International Strategy Issues - Free Essay Sample

Introduction

Few companies manage to operate and dominate international business scenes. In an article writing for Financial Review, Featherstone (2017) quoted James Abela stating that companies that survive the international domain fare on a scale of 1:5. Abela is a manager with Fidelity Future Leaders Fund, and he runs a portfolio that traverses several nationalities. Such caution from professionals in the world of business intones the uncertainty and challenging business environment through which international companies have to maneuver to report profits at the end of the financial year. This report evaluates the international; business environment for Macquarie Group, an economic entity that provides its clients with financial knowledge and advice. This report bases its discussion on global competition and global positioning in emerging countries.

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The Company

Macquarie Group Limited is a public company listed in Australia Securities Exchange and trading under the name ‘ASX: MQG.’ Company headquarters are in Sydney, New South Wales, and the company employs more than 15,800 people in over 31 nations across the globe (Macquarie Group Limited, 2020). This enterprise is an investment bank dealing with financial advisory in asset management and mergers and acquisitions. According to the company website, The Macquarie Group Foundation has over $A 606.9 billion worth of assets under its control and management. Since the founding of the company in 1969, the institution reports profits in billions (Macquarie Group Limited, 2020). The company employs knowledgeable professionals worldwide to help top management strategize and duly expand the company to overseas markets and, most importantly, emerging markets.

Challenges and Strategies of International Operations and Expansion

Tallman, Luo, and Buckley (2018) stated that international markets are subject to regional market environments. International and multinational companies (MNC) should consider their competition and global positioning about clients' nature in international markets. Foreign and multinational companies have varied cultural challenges that they have to consider. The companies should ensure that they maintain operational standards to survive and thrive in global markets. To do so, Macquarie Group Limited has to gauge competition and realign its global competitive strategy to achieve optimum performance levels. As a result, company management has to ensure that competitors’ marketing approaches do not outshine the firm in the eyes of the clients. At the same time, the company should present a prominent market presence and operational capability that align with corporate goals and objectives.

Global Competition

The international scene is rife with stiff competition. Other investment groups such as Berkshire Bank, Deutsche Bank, and the German American Bancorp Group compete with Macquarie Group Limited for employee satisfaction rates. Studies show that employees are the greatest asset to a company (Muthuku, 2020). However, amidst great economic hardships such as recessions and general economic slump down, most companies are faced with complex decision making concerning their workforce. These companies consider downsizing their workforce against the company’s profitability to retain employees in these tough times. As such, multinational companies’ managements have an arduous task involving balancing between employees’ social wellness, corporate social responsibility, and the financial standing of the organization.

Global Positioning

Macquarie Group Limited has a challenge in positioning itself in the global market environment. Most multinational companies are rushing to emerging markets (Sinha and Seth, 2018). That is where the companies can find new consumers and clients for their products and services. However, effective business operations in these markets are rife with government interference and unstable market conditions that pose a challenge to the operational efficiency of the companies. Most companies in competition with Macquarie Group Limited are forming mergers with competitors in emerging countries such as Brazil, South Korea, and Mexico. According to market projection, emerging markets present significant market opportunities in the foreseeable future.

Sustaining Global Competition

Profits are declining as consumers lose their disposable income. Krammer (2019) reported that the amount of money in circulation is declining, and so is the disposable income of individuals to invest. Subsequently, people’s purchasing power is also on a downward spiral. With vivid examples of companies that had to close shop due to the COVID-19 pandemic, it is worrying that the economy will remain in equilibrium. International companies, therefore, are faced with an ethical dilemma to reduce business operations in countries where COVID-19 has hit hard and subsequently cause people to lose jobs, or to keep the said employees in the payroll and lose a significant portion of retained earnings. Whatever the direction the top management chooses, Macquarie Group Limited should, therefore, consider that the move has a significant impact on the company’s competitive standing and perception from governments and clients across the globe.

Strategic Global Positioning

Macquarie Group Limited is a merger and acquisitions company. This statement is evident from the company website and history since its establishment in 1969 by Hill Samuel and Co Limited (Macquarie, 2020). In 2016 the company acquired Esanda, a finance dealer portfolio from ANZ Banking Group, and in 2017 acquired UK Green Investment Bank, a public limited company from HM Government (Macquarie, 2020). These moves show the tendency of Macquarie Group Limited to penetrate new markets through mergers and acquisitions.

As such, the company should continue in its acquisition spree but be conscious of over expansion. Despite new emerging economies being a hotbed for new markets, these countries have dynamic business environments that can be hard to withstand. Macquarie Group Limited should, therefore, expand to markets that have a proven record of stability and profitability. Such markets include Brazil, Mexico, and parts of Sub-Saharan Africa. The company should invest in these economies and ensure that its clientele is well catered for by the firm’s workforce.

Conclusion

Not only should companies in the finance industry closely monitor international trends, but all MNC’s should make it their business to analyse global trends and effectively realign their business strategies. Competition does not only relate to product and service quality but also about how companies treat their employees. On the same, remuneration for company staff in emerging and less developed countries should commensurate to fellow staff in developed economies. This consideration will boost employee morale and effectiveness will improve at the workplace and transcend to the social well-being of the employees and their families, and resultantly improve the company’s image in the eyes of the public and the foreign governments as well. These activities will create a conducive business environment with little or no interference from the local authorities in countries where Macquarie Group Limited and other multinational companies have a footprint.

References

Featherstone, T., 2020. Australian Companies Expanding Their Wings Offshore. [Online] Australian Financial Review. Available at:
https://www.afr.com/wealth/investing/australian-companies-expanding-their-wings-offshore-20170809-gxs9jp

Krammer, S.M., 2019. Greasing the wheels of change: Bribery, institutions, and new product introductions in emerging markets. Journal of Management, 45(5), pp.1889-1926.

Macquarie, 2020. History | Macquarie Group. [online] Available at: https://www.macquarie.com/au/en/about/history.html

Macquarie. 2020. Macquarie Group Limited | Global Financial Services. [Online] Available at: https://www.macquarie.com/uk/en.html

Muthuku, M., 2020. Soft HRM Model: Human Capital as the Greatest Asset for Organizational Performance. Journal of Human Resource & Leadership, 4(2), pp.14-29.

Sinha, M., and Sheth, J., 2018. Growing the pie in emerging markets: Marketing strategies for increasing the ratio of non-users to users. Journal of Business Research, 86, pp.217-224.

Tallman, S., Luo, Y. and Buckley, P. J., 2018. Business models in global competition. Global Strategy Journal, 8(4), pp. 517-535.