The objective of this report is to analyse advantages and disadvantages for an organisation while they moving their operational and functional activities in a developing country. In this regard, it is required to analyse the influence of external factors upon business activities in direct and indirect manner.
- Analyse the benefits and challenges which can be faced by Cadbury while moving its production and operational activities in developing country. In the evaluation, it is needed to consider influence of social, economic and political factors.
In modern scenario, every kind of company mainly aims for having global market and attain international position effectively. While moving the production sector and its operations in developing sector, there are various kind of challenges which company will mainly face and those will be discussed below in brief manner. Company chosen is the Cadbury which is a multi-national company and mainly deals in confectionery items.
There are various kind of factors which company mainly has to look out upon the transferring the production sector to another developing country. In UK, there are various kind of developed economies in which the labour cost is very high. Hence, many of the companies with multiple facilities can mainly find it beneficial and thus can move up the production factories to many of the developing countries like India and China where the labour cost along with cost of raw materials are much more reasonable and cheaper. Cadbury being a multi-national company has their main production sector in various countries. Along with this, there are some of the significant drawbacks which are being carried and thus they are needed to be considered in careful manner.
In order to move the production sector into different region, there are some of the factors on which analysis has to be made in order to reduce the chances of error. There are many of the benefits which will be attached with transferring and along with that there are some of the drawbacks which needs to be kept in mind as well. There will PEST Analysis which will be done on the company and the foreign region they are transferring into. PEST mainly stands for political, economical, social and technological. These are the factors which will help out in determining the necessary factors which company like Cadbury has to draw their attention upon.
Political Factors: This kind of factor mainly helps out in determining the extent to which the Govt. will mainly influence the economy and Cadbury as well. Example can be taken up of Govt. mainly imposing the new tax policy where the Cadbury is mainly shifting its production sector and thus due to that structure of company can might change. There are many factors which are being included like fiscal policy, tax policies, trade tariffs and many more which can make impact upon the working environment of the company specially to the country they are mainly moving in. When the production sector is being transferred, there are some political benefits and drawbacks which will be seen like at the point when another administration assumes control, it may make it harder to work together in that nation. This can run from forcing new directions on organizations or raising utility costs or duties to nationalizing creation offices. Much of the time it is troublesome, if certainly feasible, to foresee how another administration will act, which makes it difficult for organizations to take countermeasures while benefit can be like flexible policies within country will help company to gain the new kind of market and customers.
Economical Factors: There are various kind of factors which helps out in determining the performance of an economy and thus have long term impacts. Example can be taken up of rise within the inflation rate of any kind of economy will make direct impact upon the price of product which is sold by company. Along with this, purchasing power of the customer will get affected. Cadbury is basically involve with these factors like inflation rate, interest rate and many more. There are mainly various kind of benefits and drawbacks from the aspect of economical factors while transferring the production sector from one place to another foreign country. Advantages can be like Opening an abroad office enables an organization to achieve a pristine market where interest for its items and administrations is high and introductory rivalry is negligible. It likewise enables the organization to expand its image acknowledgement all through the world. In an inexorably worldwide economy, more prominent brand mindfulness might be important for organizations that need to keep on expanding, particularly if their present markets have achieved their immersion point while drawback can be currency risk which can bought up the from the abroad to sell within the local kind of market which in turn will expose to currency fluctuations. There will be no changes which will be made even when the items is being manufactured is being imported within own facilities or purchasing it from the supplier within foreign market which will make no kind of difference to the risk.
Social Factors: In this kind of factor, social environment is mainly being scrutinized and are being gauged with determinants like cultural trends, demographics, population and many more. Example can mainly be taken up of buying trends for the Western Countries like the US where there is high level of demand during occasions or any kind of festival. In aspect of moving the production sector of Cadbury to the foreign developing country, it is highly essential to look out for the social factors as there is high need of human force to create the environment in effectual manner. Major benefit which company will get is lower labour cost within the foreign developing country which in turn will mainly offer the benefits of operating overseas and reduced labour costs. There are some of the companies who have saved the money about 50% within salary payments alone. This will allow the Cadbury to have more amount of profit and they will get employees at low rates who will help in attaining objectives. Drawback of this kind of factor is that it mainly involves the local labour market within the country which can take notice and wages which began to climb. There are more employers which in turn can mainly give the option for workers who mainly seek out for alternative jobs and employers which are mainly forced to offer high amount of wages for retaining talent. Other basic things, for example, the land where you can fabricate manufacturing plants and even utilities, turn out to be more important as interest for them rises drastically. This definitely brings about higher expenses for these things, which can nullify a significant part of the cost advantage offered by the outside area.
Technological Factors: In this kind of factor, innovation is being pertained within j technological sector which in turn can put an impact upon the operations of the industry along with the market in favourable or unfavourable manner. Mainly this sector is about automation, research and development department along with technological awareness which market mainly possess. Cadbury company has been mainly focusing upon this kind of factor as there is high need of adopting latest technology and ease up the process of production and other processes. In aspect of moving the production sector to the foreign country, technology will play essential role as there are numerous kind of factors which has the potential of making impact upon the productivity of the company in foreign country. Advantage of this kind of factor is that technology will help out in bringing sustainability within the new kind of market and thus with help of new kind of tools and techniques, company will be able to reach untapped markets and technology will help out in reaching out to the brand new market where the desire and demand of products and services will be much more high and thus the initial competition will be very low. Along with this, it may help in increasing the recognisation of brand across the globe. Within the increment in global economy, there should be more brand awareness which in turn can be much more effective and necessary for company like Cadbury who has the motive of continue expansion within many other countries. Limitation can be like dramatic advances within data along with transportation technology, there is the factory in UK of Cadbury who is been located thousands of miles which can pose huge logistical challenges. First one can be bringing the product by means of water across the oceans and as in result, orders will not be fulfilled as quickly as possible. Along with this due to technology sometimes it becomes hard to solve out the quality issues which sometimes becomes hard to solve which in turn can take much longer for sending executives to survey the plant and thus mainly gather the sample of product for analysing in labs.
From the above essay, it can be stated that the While moving the creation area and its tasks in creating segment, there are different sort of difficulties which organization will for the most part confront and those will be