Economic and Political Influences on Business

Part A

1.0 External issues and trends

There are many external issues which can affect the internal business functions of the company. The economic condition of the country can affect the financial structure of the company. Political conditions of the country can also be beneficial or weakness of the company. Moreover, there are many factors which can be effective for the business functions of the company. Impact of global trends and environmental issues of Walmart and Flipkart are mentioned in the below section.

Walmart Inc.

This company has the stability of a political condition, which is a bright opportunity for the company. Political support helps to maintain globalisation related factors of the company. In addition to this, there are many political pressures on the company, which is a major threat to the company (Colacicco, 2018). Moreover, political pressure is forcing them to increase wages, which is increasing the company's expenses. The Company also faced different kinds of issues related to management policies. The company was following a traditional approach for achieving its target, but it needs to be improved for implementing change within the organisation. In addition, two days, there was a lack of collaboration within the senior and junior management team.

Flipkart Group

The company has faced different kinds of challenges when they implement some changes within the existing functions. The main challenges of this company were related to workplace issues, market competition, excessive working hours and sales issues. While implementing change management, the company has faced these challenges, which negatively affected the organisational behaviour (Harisha & Archana, 2018). The employees of this company became aggressive because of a non-flexible working environment, and the employees were unsatisfied in their work. In addition to this, while upgrading the business, the company also faced some legal disadvantages and government issues. The cultural and social values need to be promoted by the company for satisfying all the customers. Moreover, the team of operations failed to solve different aspects of the issues of the organisation (businesstoday.in, 2020).

Internal Benefits and synergies

Organisational behaviour of Flipkart company is developed, and improved methods of communication are applied here. This is beneficial for maintaining a balance within the employees of this company. All the employees get proper motivation from their higher authority because the internal business atmosphere is developed. On the other hand, Walmart also provides proper training to all its employees for satisfying the customers. Employees of Walmart follows their hierarchies orders, and they get proper support from them whenever they need it. Flipkart organises some festive offers for the customers, and a lot of discounts are given to the buyers (Colacicco, 2018). The company properly adjusts the prices of different products to attract customers. In addition to this, the company also applies different kinds of marketing strategies for increasing the sales rate. Apart from this, there are specialists who attend customers and give them high-quality customer services. The hierarchy of Walmart properly maintains the quality of the products. On the other hand, the higher authority of Flipkart properly looks after the customer-related services and always try to enhance that. Apart from this, Flipkart also delivers products within a short time, which is more attractive to all the customers of Flipkart (Luo, 2017). In addition to this, if there are some product related queries or refund issues, Flipkart properly checks all the issues and tries to solve them within a short time. Moreover, it can be stated that there are many benefits these companies provide to their customers. There are many facilities provided to all the customers which are the most attractive thing to them. So it can be stated that these developed strategies and innovation in business helps these two companies business in different regions of the world. If all the employees are happy and satisfied with their work, then they can increase the productivity of the company and finish their task properly.

2.0 Entry Mode

Recently, Walmart has announced that it purchased 77% of the shares of Flipkart, which costs around $16 billion. According to the reports, this is the greatest deal in the e-commerce business, and it will provide growth to Walmart company. Walmart has followed an FDI type of entry mode to enter in the Indian market (Jones, Jones & Vasgaard, 2020). The company has invested a large amount for developing the business. In addition to this, Walmart acquired a huge share of Flipkart for enhancing and expanding the business in different regions of India. This is a bright opportunity for the company, and it will provide a huge amount of profitability to this company. Walmart is a multinational company which followed a developed strategy to enter a foreign market.

Flipkart and Walmart formed a partnership which will provide long term benefits to these companies. They share some amount for investing in the company, and most of the investment is made by Walmart. Along with that, the business risks need to be handled by both of these two companies. There are some legal restrictions which are followed by both of these two reputed firms for enhancing the business profitability. These two companies share control and ownership of the business. Different approaches are made by these companies for reducing the risks of the company (LeCavalier, 2016). FDI is essential to form a local partnership with a foreign company. In addition to this, this is too saturated and competitive for entering a new market. Both of these two companies gathered proper knowledge about government policies and local culture. The needs of the customers were thoroughly analysed and described to the foreign company for enhancing the business by increasing the sales rate.

Risk analysis

By choosing the joint venture type entry mode with Eko, Walmart includes some major business risks. There are two different types of joint ventures which can be followed by signing a contract. These are Equity type of joint venture or contractual type of joint venture. According to the reports, Walmart directly signed a partnership with Eko for enhancing the business in India (Mehra, 2017). There are some financial services provided by this company, along with some technological services. Some audiovisual multimedia are produced by this company which is attractive to the customers of India. On the other hand, the company produced some interactive type of multimedia which is quite attractive to the customers. Moreover, there are more business risks associated with Eko than Flipkart. Unlike Eko, Flipkart serves different kinds of products to the customers, and it is well appreciated by all the customers of India. This e-commerce business of Flipkart is more popular than Eko in India. Eko includes financial risks and market risks. So, it can be stated that there are more risks of Eko than Flipkart while doing business in India. Moreover, the risks are lower than Eko, and it will provide more growth and profitability to the Walmart company. Hence, the risks associated with Walmart and Flipkart partnership is mentioned below.

3.0 Corporate and national cultures

Corporate culture is the behaviour and beliefs followed by any firm for analysing the behaviour of the company. It is essential to understand employee behaviour and international management for handling all the business functions. Moreover, Walmart properly maintains the market, clan, adhocracy and hierarchy of corporate cultures. Though the market culture is developed by the company needs to improve its adhocracy culture for enhancing business profitability. On the other hand, hierarchy culture is also improved, and the management team properly tools responsibility to improve the business functions. On the other hand, the hierarchy culture of Flipkart is significantly developed than the other e-commerce businesses (Polisetty, Manda & Naveenan, 2019). Proper motivation is present in Flipkart, which is the essential thing of employee satisfaction. Companies get a lot of benefits because of collaboration in work. These two companies properly follow global trends and satisfy customer demands. Apart from this, there are a bunch of beliefs, behaviours, customs and norms present, which helps to develop the national culture of the business. It is essential to properly manage the practices of the companies. Moreover, the national culture of the business is properly followed by Flipkart and Walmart for enhancing internal and external business functions. These cultures help to prevent some sort of risks of the business and provide proper growth and profit.

Flipkart also collects customer feedback for understanding their needs and preferences. In addition to this, any kind of critical issues can be identified properly by collecting feedback from the customers (Satnalika, 2016). This helps to enhance customer services, and it is beneficial for satisfying the customers by fulfilling their needs. Product costs are also adjustable in this company, and that is why the company gives a lot of offers to all the customers. There are many discount vouchers given to all the customers, which is beneficial for the company to increase the sales rate. In addition to this, it is attractive to all the customers because they get their required product in a short time within an affordable budget. If all the customers are satisfied with the services provided to them, then it will be beneficial for the company to expand their business and get more profit from new countries. There are some legal restrictions which need to be followed while making foreign investments. Moreover, joint ventures decrease the investment rate, which needs to be provided by a foreign firm. So, risks are reduced by following joint ventures for expanding the business (qz.com, 2020).

Impact

According to the above discussion, it can be stated that corporate culture strongly influences the economic performance of a company. In addition to that includes a polarising impact on the financial structure of the company, which is essential to provide positive financial results. Apart from these cultural factors also help to enhance different kinds of functional areas of the business such as distribution, sales and marketing. Marketing strategies could be improved by having a developed culture of the company. Moreover, as per the discussion, it is clear that Walmart and Flipkart have developed a corporate culture. The corporate culture of Flipkart is better than Walmart, which is beneficial for both of these two companies as they have signed an agreement (ROSADO-SERRANO, 2018). Improving corporate culture is essential for enhancing the business and developing the sales rate and distribution channels (Bei, 2019). The internal business condition of Walmart and Flipkart is improved, which helps to increase the productivity of the company. The management of supply chains can be improved by having a developed corporate culture. So it can be analysed that the corporate culture of these two companies has a positive impact on financial performance, and it will help these two companies to achieve their goals.

4.0 Possible effects of Exchange rate

Change in the exchange rate can highly affect the business functions of Walmart. A devaluation can make cheaper exports which is beneficial for the exporting companies. On the other hand, companies need to import all the raw materials by expanding the high cost of import. On the other hand appreciation in export is expensive and it also decreases the competitiveness of all the exporting companies. If the company imports products at a low price and sells the product at a high price, then it will be beneficial for the company. However, if the importing cost increases, then it will affect the financial stability of Walmart in a negative manner. The economic growth of the company increases by depreciation, but it will negatively affect the foreign exporters or any tourist industry (Shukla, 2016). So it can be stated that depreciation can negatively impact on Walmart. In addition to this if the export cost increases then the company needs to increase the product cost and service cost. It will affect customer satisfaction policies because the company will fail to White products in an affordable range. So, the exchange rate includes both positive and negative impacts on the financial condition of the company. Therefore the company is dependent on the change of exchange rate, which can be beneficial or threatening for the financial structure. For example, if Walmart exports goods at a low price, then the company can adjust the prices of products and provide products in an affordable range. The customers will also get a lot of benefits if the exchange rate decreases. Moreover, it is the duty of the finance department of the company to properly prepare a budget plan for calculating the Company expenses and for trusting the prices of the products. Proper cost analysis is also essential for preparing the budget report of the company. On the other hand, changing the exchange rate is beneficial for the company if the importing cost decreases. The financial department of the company needs to properly look after the market statistics and analyse the import and export cost. It will affect all over the economic condition of the company, and the budget needs to be adjusted as per the new exchange rate. Prices of the shares also go up and down because of these ever-changing importation and exploitation costs. So, proper analysis of the financial structure of the country is essential before expanding the business into a new religion. Different kinds of statistical tools can be used by this company for understanding the exchange rate and its impact on the financial performance of the company.

Part B

Specific aspects

Globalisation is a new context of academic trends and economic trends of the 21st century. There are different kinds of practices and policies which need to be followed by these companies for expanding the business in new locations (Pham, 2018). There are many aspects of internationalisation which have been chosen by Walmart and Flipkart group for expanding the business in India. Moreover, these two companies focused on three strategies of internationalisation for expanding the business in India. These strategies are mentioned in the below section.

International strategies

The cost of the products are reduced for attracting the customers towards the new brand; It is effective to enhance the brand value. The brand name becomes popular among all the citizens of the country if the company provides products in low range. Apart from this, if the company is giving a high amount of offers and discounts, then it also becomes a centre of attraction for all the customers (Shukla, 2016). Therefore, these kinds of international strategies are applied by the Walmart and Flipkart group for increasing the sales rate of the company.

Global strategies

Global trends are followed by this company which helps to attract the customer towards the new brand. In addition to this, the reputation of the company also developed by applying different kinds of global strategies. For example, Walmart and Flipkart produced a lot of new products which are on-trend (Subhashree, 2019). Customer services were enhanced, which is medical to improve customer satisfaction policies. On the other hand, the softwares applied by these companies have developed and uploaded. The developed properly look after to upgrade the softwares and applications for attracting the customers. There are some standardised products provided by these companies in selected countries. Some special discounts were given to the customers, which is the most attractive thing to all the customers of the company.

Multidomestic strategies

Apart from this, some multi-domestic strategies are applied by this company which is also an attractive thing to the new customers. The company customised its product ranges and services for innovation (Mehra, 2017). This innovative idea helps to secure the entry mode chosen by the company. In addition to this, it also decreased the risks of the company, which is the essential thing in business as it helps to maintain sustainability in business.

Justification

The current strategies applied by Walmart and Flipkart group is developed, and it will be helpful for these two companies to earn a huge amount of profitability. Core Company trolley work to enhance their business functions, and the organisational culture is also developed by applying several strategies. There are international strategies and trends followed by this company to get a positive response from the target market. In addition to this, multi-domestic strategies also helpful for customising the services and the products of this company while conducting operations within the foreign market (Zheng, Zhang & Song, 2019). Apart from this, a global strategy helps to adjust the cost of the products, which is attractive to all the customers because customers can buy their products in an affordable range. Moreover, it can be stated that the internationalisation path chosen by this company is improved and undeveloped, which is beneficial to achieve the goals of the company. Proper training is given to all the employees for reducing the internationalisation challenges and expanding the business in different areas of India. In addition to this, the company properly analyses the target market and the customer demands for increasing the sales rate. The employees of Walmart properly looked after to satisfy the customer by fulfilling their names which is beneficial for the company to achieve their target in a short time.

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