International business strategy
Q1. Able Translators was established in 1990 and its operations were internally located until 2014 when the business developed its services to serve three continents. During was this period, the industry ranked as the leading industry with quality interpreting and translation services. Even though the industry was the leader, there were technological innovation which has brought changes in the industry and this is an indication that there was global competitors and micro business which made the company to foresee opportunities (Goerzen, 2015). Due to the innovation and competitors, the company had two strategic choices one being expanding the services internationally and the second was focus on technological development in North America. However, the president of the Able Translators decided to expand the business internationally (language services) in order to compete with other competitors. He focused on competing in the market by paying suppliers a large amount and charge the clients little amount (Goerzen, 2015). The industry decided to provide quality services internationally and competitive price.
Recommendation: CAGE framework
Able Translator should apply CAGE framework in deciding whether to expand internationally and the tool will help in considering issues like where to expand, services to offer and strategies which will maintain the business in international market. The Framework will enable the industry to evaluate culture, economic and geographical issues in order to have effective operations (Sharan, 2013).
Q2a. The strategic decision in offering quality services, charging customers less, implementing technology and competing on price made the company enjoy a competitive advantage in the market. Note that in the competitive market, the industry focused on developing target markets and in this case it focused on providing language services in legal and medical areas (Goerzen, 2015). With reference to CAGE Framework, Able Translators considered cultural and economic issues for international venture. For example, cultural identity was a key element in expanding internationally to ensure that customers in the new market will accept and demand the services. Able Translators considered attractive markets in Canada where it could compete with other industries (Ghemawat, 2007). The industry focused on a technological environment where it developed document translation and established a consistent communication.
- It is worth saying that the competitive advantage is sustainable because the industry has not only expanded business but it has also implemented technological capabilities which will open path for new opportunities (Goerzen, 2015). From the case study, technology is continuing to bring innovation hence increasing value, profitability and competitive advantage. Using the CAGE framework, Able Translators considered cultural distance which stands for values and behaviors in the international market. For example, Able Translators had markets segment where there was a high demand for word translation (Ghemawat, 2007).
Recommendation: VRIO framework
Able Translators should apply VRIO framework in order to maintain a competitive advantage. The framework focuses on the internal resources and the industry is able to implement valuable resources which will build and create a sustained advantage. In addition, the framework helps the industry implement rare, valuable and costly to imitate resources (Sharan, 2013).
Q3. In the language services industry, Able Translators met opportunities and threat. First, the industry met a higher demand in translating and interpreting across many languages. For example in 2014, there was 6, 900 languages (Goerzen, 2015) and people who could translate these languages only focused on two languages. This made the industry to gain an opportunity to service on language services. However, LSP firms emerged with translation and interpretation services and their growth was high to an extent that they were dealing with outsourced businesses. In addition, LSP firms had various task such as translation and other interrelated tasks. Up to this point, it is important to note that able translators faced threats due to the growth of markets (Goerzen, 2015). In other words, globalization was high and the demand for LSP services grew dramatically. Since LSP industry was operating with outsources businesses, it was dealing with global audiences and both private and public companies demanded the services as they needed to become connected with diverse audiences. For example, Chinese firms had advanced their services to advertising since they believed that “if customers can’t read it, they won’t buy it” (Goerzen, 2015). This strategy connected global consumers with these firms. In 2013, the LSP market had grown up to 34billion where market segment for Europe, North America and Asia was 49%, 35% and 13% respectively (Goerzen, 2015). Other threat which was brought by the LSP industry is that there was a high increase of translators and interpreters suppliers. For example, there was a growth rate of 42%, the labor supply was high and LSP was expected to increase since there were new start-ups in the market which would mainly focuses on price competition (Goerzen, 2015).
The problem with Able translators is that it mainly focused on language line which relied mainly on on-site translation and interpretation. Note that there were other industries offering language services which focused on website and software localization and industries in these sectors were also active in online translation (Goerzen, 2015). This is an indication that LSP was influenced by technological innovation. Technology such as Google Translation, machine translator, cell phone application and others brought a dramatic transforming these industries.
Recommendation: Porter’s five forces
In expanding internationally, it advisable that Able Translators should analyze the industry using porter’s five forces. The forces acts a tool for competitive strategy hence increase profitability. Thus, Able Translators should focus on level of competition. This will help in the industry in selecting the services to offer in order to maintain a competitive position. It should also focus on new entrants and the threat they pose. Third, it is important to consider the substitute of services which can weaken its power. Finally, the industry should consider customers’ and suppliers’ power (Sharan, 2013).
Q4. Between the two strategic choices, I would recommend growing the existing business (translating and interpreting services).First, Able business made a wise decision of expanding the existing business. In this case, it expanded its operations in Canada and by 2014, the business had grown in a dramatic way since it had 100 employees, 10million revenue and it was ranked among the10 largest industries for language services in Canada and among 100 industries internationally (Goerzen, 2015). The reason as to why I recommend expanding the existing business is because there are many benefits. Expansion develops new markets, capital is generated from market penetration, and there is core competency, risk management and networking. In year 2005, 2007 and 2009, Able Translators had developed branches in Germany, Portugal and Hong Kong respectively. The revenue was high as it was generated by North America with 20-30% revenue and Europe with 10-20% revenue and this was reinforced by powerful competition (Goerzen, 2015). The important point to note in growing an existing business is that the industry is exposed to various opportunities and these opportunities opens path for competitive advantage. Even though there are risks and threats, there is a broader customer base. Note that the wider audience increases sales and the industry is able to achieve a high profitability. In order to enjoy a competitive advantage, the only requirement is just have a have picture of the industry in terms its operations and future growth, create business models such as joint ventures, identify the target markets and create a business plan. Note that Able translators passed through these steps and that is why it achieved a competitive and a sustainable advantage (Goerzen, 2015).
Recommendation: Organizational structure /culture
While deciding to expand the existing business, Able translator should understand the important of culture and structure and the role they play in business expansion. Note that both structure and culture are independent variables which shape the organization behavior. Even though culture is intrinsic factors while structure is an extrinsic factor, they play role in shaping behaviors. Thus, the decision of expanding internationally should be influenced by structure (design) and culture (behaviors). Able translators should develop new cultural values and structure (Sharan, 2013).
Q5a. In deciding to expand the business internationally, Able Translators met principal risks on the way. First, Able Translators faced the risk of customer proposition. Note that in the new markets, there were various competitors who dealt with competitive price. For example, the LSP industry were powerful competitors who had expertise on different areas such as technology, financial and more (Goerzen, 2015). Thus, the changing marketplace affected the Able Translators as it was unable to increase markets share and customer loyalty. In other words, the high competition with emerging industries led to high customer choices. In the new market, Able Translators faced the challenge of copping with the economic environment while trying to change the economic model. To maintain the operating margin and achieve better performance is not an easy task. For example, competitors were involved in interrelated tasks which advanced the industries and increased demand. Last but not least, the industry met the challenges of competition since there a high price pressure which acted as a stumbling block in coping with the changing markets (Goerzen, 2015).
- Principal risks adversely affect the business, employees, customers, operational performance, financial performance, strategic objectives and stakeholder’s expectations. To manage the risk and prevent the adverse effects, there should be an internal control and in this case the board has a responsibility to create a risk management for the purpose of identifying the risks. In addition, there should be an internal control system and strategic objectives which will evaluate the nature of the risks in order to develop ways to manage the risk (Goerzen, 2015). The risk system should be monitored and corrective action should be taken to ensure effective functions.
Recommendation: PESTEL analysis
In expansion the business Able should apply the PESTEL analysis. Political factors will help the industry understand the condition of foreign market in terms of trade policy, government policy, trade restrictions and more. Economic factors (macro and micro factors) will give an insight based on economic growth, inflation, and management of demand, taxation policy, income expenditure and more (Sharan, 2013). Social-cultural factors will give an insight based on population, age, career and other related factors which will assist the business offer quality services in the market. Technological factors are important in providing the industry will methods of producing quality services and delivering the services to the target markets.
Q6a (i). From the case study, I can say that providing language services and at the same time making the business to be a technology company is a best activity though it is associated with cons. First, there is an advantage in that Able Translators had gained many opportunities. Technology such as telecommunication system has helped the company grow significantly (Goerzen, 2015). In addition, technology has helped it maintain core competencies and the technological capabilities created a strategic direction. Generally, technology brought efficiency in operation, communication and new opportunities (Goerzen, 2015). However, technology brought a disadvantage in that it was a burden to both clients and suppliers. For example, for Cisco’s technology to be effective, license were required and finally this led to growth barrier (Goerzen, 2015). Other point noticed in the case study is that high competition may hinder technological innovation and hinder effective operation. This happens because powerful competitors may have technology strategies and huge investment.
(ii). Software Company has benefits in that after developing video interpreting software, there was a greater accessibility and there was no communication barrier. In addition, there were other competitive industries which were using software and they enjoyed value and growth in the business (Goerzen, 2015). In addition, the software established face-to-face interpretation services and Cisco’s system. Focusing on the case study, there are disadvantages in combining software with technology in that Able company faced internal problems which led to failure of the start-up company which was developed for the purpose of developing computer code (Goerzen, 2015).
- Of the two positions, Able Translators should deal with language services and technology since it will enjoy new opportunities in the competition market. Remember that the survival of business is determined by new opportunities and the latter is achieved through innovation. In addition, in order to remain in the market and sustain profit, effective operations are needed. With technology, Able Translators will manage time, resources and cost (Goerzen, 2015). In addition, it is important for the Able Translators to use the Cage framework since it acts as a helpful tool in considering foreign competitors, bilateral and unilateral attributes, consumers’ buying power and financial markets (Ghemawat, 2007).
Recommendation: Knowledge management
Knowledge management is a corporate strategy which Able Translators should apply in order to create value and meet goals. In knowledge management, the industry should apply a strategy which will manage and achieve strategic requirement. In addition, the industry should create an organization culture where members interact, shows respect and accepts change together. In knowledge management, effective management and leadership are required so that they can manage and direct effective operations (Sharan, 2013).
Work cited
Goerzen Anthony. (2015). ABLE TRANSLATIONS: INTERNATIONAL STRATEGY AT THE CROSSROADS. IVER
PUBLISHING
Ghemawat, P. (2007). Redefining global strategy: Crossing borders in a world where differences still
matter.
Sharan, Vyuptakesh. (2013). INTERNATIONAL BUSINESS: Concept, environment and strategy. S.l.:
PEARSON EDUCATION INDIA.
