea, O. (2014). Cross-cultural Leadership. Manager Journal, 19(1), pp.45-52.
Kumar, D. (2016). Enterprise growth strategy. London: Routledge.
Laufs, K. and Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), pp.1109-1126.
Mäkilouko, M. (2003). Multicultural Leadership – Strategies for improved performance. 1st ed. Moreenikustannus.
Nujjoo, A. and Meyer, I. (2012). The relative importance of different types of rewards for employee motivation and commitment in South Africa. SA Journal of Human Resource Management, 13(1).
PWC (2017). The Long View How will the global economic order change by 2050?. [online] German. Available at: https://www.pwc.com/gx/en/world-2050/assets/pwc-world-in-2050-summary-report-feb-2017.pdf [Accessed 5 Oct. 2018].
Sadler, P. (2003). Leadership. MBA Masterclass. 2nd ed. London: Kogan Page.
