Globalization has influenced business operations as it creates opportunity for utilizing and sharing technology, knowledge, behavioral norms, and values that enhance development. Changes resulting from globalization rapidly impacts the current generation, particularly as a result of innovation promoted by information technology. Pret A Manger is composed of experienced leadership team that formulates strategies meant for development. In providing its quality services, the company has ensured that it complies with both local and international strategies while also aligning with market requirements to achieve sustainable development. Thus, the objective of the study was to assess the effects of globalization on the business strategies of Pret A Manger.
The study utilized a qualitative methodology design to understand a particular phenomenon affecting strategy management. Both primary and secondary data were used to get more insight on the concept of globalization. The primary data was gathered using a semi-structured interview and were analyzed through content analysis. Based on the findings, it was concluded that globalization actually impacts strategic management of the firm. Due to globalization, Pret A manger has diversified its channels and marketing strategies in order to maintain customer satisfaction. The study also found that due to globalization, the expectation of consumers has increased thereby intensifying competition levels in the market. Thus, the study recommends that environmental scanning should be conducted continuously to ensure that strategies adopted aid in the implementation of quality services.
Table of Contents
ABSTRACT. 2
CHAPTER ONE: INTRODUCTION.. 5
1.1 Introduction. 5
1.2 Research Background. 7
1.3 Aim of the study. 8
1.4 Research questions. 8
1.5 Research objectives. 9
1.6 Significance of study. 9
1.7 Dissertation structure. 9
CHAPTER TWO: LITERATURE REVIEW... 11
2.1 Introduction. 11
2.2 Theoretical framework. 11
2.2.1 Resource-based view theory. 11
2.2.2 Open Systems Theory. 12
2.3 The concept of globalization. 13
2.4 Strategic management 14
2.4.1 Environmental scanning of strategies. 14
2.4.2 Strategy formulation. 15
2.4.3 Strategy implementation. 16
2.4.4 The control and evaluation of strategies. 18
2.5 Effects of globalization on business strategies. 19
CHAPTER THREE: METHODOLOGY.. 24
3.1 Introduction. 24
3.2 Research Approach. 24
3.3 Research Strategy and Philosophy. 25
3.4 Types and Sources of Data. 26
3.4.1: Primary or Secondary. 26
3.4.2: Quantitative or Qualitative. 26
3.5 Data Collection Methods. 27
3.6 Population and Sampling. 28
3.6.1 Population of Research. 28
3.6.2 Sampling Methods. 28
3.7 Data Analysis. 29
3.7 Reliability and validity of study. 29
3.8 Ethical Issues in Research. 29
CHAPTER FOUR: FINDINGS AND ANALYSIS. 31
4.1 Introduction. 31
4.2 Demographic information. 31
4.3 Effect of globalization on the company’s business strategies. 32
4.4 Strategic response to the effects of globalization. 34
4.5 Effectiveness of Strategy Management at Pret A Manger 36
5.1 Introduction. 38
5.2 Summary of the findings. 38
5.3 Conclusion. 40
5.4 Limitations of the study. 41
5.5 Suggestion for further research. 41
Chapter One: Introduction
1.1 Introduction
Globalization has greatly impacted the way in which business is perceived and conducted. The effect of the global phenomenon on business activities is both extensive and pervasive and as such requires a review of the current approaches and business rule of thumbs (Cullen and Parboteeah, 2010). For instance, an international business involves planning at different levels which require both local and global knowledge. Getting to understand the regulatory requirements at the local level is critical just like global consideration during the recommendation of strategic corporate goals (Hill, 2008). Additionally, local customs and cultural practices are significant and must be acknowledged when setting business procedures and operations. Contemporaneously influential strategic options, including events, constraints, and opportunities must be considered during the globalization of a business (Bartels, Buckley and Mariano, 2009). Without these modifications, the performance of a business could be affected.
The process of globalization results in new firm opportunities and challenges. According to Armstrong and Taylor (2014), one of the opportunities created by globalization is the possibility of accessing foreign markets that were initially impossible as a result of strict regulations, cost, and indirect barriers. Globalization has resulted in the increased chances of tapping resources like capital and labor and the engagement in global business networks which are more prevalent in diverse industries like textiles, automatic, electronics, and toys (Armstrong and Taylor, 2014). It is always a challenge to expand a business to foreign countries, particularly when there is stiff competition from domestic competitors. According to Bowen, Baker and Powell (2015), with globalization, firms are challenged to get a more efficient and streamlined while also extending their geographical reach of operations.
Globalization has always been defined by different scholars in various ways. The explanations and definitions of the concept include key terms such as economic, social, political, and cultural perspectives (David¸ 2011). There has also been a debate on the effects of globalization and the degree to which it affects societies and individuals. However, regardless of the different definitions, the recent technological and socio-economic results have greatly influenced how businesses are conducted including international business strategies. According to Thompson et al. (2008), strategy refers to the “management plan used to strengthen the position of an organization, achieve targets of performance standards, and satisfy consumers.” Hayes (2018) also argued that ‘strategy’ is the scope and direction of a firm through which resource configurations are conducted to meet the market needs whiles also fulfill expectations of different stakeholders. The main objective of business strategies is to define the vision, the mission, and the direction of an organization in order to maximize the profits while minimizing the possible risks.
Pret A Manger Company has been performing under a competitive management team that has a functional global agenda and strategy. Through its services, the company ensures it complies with local and international regulations while also managing its operations in a streamlined manner (Bowie, Buttle, Brookes, and Mariussen, 2016). To ensure effectiveness and efficiency in the strategy implementation, the company has organized its entities into different geographic areas including Asia, the Americas, and Europe. Over the years, the company has open over 374 shops in different regions. With a workforce of 8,875 people, the company has about 6,910 located in the UK, 281 in Hong Kong, 1,385 in the U.S, 30 in China, and 269 in France. One of the company’s reasons to internationalize was to enlarge its economy of scale; by increasing the number of shops worldwide, the company has been able to get lucrative deals with transport companies and food wholesalers.
1.2 Research Background
Globalization has created numerous opportunities to share knowledge, social values, technology, and behavioral norms within organizations, communities, and societies. Several social movements have been introduced to address issues associated with globalization, especially in developing countries. Pret A Manger Company receives several challenges due to globalization especially after it considered internationalization. The company has diverse consumers who are spread in different countries with varying regulatory frameworks. While providing its services, the company is expected to adhere to both local and international regulatory framework. Pret A Manger is complying with a strategic management approach to its activities regardless of the geographical location where the shops are situated (Bowie, Buttle, Brookes and Mariussen, 2016). Together with other challenges, the company’s operations have been affected.
A key aspect of Pret A Manger’s strategic management is its interaction with the environment. Scholars have found that globalization is a key element in identifying organizational environmental fit (Bowen, Baker and Powell, 2015; Hitt, Xu and Carnes¸ 2016). In the case of domestic firms that face global competition, the position of the industry presents even further challenge. According to the resource-based theory, a firm can draw its competitive advantage on its competence abilities and internal resources (Hitt, Xu, and Carnes¸ 2016). Considering the theory, a company is considered strategic if it utilizes its resources in valuable manner. To address the issues facing Pret A Manger, which operates in competitive economic environments, strategic orientation is important in order to exploit the existing resources for the purpose of competitive advantage.
Recent studies show that many businesses lack strategic implementation knowledge and as such there is need for more research on the area of strategic management. In particular, scholars have expressed the lack of implementation frameworks to be considered by companies amidst the fact that there is need for a conceptual model and details frameworks to help address the challenges of globalization (Wheelen, Hunger, Hoffman and Bamford, 2017; David¸ 2011). Similarly, studies have elicited the greatest interest on globalization; most of the literature only focuses on the implications of the phenomenon on international business with few considering the effect on business strategies (Dunning, 2014; Bowen, Baker, and Powell, 2015). By focusing this study on a specific international company, Pret A Manger, the implications of globalization on the business strategies can easily be addressed.
1.3 Aim of the study
The main aim of the study is to investigate the effects of globalization on business strategies at Pret A Manger Company.
1.4 Research Questions
The questions that guide the study include:
What are the effects of globalization on the business strategies adopted by Pret A Manger Company?
What measures are taken to control negative globalization effects at Pret a Manger?
How does strategic management influence Pret A Manger?
1.5 Research Objectives
Based on the questions directing the study, the key objectives include:
To investigate the effects of globalization on the business strategies of Pret A Manger Company
To identify the strategies adopted by Pret A Manger Company to respond to globalization effects
To determine the effectiveness of strategies management at Pret A Manger
1.6 Significance of Study
The study is aimed at improving the global performance of Pret A Manger Company as far as globalization is concerned. The finding would also be relevant to global food companies which would be able to improve their strategic management activities and streamline their current activities and processes that maximize performance. The findings of the study would also be considered valuable to scholars and researchers as it offers useful findings significant for further analysis on the impacts of globalization on business strategies.
1.7 Dissertation Structure
The study has been categorized into 5 different chapters. In the first chapter, the author highlights the introduction of the study including the aim of the study, its objectives, and significance on Pret A Manger Company and researchers. In chapter two, the concepts of globalization and its impacts on Pret A Manger Company are highlighted. The third chapter highlights the methodology of the study in which the data collection approaches, methodologies, and sampling techniques are presented. Chapter four and five clearly illustrate the findings and discussions of the study while providing recommendations. The structure is outlined below:
Figure 1: Research Design Diagram
Chapter Two: Literature Review
2.1 Introduction
In current chapter, the comprehensive review of past studies conducted on the globalization impact on business strategies, particularly strategic development is presented. Based on diverse researchers, analysts, authors, and scholars, the chapter presents the review based on the research objectives. Key concepts covered include globalization, implementation of strategy, globalized competition, and globalization impacts.
2.2 Theoretical Framework
Several studies have theoretically explored the concept of globalization strategies based on the context of business systems. The two theories that aid in the analysis of the study includes resource based theory and Open Systems Theory (OST).
2.2.1 Resource-Based View Theory
The resource-based view theory (RBV) was introduced by Penrose in 1959 with the perspective of mapping organizational competitiveness. Being that it has dominated the business sector for a long period, RBV is based on the ideology that organizational performance is directly influenced by resources and specific capabilities (Helfat and Peteraf, 2015). This philosophy has been supported by Silverman (2013) who emphasized on the fact that the theory summarizes the heterogeneity of a firm as a source of differential performance. In the context of RBV, companies are able to equally distribute their resources (Helfat and Peteraf, 2015). Thus, the best way to put the resources into proper use is by exploiting the available internal capabilities which attach the organization to the outside economic environment through a focused strategy.
By considering the continuous improvement of a company, some researchers argued that the theory offers a high level of continued performance through the promotion of supportive culture, regulatory changes based on company processes, and improvement strategies. By having competitive advantage resources, companies are able to expand their economic and geographical boundaries (Chang¸ 2016). Further, resources that add competitive advantage usually originates from the resources owned internally as well as those obtained from rational networks created through globalization. According to Kozlenkova, Samaha, and Palmatier (2014), there is a strong relationship between the RBV theory and globalization as a result of the rational networks which contribute to the entry to wealth creation. Since globalization creates a gain-pull from the scopes and scales of economies, companies are able to distribute their risks within a longer supply chain as well as outsource processes.
2.2.2 Open Systems Theory
The open system theory (OST) refers to a modern management theory that is designed to establish an innovative, healthy, and resilient communities and organizations in fast changing environments. The theory stipulates that an organization’s activities are impacted by the surrounding environment in which they operate (Khorasani and Almasifard, 2017). This involves the economic, social, and political factors which offer key resources that help to sustain an organization. As communities and organizations engage in businesses, they are able to change and influence their external environments, including being influenced by other external environments and changes (Hayes, 2018). This resulting two-way influence within and outside the organization is referred to as ‘active adaptive change. In order to increase company viability, open systems must have active adaptive relationships with the external environments (Khorasani and Almasifard, 2017). Such a system is expected to have an impact on the changing social values and cultural beliefs of the external environment over time.
2.3 The Concept of Globalization
The concept of globalization encompasses the course, causes, and the effects of trans-cultural and transnational integration of human beings with other non-human activities. Zahra, Rawhouser, Bhawe, Neubaum, and Hayton (2008) define ‘globalization’ as a group of political and economic processes which are derived from the dynamic nature of products and services based on the increasing structural differentiation. Although the concept is not new, it has far-reaching implications which directly influence the manner in which business is conducted. Globalization is considered a salient phenomenon in the millennium era, particularly as a result of the rising technological innovation (Dunning, 2014). According to Chang (2016), there are different types of globalization that can be witnessed in the society, including cultural globalization, technological globalization, political globalization, economic globalization, learning globalization, and cultural globalization.
International business strategies adopted by companies have evolved through globalization, resulting in sophisticated, a well-trained organizational team that can cope with changing business trends. Furthermore, globalization has contributed to the increased complexity in accessing foreign markets (Dunning, 2014). Global companies outsource several activities, including production, capital, distribution, and employees across the world. Organizational managers in different countries and cultures are expected to mold successfully at every corporate location in order to maximize on the benefits that results from corporate work. David (2011) argued that although many organizations rely on the parent-nation expatriates, the increased competition across the world does not allow for grooming of the expatriates or take a lot of time to acquire experience, multilingual skills, and global vision required for top leadership (David, 2011). As such globalization creates the platform for development of multinational and multicultural organizations which are able to effectively implement business strategies.
There are several drivers of globalization that affect business operations including technology advancement, political drivers, market drivers, cost, and competition. Technology has greatly affected globalization due to the improved communication and performance standards (Nandakumar, Ghobadian, and O'Regan¸ 2010). Innovative ideas in the transportation sector have revolutionized the business industry with most developments witnessed in the hotel sector and commercial aircraft since the 1970s (Wiersema and Bowen¸ 2008). Inventions in telecommunications and microprocessors have enabled effective communication and computing of data at affordable costs. In addition, the rapid growth of internet which is the latest technological driver has enhanced business operation through e-commerce and e-business. Many scholars have also considered political drivers as a major influencer of business operations (Nandakumar, Ghobadian and O'Regan¸ 2010). Trading rules and markets has been able to lower tariffs which influence foreign direct investments in different regions across the world. International institutions like the World Trade Organization and General Agreement on Tariffs and Trade have been created to facilitate equal trading possibilities through international trade standards. Companies are able to internationalize in countries where the political climate and economic rules are favorable.
The market is also a major globalization driver. If a domestic market gets saturated, the potential for growth and high revenue generation among businesses is limited. This results in the consideration of global expansion as one of the most effective organizational strategies that companies use to overcome the phenomenon. Nandakumar, Ghobadian, and O'Regan (2010) also asserted that customer needs have also resulted in the transfer of markets which has welcomed foreign businesses to invest in different markets. Additionally, there are opportunities that arise to use global marketing chains including e-commerce; these market factors also encourage globalization of businesses (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). Another factor identified by scholars to facilitate globalization is cost efficiency. Sourcing affordability and costs differ across different countries and several firms have taken advantage of these opportunities to venture in the foreign markets (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). Other cost-related factors that promote globalization include the global scale economies and rising costs of product development in the local market. It is, therefore, more common for companies to outsource their operations to countries that offer production activities at low costs.
Competition is also a major globalization factor. With a globalized economy, inter-firm competition increases which results in high competition for same customer base. Organizations are, therefore, forced to diversify their operations in other markets outside their geographical environment (Robson, 2015; Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). Another competitive aspect of globalization is the strong interdependences existing among countries; different nations which rely on imports and exports are more likely to engage in globalized trade. According to David (2011), increased competition across the world forces companies to acquire experience, multilingual skills, and global vision which can give them advantage over the competitors.
2.4 Strategic Management
Strategic management involves the specification of key organizational objectives and coming up with specific plans and policies to achieve the objectives while also allocating resources to aid in the implementation of the created plans. Managing strategies is done at the top management level, and is usually executed by the organization’s CEO and the management team (Crane and Matten, 2016). The management process offers the overall direction that influence other business processes. A strategy should be appropriate for the available resources, the objectives, and circumstances (Chang, 2016). An objective of corporate strategy is to put an organization in a position in which it is able to carry out its mission efficiently and effectively. In formulating a business strategy, several processes are involved environmental scanning, strategy formulation, and strategy implementation.
2.4.1 Environmental Scanning of Strategies
This is the process of gathering, providing, and scrutinizing information meant for strategic management. The process helps in the analysis of internal and external factors that influence the organization (Crane and Matten, 2016). After the execution of the analysis process, the strategic management process should continuously be evaluated on a basis and attempt to improve it. According to Bratton and Gold (2017), environmental scanning of strategies should allow the management to measure the potential and current changes witnessed within micro and macroeconomic environments. This process helps in the creation of strategic intelligence which is important in formulating the strategies. Scanning results in the understanding of changes that affect the organization which results in forecasting the expectations of the organisation.
2.4.2 Strategy Formulation
Formulation of business strategies represents the second phase of strategic management. It creates recommendations used to revise the existing objectives and mission of the organization, and offers strategies for implementing them (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). In the process, organizations modify current strategies and objectives to improve the success of the organization. This includes establishing competitive advantages that are ‘sustainable,’ although the process may be complex due to competitors’ efforts. Crane and Matten (2016) argued that strategy formulation is a major cycle in strategic management which is aimed at framing the key issues affecting the firm through the engagement of functional, business, and corporate perspectives.
Formulation of strategy affect operational and strategic budgeting which deals with subsequent consolidation and the final definition at the budget level for all functions of the organization. A budget always involves a legitimate output of the formulation process as it reflects commitment to implementation. According to Sassen (2016), strategic formation involves three processes: a situation analysis, competitor analysis in regards to micro and macro-environmental factors, and self-evaluation. Based on the process, short and long term objectives are formulated. The management crafts vision statements, mission statements, and the overall corporate objectives. Strategy formulation is a very critical process in every organization because if it is not well formulated, the organization will be unable to attain its vision (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). Situation analysis requires thorough consideration of key environmental factors, identification of competitors and understanding their strengths, and structuring objectives to improve performance.
2.4.3 Strategy Implementation
After the identification of a strategy, the next step is to put it into practice. This involves organizing, sourcing, and utilization of change management procedures. Strategies must be implemented successfully, and this should be done either privately or publicly. Without putting strategies in practice, the company will be faced with several challenges (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). The notion of implementing strategies might appear straightforward at first, and would be perceived as involving resource allocation and changing the structure of organization. However, changing strategic ideas into action involves series of tasks which may be complex or challenging (Wheelen, Hunger, Hoffman, and Bamford¸ 2017). The implementation process has attracted less attention in research compared to strategic planning or strategy formulation. In addition, there are few conceptual models that explore the concept of implementation.
Implementation of strategies involved matching plans with company objectives with the aim of attaining organizational goals (Wheelen, Hunger, Hoffman, and Bamford¸ 2017). The key components of strategy implementation include communication, adoption of action, and interpretation; these processes cannot be detached or considered independently. There are six areas that are essential for effective strategic implementation (Zahra, Rawhouser, Bhawe, Neubaum, and Hayton, 2008). These include: the market, finance, environment, people, adaptability, and operation. However, several problems may emerge as a result of adverse environmental factors which have negative effects and political challenges that may force strategic decision makers to leave the organization during the process of implementation.
Strategic planning is a significant aspect of management that must be considered to ensure that the business strategies selected are effective. There is never a “best practice” that influences the success of strategic planning process (Wiersema and Bowen, 2008). The process and timing differs across all industries including the pressure of the market, the business culture, and the size of the business. Strategic planning involves devising action plans, both defensive and offensive, in order to build and maintain a competitive advantage in the market (Wheelen, Hunger, Hoffman, and Bamford¸ 2017). It is a top-down approach which involves discipline and formal steps in order to produce actions that guide and shape the activities of an organization. Armstrong noted that strategic plans aim towards achieving the company’s long term goals.
In order to ensure that strategic planning is conducted comprehensively, the management should engage in broad gathering of information, exploration of different alternatives, and emphasize on the implications of the current choices of the business (Wiersema and Bowen, 2008). In order to keep pace with the changing environment, organizations are expected to consistently engage in the planning process in order to re-evaluate the existing situations and the environment to adapt to the changes accordingly. Thus, key practices should be adopted in order to develop functional strategic plans that would improve the organizational performance (Crane and Matten, 2016). One of the practices necessary for strategic planning is organizational diversity when developing the strategic plan. This involves consideration of individuals in various facets of the company including operations, finance, marketing, human resources, and sales. Business strategies usually have company-wide effects (David¸ 2011). Lack of inclusion of all departments will mean that departmental leaders would feel excluded, but will also result if the development of a threatening feeling among unrepresented departments. Organizational diversity is important in strategy management due to the inclusion of diverse input from several seniority levels.
2.4.4 The Control and Evaluation of Strategies
Evaluation of strategies is the last phase of strategic management. The process of evaluation includes internal and external factors appraisal, measuring of strategy performance, and putting in place remedial and corrective measures. According to David (2011), evaluation ensures that the implemented organizational strategies meet the objectives of the organization. Strategic control systems helps in the translation of detailed strategic plans into action while also providing short-term targets which can be used to achieve company’s long term goals (Chang¸ 2016). The implementation process is usually dependent on the effective strategic and management control systems (Crane and Matten, 2016). While new strategies need change, control systems are required since organizations may find themselves in situations in which they do not have precedent. Strategic controls helps to balance the long term goals of the company and the short-term operational demand (David¸ 2011). In addition, the systems help in the incorporation of “feedforward” information and “feedback”, thus helping managers to measure their level of progress while also creating opportunities to revise and adapt needed strategies.
A key aspect of strategic control systems that ought to be addressed as a result of the rising competition is the existing tension between flexibility need for strategy adjustment and strategy implementation rigor. Crane and Matten (2016) proposed that there is a need to adopt a strategic control plan which acknowledges the existing environmental turbulence as well as organization’s ability to measure the strategies and objectives. Such a framework considers the fact that specific control approaches are needed in different circumstances in order to successfully implement a particular strategy.
2.5 Effects of Globalization on Business Strategies
Globalization has become a recognized phenomenon due to the fact that it creates several opportunities for technology utilization, knowledge sharing, social values, and promotion of development at different organizational levels as well as communities and cultures (Hill, Jones, and Schilling, 2014). Although globalization is very important to organizations and that numerous efforts and initiatives have been taken to adapt to the phenomenon, there has been recent concern about the possible impacts of globalization on the national and indigenous developments (David¸ 2011). Several social movements have emerged in the recent in an attempt to address the threats emerging from globalization, especially in developing nations.
The widespread of globalization among different markets coincide with the development of business internationalization process. Globalization of economies means that there is a growing integration of markets as well as an increased interdependence of nations across the globe. Internationalization involves the tendency of companies to increase their scope internationally in a systemic manner while globalization is the trending intensive economic relations that exist between countries across the world (Cullen and Parboteeah, 2010). As such, the process of globalization influences organizations and firms to internationalize and increase their transactions of goods and capital across borders. In addition, globalization results in the diffusion and dissemination of technology, products, and knowledge across the globe (Crane and Matten, 2016).
According to Cullen an
