Presentation Of International Retailing: Arti Devi

Presentation of international retailing Arti devi

What is International Retailing? Retail internationalization is the transfer of retail operations outside the home market. It involves the international transfer of retail concepts, management skills, technology and even the buying function. Based on this, a definition for retail internationalization can be as follows: “the process of a retailer transferring its retail operations, concepts, management expertise, technology and/or buying function across nationals borders”.

Factors involved in International Retailing

A careful examination of the definition for international retailing reveals certain concepts which are key to the process of international retailing. These include operations, concepts, management expertise, technology and buying. 1. Operations Retail internationalization is the expansion of a retailer’s operations into a foreign market. The store format may or may not be similar to that in the home market. Identical operations may well trade under a different brand than that operated in the domestic market. This decision is largely dependent upon the method of market entry. On the acquisition of a foreign retail operation, the new owner may retain the original brand if it is a respected brand.

2. Concepts Retail concepts lay emphasis on innovations in the industry. The self service concept first emerged in California in 1912. Later, the concept was followed in a number of international markets in the next two decades. Similarly, the convenience store format which originated in USA in 1920s was taken up in Europe in the 1970s. Now, the focus in on globalization. The retail concept currently by operated by retailers may also become successful in a foreign market. The internationalization of “the body shops” popularized the idea of environmentally sensitive products. The success of such concepts have been adopted by competitors spawning of similar retail offers in natural toiletries and cosmetics. 3. Management expertise The transfer of concepts is linked with the internationalization of management expertise. This encompassed the internationalization of skills and techniques used in the management of the business. Formation of alliances is an important means of transferring management functions. Retail alliances are prompted by operational synergies, buying economies of scale, increased retailer power over manufacturer, the development of retailer own labels and joint defense building against the market entry of foreign competitors. International retail alliances are the direct outcome of growing globalization. Successful alliance management rests on close cooperation, communication, synergistic performance measures and an agreement to common objectives.

4. Technology Retailers who operate internationally require the use of technology advances. Use IT in central management of retail operations has improved its decision making in areas such as finance, personnel and logistics. Technologies such as EPOS (Electronic Point of Sale) are also used at operational levels of retail stores. Generally, internationalization will employ relatively advanced technology. It is preferable for retailers to move into a market where they have a technological advantage. Technological advantage in turn, would confer a competitive advantage over indigenous retailers. 5. Buying The proportion of consumer expenditure on retail is considerably important. As the population becomes more wealthy a greater proportion of income is spent on non-essentials. Only a small percentage of total spend goes on food and clothing. A higher share of spending power is directed towards non-essentials such as holidays and leisure activities. In retail operations the function of buying is indeed sourcing. Sourcing has had the greatest impact in terms of internationalization. Alliances are formed to attain efficiency and leverage in sourcing. International retailers use their collective influence with suppliers to reduce prices and improve quality. For example, the European alliance EMD has stated exerting the combined purchasing power of its members as its primary objective.

Reason for Internationalization of retailing

Hollander proposes five reasons for retail internalization.

Inadvertent internationalization, Non-commercial motives, Commercial objectives, Government regulations, Capitalizing on existing or potential sales opportunities.

1. Inadvertent internationalization: Inadvertent internationalization is due to political instability. Sometimes, changes in the demarcation of national borders take place. This may mean a retail company is operating in a different market although its stores have not physically moved. Changes in Eastern Europe are the examples of this kind. The US retailer KMart entered Czechoslovakia. Within a year it found itself operating in two district markets, the Czech and Slovak republics. 2. Non-commercial reasons: Non-commercial reasons of political, personal, ethical or social responsibility have motivated retailers to move into foreign markets. For example, retailers foray into markets for reasons of social and environmental responsibility. Notably, the Body Shop’s “trade not aid” sourcing policy helped develop infrastructures in order to stabilize economics.

3. Commercial objectives: It include entering the market which gives retailers competitive edge. Gaining important market knowledge before moving in on a larger scale learning about innovations may be other commercial objectives of retail internationalization. 4. Government regulations: Government regulations influence the choice of market by retailers. It is not a prerequisite to internationalization. Retailers prefer the markets with fewer restrictions on their growth. Severe regulations at home push retailers into the international arena. Loi Royer in France severely restricted the development of large out of town stores. As a result the French hypermarkets turned to less restrictive markets to continue their expansion. 5. Growth potential: Retailers seek the best growth potential possible. If they perceive profitable opportunities in overseas markets, they are likely to capitalize on them.

What is the meaning of Globalization? Globalization is the process of worldwide integration of economic, financial, cultural, environmental, and communication system Globalization refers to a scenario where countries and nations around the world becomes inter-connected and interdependent for meeting their needs, both internal and external, characterized by: ● advanced transportation system (road, sea, and air) between countries ● movement of capital between countries in the form of investments, ● cross-border transaction of goods and services, ● wide scale financial transactions between nations, ● easy migration, movement and settling up of people in foreign countries, ● inter-exchange of labor between countries, both skilled and unskilled, ● flow of raw-materials, semi-finished goods, finished goods, and services to foreign countries, ● flow of resources from one country to another, both material and human

What are the advantages of Globalization? The advantages or merits of Globalization is discussed below in points: ● Globalization broadens our minds. We feel that we belong to one world and we are a part of one nation, namely, humankind. ● Closer contact with foreign people make us quite familiar with their manners, habits, and customs. The cultures become richer as they come into contact with each other. ● Globalization help us shake off narrowness. We get the chance of comparing our country with other countries. In this way, we enrich our manners, customs, and habits. ● Globalization help us fight illiteracy and promotes education. It gives us clear knowledge of facts and things. ● Globalization help us shed or combat the burning social issues such as childlabor, dowry, etc.

What are the disadvantages of Globalization The disadvantages of demerits of Globalization is discussed below in points: ● In a way, globalization has contributed towards increasing the gap between the rich and the poor. Rich and wealthy people are able to exercise more control over the national resources through the application of science and technology. ● The local industries could not compete with their global counterpart ● The global economy is now inter-connected. The economic downfall of one major economic nation adversely affects the entire global community. Globalization has caused specialization of labor. On one hand, there is an increase in demand for skilled labors. However, it has caused enough disadvantages for the unskilled labor group. There are few employment opportunity for unskilled labors in a global environment.

● The adverse effect of globalization is not restricted to financial and economical imbalance. Last century has witness spread of diseases from one country to another country. Diseases spread to local places when a diseased person from a foreign country comes in contact with local inhabitants. ● Globalization is responsible for the emergence of large number of multinational companies. Very often, it is found that they do not provide good working condition to the workers. Further, forests have been cut for setting up large industries. The industrial discharges have widely contributed towards environmental degradation. ● Globalization can pressure us to act in a certain way. ● The more technologically advanced countries are able to sell their products to less-developed countries. Hence, the less developed countries become dependent upon the superior nations.

Definition of Internationalization: "Internationalization of Higher Education is the process of integrating an international and intercultural dimension into the teaching, research and service functions of the institution“. "(knight and De Wit, 1997). "Internationalization at the national, sector, and institutional levels is defined as the process of integrating an international, inter- cultural or global dimension into the purpose, functions or delivery of postsecondary Education“. (knight, 2003) " … the purpose of internationalization of higher education is to enhance students' ability to engage in job-related problem solving and decision making in ways that reflect knowledge and respect for other cultures". (Huang & Lin 2007, p 69)

Advantages & disadvantages of Internationalization: ● ● ● ● ● ● ● ● ● ● ● ●

raises faculty and students intercultural awareness. improves programme outcomes to meet requirement of the global market. enhances graduates' national, regional, and global mobility. enhances faculty members mobility and expertise. helps students, and faculty become global citizen. contributes to improved measures of curriculum design implementation, and modification. enhances the visibility of students, faculty, and institutions improves language skills of students enhances the international character of research contributes to the economics of education improves the nation’s cultural, economic and political visibility contributes to the understanding of other peoples religions and culture.

Disadvantages of Internationalization

brain-drain of students and faculty of developing countries. benefits of Internationalization are sometimes confined to outstanding students and faculty. weakening of national and regional engagement of students and faculty. adverse effects on the job market (cross-border education). elitism of graduates from developed countries. acculturation and loss of indigenous culture and values.

Why Do Companies Go International? Companies go international for a variety of reasons. In general, companies go international because they want to grow or expand operations. More specific motives include generating more revenue, competing for new sales, investment opportunities, diversifying, reducing costs and recruiting new talent. Going international is a strategy that is influenced by a variety of factors and is typically implemented over time. Sometimes, governments will incentivize expansions into global markets. ● Improving Profit Margins ● Competing for New Sales ● Diversifying the Business ● Recruiting New Talent