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Introduction - Implementation of Business Internationalisation Strategy for Nike and Adidas
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Internationalisation of a company means it has to deal with many differences of the new country where it is going to start operation and expand its business. The political, cultural, legal and economic environment is especially needed to consider in the new country. In diverse areas of the world, management differs significantly and every company should implement its international strategy and strategic management practices considering the external environment of the non-residential country. This assignment will consider Nike and Adidas these two real-life international companies to discuss how they should be aware of the external environment of New Zeeland and the UK, where they are going to expand their business operation. Being the top two MNCs they should maintain their corporate social responsibilities in those foreign countries as well. This report will help them to improve their performance and behaviours so that they can achieve great success.
Implementation of international strategy
As per the opinion of Kaplan & Norton (2021), every company should research the new market they are going to enter to understand the customer demands, and competition with existing ones and set goals for international strategy. Both Nike and Adidas should go through this strategy implementation process that will help them to plan for marketing strategy, distribution strategy and international organisational structure as well as help to turn plans into actions so that they can reach their desired outcome. The knowledge about the market conditions and competition of New Zeeland and the UK will help companies to implement decisions and execute their expansion process efficiently. New Zeeland market works on free market principles so that has an open economy system (Charter & Carruthers, 2022). Some parts of the UK practice a free market economy whereas other parts use a planned and controlled economic system. Therefore, Nike and Adidas should analyse the market and external environment first before entering those countries.
Strategic management practices
According to the study by Meng et al. (2021), strategic management practices might not be the same for different countries. Therefore, Nike and Adidas should understand the strategic situation of the New Zeeland and UK markets and make their strategic options for the future. The process of strategic management in the case of internationalisation involves strategic analysis and turning those strategies into action. Companies have to consider the “Ukraine Effect” and the effect of the Covid-19 global pandemic while implementing their international strategic management practices. The Ukraine conflict has become the main source of increasing volatility in the short-term market. Before starting the war between Ukraine and Russia, Covid-19 has already disrupted the global economic condition (Sicoli, Bronzetti & Baldini, 2019). Both situations have given different effects on different countries, so Nike and Adidas should understand the external environments of these countries where they are going to internationalise their businesses.
Influence of external environment on internationalisation
According to the study by Shao (2021), influencing external environmental factors need to be considered when establishing internationalisation. These factors involve the potential for market growth, the quality of the organisational infrastructures, the competitive structure of the market, cultural and social particularities of the market and the presence of entry barriers. In the following section, the study will justify the influence of cultural, legal, political and economic environments and compare each company.
Influence of country culture
As per the opinion of Regonda et al. (2020), culture is an essential factor in international business as it has a strong influence on the interaction and collaboration of multinational and cross-cultural teams. The values, decision-making, thinking patterns, processes and practices of consumers are dictated by cultural factors in the business world. Both Nike and Adidas should focus on etiquette, communication and organisational hierarchy in the country where they are going to start their business operations. This will prevent them from harming their brand image and creating misunderstandings with foreign clients (Grundlingh& Grundlingh, 2019). In addition, there is another extensive influence of a country's culture that impacts employee management, the process of business conduction, negotiation handling and risk management of the company.
Influence on country's economic environment
As per the opinion of Müller (2019), the global economy fluctuates and production companies shift to accommodate this. Nike and Adidas both should research where to sell their products, which means where the demand of customers is high. This will ensure opportunities and growth for companies. A market collapse means there is waiting for some bad news for these companies. For example, the economic breakdown caused by the global pandemic has given a strong effect on this business. Many consumers are forced to switch to lower-end products. Both companies have the resources to operate in small emerging markets with their strong financial conditions. Revenues of businesses depend on the low cost of workers in Eastern countries; especially it can be compared to North American countries (DOMINGUEZ, 2020). Therefore, both companies should play smart with the cost of materials and they should be aware of the challenges that can arise while importing or exporting goods.
Influence on country's legal environment
According to the study by Pratama et al. (2022), Adidas has ownership of IP systems and intellectual properties. They also own patents that provide them legal protection against infringement and copiers of their products and designs. Adidas also follows local and national laws with full compliance. Both companies should know the business-related laws of the UK and New Zeeland. They should understand consumer rights and laws, advertising standards, product labeling and safety, and import-export laws of those countries. In the UK, consumer protection, employment law and competition law are the main areas of legislation that may affect these businesses. On the other hand, New Zeeland is very strict on commercial and environmental law; therefore, companies should execute their MNC corporate social responsibilities effectively and plan for marketing and advertisement very carefully.
Influence of country's political environment
In the UK market, there are good policies for growth that might be valuable to this company. These policies involve well-arranged international tax agreements and low-interest rates (Grundlingh& Grundlingh, 2019). Both companies produce and sell physical goods, which indicates these businesses are always subject to changes in production and tax laws. In many countries, different political conflicts have taken place because of the “Ukraine Effect” that might make business processes difficult. Adidas tends to import the development of their product to reduce the manufacturing cost, but every community does not permit this type of business. This is why they should follow production laws, international trade agreements, labor laws, consumer safety products and product safety laws in different countries.
MNC corporate social responsibility
As per the opinion of DOMINGUEZ (2020), Adidas views Corporate Social Responsibility as a sustainability practice and they want to develop “a team sport” with consumers, employees and communities to play an important role. The company mainly focuses on human rights, employee development and environmental sustainability to achieve its CSR objectives. On the other hand, Nike wants to execute its sustainability and corporate social responsibility program having the core belief of "sports can change the world for the better". The company mainly focuses on community investment, environmental sustainability and diversity and inclusion. Adidas aims to 30% reduce absolute greenhouse gas emissions by 2030 and achieve climate neutrality across its own operations. Nike is also focused on executing its social duties. Nike foundation empowers young women across the world (???? & ????, 2021). Both companies have made a commitment to sustainability implementation for the environment and communities by constantly to reduce their environmental impact. These CSR policies might attract the consumers and investors of new countries that can make internationalisation successful.
This study has analysed the implementation of internationalisation strategies for Nike and Adidas, these two companies. They are going to expand their businesses in the markets of the UK and New Zeeland. The study has mentioned why the analyses of the external environment of these foreign markets are important and what factors the companies need to consider before starting their expansion process. Companies also need to consider the "Ukraine Effect" and the effect of the Covid-19 global pandemic while implementing their international strategic management practices. Both have affected the economic strength of consumers and the government. On the other hand, country culture is another essential factor that has a strong influence on the interaction and collaboration of multinational and cross-cultural teams. The study has recommended that both Nike and Adidas should focus on etiquette, communication and organisational hierarchy in the country where they are going to start their business operations. Both companies should fix their product prices so carefully and according to the demand of customers of both countries. They should follow local and national laws with full compliance. Both companies are trying to establish business ethics by executing their corporate social responsibilities, which may improve their brand image and provide the opportunity to make their internationalisation successful.
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