Angkasa Training Centre

Universiti Teknologi Malaysia

STUDENT’S NAME : GETHA A/P CHANDRAN

I/C NO : 830601-14-5196

PROGRAMME : PROFESSIONAL MASTER BUSINESS ADMINISTRATION

CLASS DATE : 19th & 20th March 2022

INTAKE DATE : JUNE 2021

MODULE : STRATEGIC MANAGEMENT

TRAINER’S NAME : SALMAN NURILLAH

CENTRE : JB CENTRE

OVERALL MARK
(Fill up by Trainer)

QUESTION MARK

1
4

TOTAL

FINAL MARK
(30%)
Question 1 :

The priority of Toyota’s top management team is to increase shareholder value steadily over the
long term. As the company continues to expand outside Japan, Toyota will increasingly face
market risk, which will vary from country to country. To create a company that can resist
fluctuations all over the world all the time is difficult. Assuming you are the CEO of Toyota,
present your ideas based on the Strategic Management approach to minimize risk of Toyota in
the International market.
Contents Pages
Introduction…………………………………………………………………………………… 2
Task 1…………………………………………………………………………………………. 2
Political ……………………….…...………………………………………………….. 2
Economic …………………………………………….…………………………………3
Social …………………………….……………………………………………………..3
Technological …………………….…………………………………………………….4
Threats ……………………………….…………………………………………………5
Opportunity ……………….……………………………………………………………5
Task 2…………………………………………………………………………………………. 6
Strengths ……………………………………………………………………………… 6
Weakness ………………………………………………………………………………7
Resource Audit ……………………………………………………………………….. 7
Value Chain Analysis ………………………………………………………………… 8
Core Competence ……………………………………………………………………...9
Strategic Capability ……………………………………………………………………10
Competitive Advantage ………………………………………………………………..10
Task 3 …………………………………………………………………………………………..10
Introduction …………………………………………………………………………….11
1st issue is Low price …………………………………………………………………..11
2nd issue is Environment ……………………………………………………………….11
3rd issue is Social ……………………………………………………………………11-12
Task 4 ……………………………………………………………………………………….12-13
References …………………………………………………………………………………..14-15

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Introduction

The great Japanese automaker company Toyota Motor Corporation TMC is one of the best
leading car producers in the world, it holds a large range of vehicles from mini-sized cars to big,
large trucks and buses, it is well known and sold in a lot of countries around the world hiring
thousands of employees. Their name is among the world’s strongest car production
manufacturers because they believe as Japanese that improvement in things must be running
continuously through their lifestyle. Toyota is a multinational company with factories all around
the world, assembles and produces vehicles in local markets, Toyota Motor Europe TME
assembles and manufactures in many countries in Europe such as United Kingdom, Czech
Republic, France, Poland and others helping the company sales increase year by year.
(www.toyota.eu, 2010) It has become a popular manufacture in Europe following the strategy of
focusing on small cars segment with its high demand because of the fuel high price,
environment, high unemployment and an unstable economy

Task 1

There are several factors that could affect organizations, these factors effect on the firm’s
environment internally and externally. Environmental analysis comes in internal analysis that
concerns stuff like employees, finance, office technologies and so on. The external analysis
comes in micro and macro environment, micro such as costumers, supplies, distributers and
competitors and macro such as political, economic, social and technological forces. And that is
known as PEST analysis. (NCC lecture) PEST analysis is a very helpful and useful analysis tool
to help understand losses or growths of a specific market concentrating on the Political,
Economic, Social and Technological factors of the business. PEST is very useful to show the
benefits and available opportunities for the business itself.
Political

The Political factor is so important for the multinational companies, such as Toyota, because it
will guide the company to understand the country specific requirements, regulations, security
measures, restrictions and policies. It has huge influence on the business’s regulations and how
much will the consumers spend. (ukessays.com, 2009) Any recent produced cars must comply
with the European vehicle emission standards and regulations this is known as Euro Standards,
therefore, Hybrid or small engine cars with lowerCO2 emissions has big demand and support

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from the government because it is friendly to the environment also vehicles with high CO2
emission will have higher rates of TAX charges. This industry in Europe faced strong regulations
to make high mileage cars while increasing the automobile productions and sales. (academia.edu,
PEST Analysis) Renewable energy is aimed by the Government Policy to decrease dependence
on foreign oil which will effect on the country’s security and economy due to the oil price
raising. Surely, with the mentioned above, the political environment is stable for Toyota, because
it makes cars with low CO2 emissions and longer mileage which would reduce petrol usage also
because this industry is enormous, therefore Toyota has a positive political impact because it
makes cars that use less fuel and reduce dependency on fuel.

Economic

Economic factors influence on an organization’s development and growth and effects on the
consumers demand, they need to concentrate on the trading economy in the short and long terms.
The consumers now choose cars with smaller efficient engines based on the benefits of fuel
consumption and the savings over time which means they have paid back. Recently the prices of
automobiles have increased due to inflation, the main factor that effect on price elasticity is from
the oil dependency, customers came aware of new cars with efficient engines which causes
saving money in terms of giving bigger mileage for the same amount of oil they could spent on
older cars. The dependency on foreign oil and gas will effect on the country’s economy growth,
Gross Demotic Product GDP and national security. Previously, the Europe Union had an
agreement for quota system, which provides protectionism for European countries, later on they
dropped the quota system and eased the tariffs for the external company which made it easier for
many international companies including Toyota to trade in Europe and establish opening
factories, which has led to positively effect on decreasing the unemployment rate and the
economic growth. (Choon Keet Sin, PESTLE Analysis on Toyota Prius)

Social
The society environment plays a good part on the type of cars people buy and fuel efficiency in
the car in terms of being green and mileage, the social factor is a change in consumer needs in
the society, it effects on business is different from country to another, they should be considered.
The challenge for Toyota is the difference between the Japanese customers and European

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customers, where in Japan there is all about working, where in European culture life is all about
both work and social private life. The Japanese culture aspect is that they only take what they
need not what they want, without wasting their energy and time on things they wouldn’t need,
following “just in time” production just like what Toyota supports. (ukessays.com, 2009)

People can communicate overseas more easily nowadays because of the social value of an
additional transportation which has come from this industry, Toyota has come up with new
strategy of making cars specifically to target at European consumer. Toyota employs a lot of
people in a direct manner and a lot more indirectly which shows how it effects on the society in a
major way. ME has made its products for green and small cars segment in Europe, which aims to
keep the world in a clean environment and save the natural resources of the world focusing on
providing acceptable social costs for European countries (www.Toyota.eu)In Europe TME
conducts seminars and campaigns to introduce environmental issues such tips on ECO DRIVE,
an economical driving style with cooperating with social communities and NGOs to be involved
with the Europeans mentality on saving the environment. (www.Toyota.eu,Sustainability Report
2012).

Technological
Nowadays the technology factor is a main driver of globalization, and it is important for the
competitive advantage, the automobile manufacturing industry should concentrate on it, because
of the high competition among the European manufacturers, technology changes from time to
another. The TME concentrates on this factor for all its processes, products, operations
unbothersome of the major technology strategies for TME is reducing CO2 emissions and
innovate new alternative fuel such as electric motors and hybrid engines also reduce the air
pollution, therefore TME is a great example for providing an environment-friendly cars.
(www.Toyota.eu,Sustainability Report 2012)Technology solutions is the investment of today to
get benefits for tomorrow, Toyota does not focus on producing fast cars yet it focuses on Eco-
friendly cars in Europe, they are researching for alternative energy resources such as Hydrogen,
Natural gas, Electricity and Bio fuels.(Toyota.eu, Sustainability Report 2012).Toyota produced
Prius with a great Engine technology especially for Europe, which focuses on small engines with
the ability to generate higher outputs and using aerodynamic technology for as mother air friction

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which will decrease the engine efforts and fuel consumption so it achieves low emissions
throughout all area. (Choon Keet Sin, PESTLE Analysis on Toyota Prius) The car manufacturing
industry in Europe is very competitive technologically where the greatest car manufactures in the
industry have cutting edge in science, such as Audi, BMW, Mercedes, Jaguar and others which
made it a difficult competition for Toyota and a big challenge for achieving Toyota strategy in
technology. Finally, TME must concentrate on green cars it has a huge demand in future and in
the European market maintaining the technological, economical and socio environmental factor
with accordance to the European standards.

Threats
Global competition in the automotive industry has become highly competitive because of the
globalization, the competition which may reduce sales which could influence financial condition
of a company. (Slide share, 2013, Toyota Analysis) The competition is the main threat for the
TME especially in the crowded market for Europe and the Korean motor opened a factory in
Europe which makes it a foreigner competitor that leads TME to make joint venture with Citroen
and Peugeot in manufacturing the Aygo. (Slide share,2013, Toyota Analysis)Another factor that
threats TME are the Emission Restriction the probability of tightening or imposing new
European emission standard that may increase the cost for product testing and manufacturing
operation and it will be affected on the Toyota production reducing, however ME meets with the
regulatory requirements of CO2 emissions.(strategicmanagementinsight.com, 2013, SWOT
analyses)The economic recession is one of the most dangerous factors for the automotive
industry in Europe. The cost of production may effect on many reasons such as pricing of the
raw material and steel. The financial crisis which also affects negatively on the fuel price
elasticity which threatens the production.

Opportunity
Nowadays one the main environmental problems is climate change and air pollution, customers
looking for products which aim to save the environment which is the best opportunity for TME
to implement green cars using alternative resources such as, electricity and hybrid engines to
reduce CO2 emission to meet the costumers needs and show the society responsibility.
(SlideShare, 2013, Toyota Analysis). Europe has many manufacturers seeking the same vision

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and responsibility as TME, with the existence of the products and market in Europe as per
Ansoff’s matrix which is to implement market penetration by making joint venture and strategic
alliance giving a good opportunity to produce cars in Europe and develop supplied network to
locate any future plants. As mentioned previously in PEST analyses, one of the best
opportunities is to match mini cars segment which meets costumer needs in saving the
environment and the economy. TME must innovate products specifically for this segmentation
because of high unemployment rate, rising fuel price and economy uncertainty in Europe.

Task 2
Internal environment analysis for an organization is one of the basic analyses to make a strategy,
it measures the power of a company and its whereabouts by finding out the strength and
weakness factors then set the goals and objectives for the organization depending on results of
the environment analyses and formulating the strategy to implement.

Strengths
Toyota is a world leading company with a strong brand position in the automotive industry
globally, with a large number worldwide in the car sales, it has strong financial backbone, strong
distribution networks which help Toyota to improve their sales and market positions around the
world.

Toyota has different products with different segments for costumers which meet the needs of
customers from all levels with the high production lines which gives Toyota its good reputation
and brand image that reflects positively on the competitive advantage.
Its products are famous with value cost, quality, durability, and reliability and environmentally
safe which gives it the strength throughout Europe market.
By innovating hybrid cars and high fuel efficiency engines and produce cars specifically to meet
Europe standards with reducing air pollution and CO2 emissions, gaining competitive advantage
among the automotive industry in Europe while possessing the society loyalty by keeping the
environment green and saving economy through reducing fuel consumption. (www.Toyota.eu,
Sustainability Report 2012).

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One of the strong factors for TME is the innovation of cooperation with European car
manufacturers Peugeot and Citroen with a clever strategic alliance to manufacture the car Aygo
specifically for Europe that gives the power of purchasing in the market share and added value
for the company, with a reduced cost of courier and lowering the exchange rates also by sharing
manufacturing parts alongside gaining from the sharing of knowledge and local experience.
(www.Toyota.eu).

TME has succeeded in advertising and promoting with showing their core competence and the
company strategy for safe environment by supporting volunteered initiatives through NGOs to
share awareness of ECO Driving steps under corporate society responsibility programs and
activities. (www.Toyota.eu, Sustainability Report 2012).

Weakness
In recent years Toyota faced design engineering problems which was one of the weakness factors
that has challenged Toyota manufacturing is not having high technical skills of engineering
designs when they have high level of skills in production.
When Toyota faced lapses in product quality it is announced to recall millions of cars around the
world from the most popular models which were affected on the market share and reduced the
share prices not only for that but also affected on the brand image for costumer and shook
costumer’s confidence. (Slide share, 2013, Toyota Analysis)
When Toyota decided to enter the European market, they had lack of experience among the
European competitors especially with suppliers and new young segment of costumers. Also, it is
such a strange investment which made it look like an interrupter from the local’s point of view,
given it has overcome this issue, but it is still not counted as proud European manufacturer like
its rivals.
Resource Audit
Most parts of Toyota cars production is outsourced, it makes standards for their production and
get it from various specialized manufacturers such as, tires, glasses, water pumps, so it helps take
a lot of lesser time in production and makes better product quality, it has physical plants and
assets around the world. They use resources to generate competences which is applied in their
strategies and competitive advantage also integrate technological resources and the capital in

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machines, so it makes competence in production to contribute to a sustainable competitive
advantage. (Study mode.com,2013, Resources and Capabilities of Toyota). Toyota has strong
capabilities in human resources, intellectual capital, learning and knowledge
management, they share and train their suppliers along with their staff to maintain their core
competence.

Value Chain Analysis

Company Infrastructure
activities

Human Resource Management

Support

margin
Technology

Procurement

margin
Inbound Outbound Marketing
Operations Service
Logistics Logistics & Sales

Primary
activities

Figure 1: Value Chain analysis

For primary activities: -

Inbound: The company almost obtain raw material from third party, they also handle small parts
not manufacture and keep good relationship with their suppliers.

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Operation: Toyota is properly manufactured and assembled, it is known for its reliability and
durability thanks to the efficient operations.

Outbound: They store and distribute their finished products to dealers to make them easily
reachable.

Marketing & sale: They focus importantly on marketing and the promotions variations to meet
what the targeted customers need.

Service: Toyota appreciates and gives value to their customers, so after-sale, maintenance and
other services are included. (scribd.com,2009, Value Chain Analysis)

For support activity: -

Infrastructure: Toyota handles and controls its different departments by Management

Information System and other systems.

Human Resource: Toyota values their employees as Human Capital, they aim to maintain them
employees by training and developments.

Procurement: It aims to reduce the prices for purchasing with the most possible quality and they
use e-Purchasing.

Technology: Toyota implements production technology and innovate to reduce cost by using
internet activities and other technological developments. (scribd.com,2009, Value Chain
Analysis)

Core Competence

Toyota is rich in core competence, which is high professional skills in management, high
technology and knowledge with good relationship with competitive. It has high capabilities that
give it high performance and production which made it distinct among competitors.

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The company is looking for unique product which is recognized by its ability to manufacture
cars with great quality and best prices to meet costumer high expectations.
With continues improvements in the Japanese word KAIZEN Toyota distinct in continuously
advancing in production, it has just in time production which give it high efficiency in
production. (www.Toyota.eu, Sustainability Report 2012).

Strategic Capability
Toyota is a company with strong management capabilities that makes it to increase its value with
time, with high ability to use competitive strategies successfully by focusing on assets and
resources and market position.
It could use their strategy for the future globally; it has successful management
capability in Europe especially when they employ their capabilities and resources to meet
standards for Europe in a challenging market. (Toyota.eu, Sustainability Report 2012).

Competitive Advantage
The competition in the automobile industry is strong in Europe, TME faces big players to
compete with, it is struggling to increase its market share. It creates a unique brand image in the
mind of the targeted costumers which is an advantage over the competitors. The company always
keeps an eye out on their competitors with continuously improving quality and low cost.
TME has accomplished a great achievement of the mini cars targeted segmentation, especially
with less fuel consumption and low price in the Aygo and Prius. (Slide Share.com, 2013, Report
on Corporate Level Strategies). It has created a competitive edge over costumers to keep them
satisfied by developing and implementing their core competence and capability.

Task 3

Introduction
As mentioned previously on the environmental analysis for the internal and external factors it
appears that Toyota is a one company that cannot be underestimated and is considered a huge
competitor for automobile companies in the industry.
It focuses mainly on being known to be low in price with good quality among its competitors,

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environment friendly is considered one of the major strategies for Toyota, especially in Europe,
globally expanding all over the world, adapting with many cultures and take society’s needs,
without neglecting the cutting edge of technology.

1st issue is Low price

Toyota mainly adopts low-cost strategy as one of its competitive advantages they are focusing on
reducing cost for all supply chain management starting from suppliers and resources of raw
materials during operation to sales, logistics and capabilities in overall, when all other
competitors focusing on reducing the cost Toyota achieved leadership in low-cost production.
(www.Toyota.eu, Sustainability Report 2012). Toyota should adopt competitive strategy in
Europe by implementing low-cost leadership strategy. Low-cost leadership occurs by Toyota
having their own channel of raw material suppliers to avoid fluctuation increase from the
suppliers, redesigning of component process to save sustainable cost. They needed to be careful
to decide having assets and ensuring those assets are fully used, low cost of product design,
engineering and a skilled workforce. Low cost is a main interest of the targeted customers
because of the economy uncertainty, increasing fuel prices and high unemployment rate in
Europe, given this it makes it an appropriate strategy.

2nd issue is Environment

Another corporate strategy for Toyota is to save the environment and keep the environment
green by reducing emissions CO2, less fuel efficiency and innovate hybrid car with electric
motors. (www.Toyota.eu, Sustainability Report 2012).
For this issue, the best strategy the differentiation, increase market share with changing the
costumer’s perception for Toyota products as a competitive car by added value downstream
choosing clever advertising and promotion to view to the costumer the meeting of their needs for
environment responsibility.

3rd issue is Social

A clever competitive advantage of Toyota is involving with the countries culture, in Europe they
focus on the society awareness of the economical practices to save the economy. They gain more
loyalty of the costumers by dealing with NGOs and involve corporate social responsibility

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through social activities. (www.Toyota.eu). Appropriate strategy for this issue is by adopting
social responsibility, one of the good business ethical practices and showing their care of
improving people lives, supporting awareness campaigns for the society, support charities and
education. This strategy will keep the stakeholders satisfied and give out a positive vision to the
world about
Toyota.

Task 4
Undoubtedly when the organizations implement their strategies facing problems and barriers,
strong management is the key behind overcoming these barriers, it plans and implements
emergent strategies to flexibly change their approach of achieving their vision.
For Toyota strategies as mentioned previously for implementing low-cost leadership strategy
many problems and barriers Toyota might face, some of it is like the ones developing and
improving the quality of technology, and keep up with the modern technology, especially when
they add new electronic systems and sensors.

When the company plans to apply the low-cost strategy, that means they will decrease all cost
for all value chain in primary and supportive activities, these will affect directly on the quality of
technology because they will not be encouraged to spend more money for research and
development, and support innovation centers which slows down the technology growth in
comparison to the competitors, the new technology production may appear defected that would
force the company to recall the defected cars which will lead to losing customers trust and
reputation, and society loyalty.

Other problems that may face the low-cost leadership strategy is price increase of raw materials
and suppliers over-controlling the prices, forcing the company to raise their product cost
affecting its known reputation of value of money. Also, currency exchange rates in the scale of
economy between company, suppliers and distributers may also make Europe increase the taxes
rates for the foreigner markets and making inappropriate advertising and promotions to the
society.

The company should keep its prices low for this strategy and adopt operational strategies to

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maintain capability and resources for appropriate prices. The implementation strategy should be
flexible and emergent perspective in action plans which deals with all emergent cases that
becomes a barrier of implementing the strategy. Suggestion for the low-cost strategy, to keep
technology growing with low expenses is to encourage younger people, invest and support
innovation in schools and social groups and award the young learners by making technological
competitions whom wages come lesser than the experienced ones, generating new ideas from the
young minds.

For suppliers it should seek out joint venture and strategic alliance opportunities and invest with
suppliers and share the stocks to contribute with the supplier’s decision. The strategies should be
focused on the operational performance objectives quality, speed, dependability, flexibility and
cost to create competitive products with achieving organization goals without neglecting any
safety and technology.

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References
 PEST Analysis on the Automobile Industry. [Online] Available from:
www.academia.edu/7033015/PEST_Analysis_on_the_automobile_industry [Accessed
Oct,2014]
 Bob De Wit and Ron Meyer (2004), Strategy, Process, Content, Context 3rd edn. London,
England. Thombson Learning.
 Meko Group, Value Chain [Online] Available From;
www.mekogroup.com/Services/Value_Chain.html [Accessed Oct, 2014]
 NCC, Strtegic Management Lecture 2. Manchester, UK. NCC Education Limited.
 PESTLE Analysis on Toyota Prius. [Online] Available from:
www.academia.edu/2064315/PESTLE_Analysis_on_Toyota_Prius [Accessed Oct, 2014]
 Scribd, (Nov 2009) Value Chain Analyysis of Toyota Co. [Online] Available from:
http://www.scribd.com/doc/22372540/Value-Chain-Analysis-of-Toyota-Co [Accessed
Oct 2014]
 Share (Oct 2013), Strategic Management Toyota Case Study. [Onlilne] Available from:
www.slideshare.net/ArioArdianto/strategic-management-toyota-case-study [Accessed
Oct 2014]
 Slide Share (Mar 2013), Toyota: Analysis of Vision Statement, Corporate Level
Strategies & SWOT, [Online] Available from:
http://www.slideshare.net/rohannegi/toyota-analysis-of-vision-statement-corporate-
levelstrategies-
swot [Accessed Oct 2014]
 Slide Share (Mar 2013), Report on Corporate Level Strategies of "Toyota" [Online]
Available from: www.slideshare.net/rohannegi/toyota-analysis-of-vision-statementcorporate-
level-strategies-swot [Accessed Oct 2014]
 Study Mode (Dec 2013), Corporate Strategy of Toyota [Online] Available from:
http://www.studymode.com/essays/Corporate-Strategy-Of-Toyota-45808935.html
[Accessed Oct 2014]
 Study Mode (Feb 2013), Resources and Capibilities of Toyota. [Online] Avaialble from:
www.studymode.com/essays/Resources-And-Capibilities-Of-Toyota-1464747.html
[Accessed Oct 2014]

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 Strategic Management Insight (Feb 2013), SWOT analysis of Toyota, [Online] Available
from: http://www.strategicmanagementinsight.com/swot-analyses/toyota-swotanalysis.
html [Accessed Oct 2014]
 Toyota Company (2010), Toyota Motor Europe Corporate Site [Online] Available from:
http://www.toyota.eu/about/Pages/heritage.aspx?cat=6 [Accessed Oct 2014]
 Toyota Company (2012), Toyota European Sustainablity Report 2012 [Online] Available
from: http://www.toyota.eu/SUSTAINABILITY/Pages/default.aspx [Accessed Oct 2014]
 UK Essays (2009), PESTEL analysis of automobile company Toyota, [Online] Available
from: http://www.ukessays.com/essays/marketing/pestel-analysis-of-automobilecompany-
toyota-marketing-essay.php [Accessed Oct 2014]
 UK Essays, Value Chain Analysis Focus On Toyota Motor Thailand Marketing Essay,
[Online] Available from: http://www.ukessays.com/essays/marketing/value-chainanalysis-
focus-on-toyota-motor-thailand-marketing-essay.php [Accessed Oct 2014]

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Question 4 :

To be successful in a foreign market, companies must fully understand the foreign environment
in which they plan to operate. By using guidelines on Strategic Management, discuss on how
opportunities and threats applies in the global marketplace.

pg. 1
Introduction

Globalization combined with new communication and information technology created new

opportunities for those who took advantage of them; while they constituted a treat for those who

did not adopt them. Moreover, globalization increased competition among companies making

some of them lost their market shares. To ensure their survival, companies are finding new

market by exporting their local ability abroad. This essay identifies challenges and opportunities

to be considered when planning an international business venture. Before presenting those

challenges and opportunities, I first explain opportunity and business venture.

Opportunity

In entrepreneurship world, the word “opportunity” is very used, but it is not well defined.

For instance, Osman and Murat (2011) defined “entrepreneurs as individuals who exploit market

opportunity through technical and/or organizational innovation”. Samuel, Mary, and Damary

(2012) considered that “an entrepreneur perceives a business opportunity and chooses to pursue

this as an active career”. Thokozani (2011) defined entrepreneurship as an activity that involves

the discovery, evaluation, and exploitation of opportunities to introduce new goods and services,

ways of organizing, markets, processes, and raw materials through organizing efforts that

previously had not existed. Robert (2004) declared that there are many definitions of the term

opportunity and attempted define it as a means of generating economic value (i.e., profit) that

have not previously been exploited, and are not currently being exploited by others. According

to Thomas (2019), an opportunity is a set of circumstances that makes it possible for something

to be done, a chance for progress.

pg. 2
 According to Delia (2019), “opportunity can be seen as a favorable situation or a chance

to achieve something an individual had as a desire or as a thought / idea”. Based on these

definitions, I can define opportunity as an external event that occurs or identified, if exploited,

procures an economic advantage to the person (individual/company) that exploits the

opportunity. An opportunity helps to reach one’s objective; it can be considered as a mean/tool to

reach to the objective. An event can be an opportunity in one side and be a treat in the other side.

For instance, coronavirus is a treat in China and in some other countries, but for pharmaceutical

companies, it is an opportunity. HIV/ AIDS is a treat in some countries, but in companies

producing treatment it is an opportunity. Business encouraging legislation is an opportunity for

investors. Growing demand is an opportunity for a company. These opportunities help

companies to achieve their objectives (profit maximization).

Business Venture

Entering on international market is one of the difficult strategies a company can take. It is

a strategic decision, because it can affect positively or negatively the future of the company. It

constitutes to put together resources with a local company to produce goods and services for

market. According to Maria (2009), international joint venture enables firms to access the

complementary resources and capabilities of each other, which they need to achieve economies

of scope and/or scale and to bring new products, services or technologies into market

faster, more efficiently, more reliably and more cheaply than what they could do alone or using

other methods. Business venture procures advantages for the companies deciding to work

together. Bojan, Renata and Nikola (2018) indicated that the internationalization drivers factors

are individual (business experience, motivation to become an entrepreneur), organizational

pg. 3
(product strategy, newness of technology) and firm - environmental factors (location, type of

sector). They added that companies that use technology more aggressively were more likely to

engage in international activities. Technology innovation plays a crucial role in achieving

competitive advantage. In nutshell, business venture helps to reduce risk for the companies, as

risk is shared among those companies working together.

Opportunity Consideration

Any strategic decision must be taken based on a lengthy process of information analysis for its

strategic management. Business Environment is made by different components in interaction

such as: customers, supply and demand, management, clients, suppliers, owners, government,

technology, social trends, market trends, economic changes, etc. As business international

venture engages the company at long term, many aspects must be taken in consideration before

engaging in such process. Thus, a company must make a fundamental analysis regarding its

strengths, weaknesses, opportunities, and treats. The two first analysis (strengths, weaknesses)

are constituted by company internal environment, while the two second other elements

(opportunities and treats) are constituted by company external environment. The analysis must

be done at local and in the country where will be located the business joint venture. Products

and services will be evaluated in term of strength and weakness. The opportunity can be

provided by the availability of skilled labor in the country of the joint venture, low cost of labor,

a country presenting a favorable tax and regulatory environment, the proximity of suppliers or

consumers, the quality of infrastructure like transport (Paul& Dorron, n.d).

According to Cynado (2019) external business environment is made by political

environment, legal Environment, socio-cultural/religious/ethical environment, economic

pg. 4
environment, technological environment, and natural environment. A deep analysis of these

environments can lead to an opportunity for a company. A country with high economic growth,

with high wages level, with liberalization, without corruption, with reduced procedures, with

infrastructure, for instance, can be attractive for foreign investors. In addition to this analysis,

a company should analyze: macro-economic conditions through gross domestic analysis,

revenue per person, wages, political stability and priorities, population growth, inflation,

exchange rate, balance of payment, local infrastructures, availability of resources (raw

material, skilled labor, tax politics, tariff and non-tariff barriers, cultural aspects, political

and legal risks (in term of favorable or unfavorable regulation), security risks, etc.

Challenge Consideration

Entering on new market presents many challenges to be taken in consideration. The first

challenge is related to the choice of a good partner. The challenge is a concern not only with

joint venture but also in same local partners. Based on my experience, I saw many associates

who created a company, but after a certain period they divided causing the failure of the created

company. The second challenge is based on the multicultural management. Management in

intercultural environment needs a strong leadership for the success of a company. The third

challenge is based on the management. Clear objectives and strong control must be established

for the new venture. Another problem is based on the corporate strategy. There must be a better

coordination among local, regional, and international strategy for the whole company. Other

consideration is based on social responsibility. This aspect must be taken in consideration while

managing the new venture. There must be a clear responsibility and flexibility in the joint

venture management. Other aspects that constitutes challenges are related to country risk as we

pg. 5
mentioned it in opportunity consideration (political, legal and environmental concerns),

variation in the local currency, commercial risk, organizational structure, compliance with

the local regulations, payment aspects, supply chain complexity and risks of labor

exploitation, worldwide environmental issues

Conclusion

The companies should make a better analysis of their strengths, weakness, Opportunities and

treats before engaging in business venture. If professionally managed, this strategy constitutes a

competitive advantage for both sides. Even though joint venture has advantage, companies

should consider changes mentioned previously.

pg. 6
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