Global Strategy for Boral Limited

Date: Dec 20, 2018

Executive Summary

This business report provides a global strategy for Boral Limited that deals with the manufacture of building and construction materials. The methods of data collection include interviews and questionnaires. Descriptive statistics would be utilized in the analysis of data collected for the recommendations concerning Boral Limited’s global strategy. The external business environment is getting competitive, hence calling for innovative ideas to boost performance and survival in the market. In line with the report, Boral Ltd should enter a strategic horizontal alliance with Everite Building Company Ltd in South Africa, which also deals with the manufacture of building materials. This merger would lead to Boral’s entry into the retail industry, involving the sale of building materials. The report establishes that Boral Ltd would be successful in South Africa because it is one of the biggest emerging markets with a considerable demand for high-quality building materials among consumers. The report recommends that the new firm should be flexible in its pricing in the new industry. It has to give regular offers to customers to attract most of them and maintain their loyalty for future prosperity.

Business Problem

Companies face immeasurable challenges in a bid to expand their businesses into new countries. Some of the most significant challenges include identifying the nature of the market in the country and setting appropriate prices that would attract and retain consumers. It is always crucial for companies to understand the culture and business policies that exist in the countries they wish to do their businesses. Swift (2012) opines that merging with another company in the country of choice to establish a new international business provides a stepping stone to the country’s success. In this case, Boral Limited needs to consider available opportunities in the South African market and maximize them together with its partner Everite Building Company. The success of the new building materials retail industry would depend on its understanding of the market and its approach to the market.

Objective

The objective of the report is to select an appropriate country where Boral Limited could move and partner a local firm in the course of expanding its business internationally. Apart from suggesting an appropriate country to Boral Limited, the report aims at recommending relevant strategies that the newly formed firm would utilize as soon as it enters another industry. It would be an effective contributor to the survival of the new international firm in the building materials retail industry.

Scope of the Report

The report covers a range of information that leads to the selection of South Africa as an appropriate destination for Boral Limited’s expansion of business. It includes methods utilized in the collection of data and its analysis. Additionally, the report offers an explanation of the current economic and business conditions around the world. It also gives recommendations on the most efficient strategies that would boost the success of the international firm formed by a strategic alliance between Boral Limited and Everite Building Company Ltd in South Africa.

Methods of Data Collection and Data Analysis

Data relevant to the understanding of the current business world and the viability of moving to South Africa would be collected by using questionnaires and interviews. Open ended questionnaires and interviews are effective in ensuring that adequate information is gathered, hence enabling Boral Limited move forward effectively in its international strategy of widening the international business. Claude-Gaudillat and Quelin agree that questionnaires and interviews are preferred because of their cheap nature and the ease of collecting a wide range of information (2008, p. 11). They also provide the opportunity for researchers to collect reliable information concerning a particular course of action. In this case, they are effective in ensuring that the internalization strategy is assessed effectively before the decision to move is made. However, it should be admitted that questionnaires and interviews exhibit weaknesses in the sense that they may lead to the collection of incomplete information, hence making it difficult to formulate a correct conclusion on a particular course of action. The collected data will be analyzed by using descriptive statistics. In line with this method of data analysis, the relevant data will be summarized, hence ensuring that it is effectively categorized for the understanding of participants’ views in research. The measures of central tendency achieved from descriptive statistics would be of vital importance in showing the direction to be adopted by the company in line with the views provided by the participants in the interview. This method of data analysis is preferable because of its simplicity in the understanding of the collected data.

Review of the Current International Business and Economic Environment

The international business environment has been changed tremendously over the years. In the current business environment, businesses have become more competitive as they utilize technology to run their activities. According to Ghauri and Cateora, most companies have automated their operations and use technology to enhance them in the challenging business environment (2012, p. 10). Admittedly, businesses remained fixed in their operations have been pushed out of the market as more flexible enterprises took over their activities. Most companies have also internationalized their operations with the aim of diversifying their profitability. With the spirit of internationalization, businesses believe that they will perform better elsewhere in case their operations fail in one country. New businesses that comply with changes in technology are established each day, hence adding to the existing competition. Therefore, the international business environment has witnessed growing competition, requiring all companies to be innovative at all times to succeed in the tough market.

The international economic environment has become favorable to some extent as most countries try to recover from the 2008 recession that destabilized the entire world. H?schelrath asserts that the economy has been picking up gradually, and it can be seen that the exchange rates are finally going back to their normal point (2008, p. 36). Again, economic activities have increased, meaning that more opportunities are created everyday with the emergence of technology around the world. The economic environment is currently witnessing changing cycles, and it demands businesses to be more careful in their strategic planning to avoid losses in cases of small deviations in the economy. Overall, the economy is picking up from the recession that affected the entire world. Investors are willing to take up opportunities in the development of the economy, hence indicating a growing trend in it.

Analysis, Evaluation, and Justification of the New Target Industry

The retailing industry is a new target industry dealing with construction and building materials. Coming up with this venture is expensive, but it also calls for some form of diversification because there are already other businesses in the industry. The retailing industry dealing with the sale of construction and building materials presents a viable business opportunity because of the increasing demand for construction materials in the contemporary world. Most countries are growing at a high rate, and investors are moving into them facilitate the growth of real estate (Spiegel & Meadows 2010). It implies that there is a growing need for building and construction materials each day. The high demand for building and construction materials means the new industry is worth and will be profitable in case the simple rules of the industry are followed. For instance, the new target industry calls for the continuous diversification of business operations to ensure that there is a difference between it and existing businesses. This form of diversification is effective because it boosts the level of profit that could be earned from the industry. Overall, the new target industry relating to the selling of building and construction materials is effective due to the profit it presents to the company.

The choice of the new target industry could be justified by the fact that there is an adequate demand for building and construction materials all over the world. It means that the new target industry will not lack customers. It offers an effective way for the understanding of the business landscape and the pursuit of relevant business targets in the required manner. The new industry is also supported by the fact that there will always be a high demand for building materials.

Analysis, Evaluation, and Justification of the Target Country

Es, Howells, and Winkler (2006) agree that the most appropriate target country is South Africa. South Africa is the most developed country in Africa with an estimated GDP of $ 375.944 billion. It exhibits extensive growth in the real estate sector as the government looks forward to ensuring that development is implemented in all areas of the country. It implies that there will be a high demand for building materials within the country, hence ensuring superb performance of the established international firm.

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In evaluating South Africa as the most appropriate destination, it is important to understand that it has the highest purchasing power compared to any other country in Sub-Saharan Africa. Thus, it makes the country the most appropriate place to locate a new business. The fast rate of South Africa’s development has led to the increased demand for building and construction materials, meaning that the business would perform at the best level of operation. The country also has more opportunities than others that could be evaluated and understood in the growth of international business. In terms of labor, there would be no problem as there are many people willing to work in different industries. The new international business will not struggle to access a mixture of skilled and unskilled employees in South Africa.

Havenga and Locke affirm that the choice of South Africa as the most appropriate destination is justified by the fact that it is the most developed country in Sub-Saharan Africa, hence offering a better opportunity to improve performance of the new business (2010, p. 17). The country is the best place to locate the new business because of its growth in technology and continued innovations that would facilitate the growth of the new target industry.

Analysis, Evaluation, and Justification of the Most Appropriate Entry Mode

Most businesses around the world face challenges when it comes to making decisions on the most appropriate approach to utilize when entering a new industry. It is worth acknowledging that some businesses make mistakes in determining the most appropriate strategy, and they end up collapsing before the growth of their businesses in the market. In case of a new business, the most appropriate mode of entering the new industry would be to charge cheaper prices compared to those charged by other businesses in the industry. Low pricing is an effective entry strategy because it ensures that customers are attracted to the business at all times (Wisma 2007). Despite a few losses experienced due to lower prices, profits would be effectively realized in the future as more customers will come with the aim of purchasing building and construction materials. Charging prices similar to those charged by existing businesses would have disastrous consequences as it would make it difficult for the new business to attract customers who are always willing to pick up new opportunities. This approach ensures that customers are attracted to the business in the most appropriate manner. It will lead to a more competitive and profitable venture in the future.

The choice of cheap pricing is justified by the fact that it attracts more customers to the new business. It promotes future profits that come from a loyal customer base. Therefore, the new business should enter the new industry by using the low pricing strategy to entice new customers. It needs to be followed by the skimming strategy where a mixture of high and low prices is charged in the market. Customers will remain in the company because they understand the quality of products on offer.

Analysis, Evaluation, and Justification of the Positioning Strategy

The new firm could adopt a competitive positioning strategy. It is a strategy that ensures a new firm is positioned in a sense that it is equal to the existing businesses and is working in the same direction. According to Porter, the competitive business strategy recognizes that competition exists and could lead to losses in case it is not handled appropriately (2008, p. 71). Therefore, the new retail firm can differentiate its building and construction materials to ensure that it competes properly with other companies established in the industry. The competitive positioning strategy would also attract customers to the new firm because they will realize that the business is worth and reliable in terms of making purchases. It would also be in a better place to compete with other businesses established in the market. Thus, it would be prudent for the new firm to employ the competitive positioning strategy because it would also promote its growth as a business with the elimination of inferiority feelings in the new industry.

Conclusion and Recommendations

In conclusion, it is always crucial for companies to evaluate factors prevailing in different countries before choosing one as part of their internalization strategy. They should assess the social, political, and economic situation in the country before deciding to move there and establish their businesses. Again, it is vital to choose the right company for alliance in the establishment of a new international firm (Merrett 2013). Firms are also supposed to ensure that they understand the diversity strategy and embrace only the best strategies as they move into new industries. It promotes the growth of business from the initial stage.

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In this case, it is recommended that Boral Limited should move to South Africa as part of its internalization strategy. South Africa is a land full of opportunities that would ensure the company realizes its goals relating to profitability and overall growth. The country also has adequate labor that would allow the new firm to operate in the required manner toward the realization of its targets in the retail industry relating to building and construction materials.

Moreover, the new firm must use the low pricing strategy to penetrate the new industry. The low pricing strategy would set a proper ground for attracting customers and ensuring that they stay with the company. It should be boosted by the competitive positioning strategy that would make sure the new firm affirms its authority in the market, hence leading to the required level of performance in the industry. Moving to South Africa would give a high chance for the success of the company.

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