VUM foreign market 1.2. Characteristics of the object

VUM – Varna University of Management – Campus Dobrich

International Business Management

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Assignment 1: Transferable and Non-Transferable Firm’s Specific Advantages Influencing Managerial Decisions in International Development – A Critical Evaluation

 

 

 

 

 

JSC “KTZH” “Central Directorate for track repair”

Formation of the strategy for the management of a road-company to go international.

 

 

 

Nukusheva Ayauly Agynovna

Erasmus Student – number E1711

 

 

 

 

 

 

 

 

 

 

 

 

 

DOBRICH 2018

 

Content
1. Introduction
1.1. Motives and approaches to the choice of foreign market
1.2. Characteristics of the object of research JSC ” KTZH ” “Central Directorate on repair of the road” structural divisions of Central Asia of the Directorate for track repair, track machine station number 56
2. Specific factors of the company JSC “KTZH”, which influence the managerial decisions to go international
2.1. Characteristics of the external environment and the factors of direct influence
2.2. The reasons for the choice of the Mongolia market as a potential foreign partner
3. Conclusions and recommendations

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1. Introduction

 

Today, many professionals have realized the crucial role of management. Moreover, this is true for businesses of any sector of the economy. One of the most important elements of the organization management activities is to build and implement its strategy.

The importance of strategic behavior, allowing the firm to survive in competitive struggle in the long term, has increased dramatically in the last decade. All companies in the fierce competition, rapidly changing situation should not only focus on the internal condition of Affairs in the company, but also to develop a strategy for long term survival which would allow them to keep pace with changes occurring in their environment.

In the past, many firms were able to operate successfully, paying attention mainly on the daily work on the internal problems connected with increase of efficiency of use of resources in ongoing activities. Now, although not removed the problem of rational use of capacity in the current activities, becomes extremely important the implementation of such a control, which ensures the adaptation of firms to a rapidly changing environment and allows to expand the organization by opening new businesses in new markets.

Business practice has shown that there is no strategy common to all companies as there is no single universal strategic management. Each firm is unique in its kind, and the process of developing the strategy for each firm is unique, as it depends on the position of firms in the market, its dynamics, its potential, competitors, characteristics of the produced goods or of the services it provided, the state of the economy, cultural environment and many more. At the same time, there are some fundamental things that allow us to speak about some generalized principles for strategic management. Of course, you should always remember that strategic management is first and foremost a product of the creativity of senior management, but at the same time, we can speak of a certain theory of strategic management, the knowledge of which enables more efficient management of the organization.

The object of study is a Branch of “KTZH” JSC “Central Directorate on repair of the road” structural divisions of Central Asia of the Directorate for track repair.

The aim is to offer management strategy, the company PMS-56 Central Asia CDC DRP – branch of JSC “KTZH” for the development of a new enterprise market of Mongolia.

 

 

1.1. Motives and approaches to the choice of foreign market

 

Management decision to enter a foreign market can have both positive and negative long-term consequences. Depending on the depth of the substantiation of the managerial decisions it is possible to allocate three approaches to the choice of the foreign market.

a) subjective approach ? is based on subjective feelings, expectations, experience of persons who decide to enter a specific market. This approach has only one advantage – the absence of cost justification for the solution. The risk is maximum, and the degree of validity of the decision, respectively, is minimal;

b) the discrete approach ? based on the assessment of 2-3 most important business indicators of market development or other criteria. The success of the use of discrete approach depends on the proper choice of these parameters, which must match the order of output on a foreign market; objectively characterize the condition or features of the development of foreign markets; to be explored over a certain period of time. Most often to justify decisions on the choice of foreign market over a discrete approach using the indicators and criteria: market size; market growth rate; a competitive advantage; market potential; market accessibility; stability.

C) comprehensive approach ? involves quantification of each market on the scorecard or deep analytical justification. This is the safest approach because it minimizes the risk of leaving the company at an inadequate market, increases the validity of management decisions, but requires significant investment to conduct research.

Reasons for exit of firms on a foreign market can and should be considered at three levels: global (modern trends in international economic relations), national (the country’s place in the international division of labor) and the actual signature.

Motives for entering the international market can serve, in particular, the following considerations:

? certain trends in the domestic market, pushing the company abroad (the saturation of the market for the product, growth and increased competition, financial, fiscal, social, environmental policy of the state);

? firm growth and expansion of its sphere of activity;

? the need to maintain and develop the company image;

? the desire to overcome the dependence on the internal market, with its specific characteristics (e.g., seasonality), to disperse the risk and provide the ability to maneuver resources;

? the desire to access technological secrets;

? ability to use state programs for the promotion of international trade (both domestic and foreign);

? the desire to release part used in the domestic market resources (capacities, personnel, financial resources) to solve more challenging problems

 

 

1.2. Characteristics of the object of research JSC ” KTZH ” “Central Directorate on repair of the road” structural divisions of Central Asia of the Directorate for track repair, track machine station number 56

 

Track machine station ?56 Central Asia of the Directorate for track repair – structural subdivision of Central Directorate for track repair – branch of JSC “Kazakhstan Temir Zholy” (hereinafter – PMS-56) was created by order of the joint-stock company “Kazakhstan Temir Zholy” from 06.11.2007 ?137 “On the establishment of structural subdivisions of the Central Directorate for track repair and structural transformations in the economy Railways – branch of JSC “KTZH”. Without the right legal entity, the entity is vested with property accounted for in the balance sheet PMS-56 provides current accounts in banks open to JSC “KTZH”, a round seal with its name, stamps, letterheads, brand name and other necessary details.

The mailing address for the location of the PMS-Ridder article 56.

The organization is an open system, integrity, consisting of numerous interdependent parts, closely intertwined with the outside world. Consider the internal characteristics of situational factors in the PMS-56. In educational and scientific literature most often, the term internal environment is defined as situational factors within the organization.

The main internal factors are goals, technologies, tasks, organizational structure and people.

The structural division was established for the efficient management of production activities to meet the needs of the JSC “KTZH”, as well as external customers in the services of repair of track work to ensure operational and transportation activities, traffic safety of trains, establishing public needs the results of its operations and profit.

To achieve this goal, PMS No. 56 entitled, in the procedure established by the legislation and other normative legal acts of the Republic of Kazakhstan carry out the following activities:

– major, medium and other types of repairs paths;

– repair and laying of turnouts;

– works on modernization and reconstruction of railway tracks;

– organization of introduction of new technologies and technological processes;

– development of measures to reduce the cost of work performed (services, products) and increase of profitability of production and etc.

 

 

2. Specific factors of the company JSC “KTZH”, which influence the managerial decisions to go international

 

In accordance with the system, approach considers the organization as an open system that actively interacts with the external environment.

The external environment affected the organization, which can manifest in various forms, providing favorable conditions and opportunities for the effective functioning or creating the threat for its existence.

The nature of the impact environment as a system isolated environment of direct influence and indirect environment impact.

The environment of indirect impact are the environmental factors that affect the organization indirectly. They are considered in the development strategy of the organization. This General economic situation, unemployment, inflation, scientific-technical process, political and socio-cultural changes, factors of the international environment.

Scientific-technical progress (STP). Introduction of achievements of scientific-technical progress, especially mechanization and the mechanization of track work gives an opportunity to reduce operational units of track facilities and is a critical means of lowering the cost of transportation.

Economic factors: the General state of the world economy; the economic situation in the country, the region, at the local level; the financial condition of enterprises; investments have a significant impact on the work of the ICP ?56 and on the work of the JSC “KTZH” in General.

Investment in transport cause economic growth, while economic growth contributes to the growth of capital investments in transport infrastructure.

Also on the work of the ICP ?56 has an impact no less significant factors such as demand factors (level of employment, level of income and tendencies of its changes, the solvency of the population) and supply factors (availability of sources and terms of financing, taxes);

Political factors: monetary policy in the country, the interaction of supply and demand in the credit market, inflation, inflationary expectations, the phase of the industrial cycle.

From all the above discussion it can be concluded that the enterprise ICP ?56 affected by many factors. Their combination gives a clear picture of the situation of the enterprise market at this point in time helps to identify hidden threats and opportunities.

 

 

 

2.1. Characteristics of the external environment and the factors of direct influence

 

To the environment, direct impact includes suppliers, consumers and competitors, the state bodies and legal provisions that directly affect the organization’s activities.

Consumers: track the division which is located in the city of Ridder. After the repair path PMS No. 56 transmits the repaired areas of the track start track, the balance of which these sites are, passengers, senders and recipients of cargo carriers.

Suppliers: energy plot ? 6,7, located in the city of Shubartau OOO “Water canal of Shubartau”; boiler, belonging to the Directorate of heat and water supply (DTV). Is the boiler on-site PMS ? 56; factories producing sleepers, rails and other materials of the permanent way; plants producing crushed stone ballast.

Track machine station ? 56 makes an application for the required amount of materials needed for the plan of repairs. After registration transferred to the Directorate for track repair, they are there to coordinate, revise, and transmit to the Central Directorate for track repair in Astana. In Astana summarize the plan, approve the application and make orders on our suppliers ‘ factories producing sleepers, rails and other materials needed for track repair.

Partners: travel repair and mechanical plants for the manufacture and repair of track machines of heavy type, mechanisms and spare parts to them; the plants for the production of concrete sleepers and beams; forest enterprises supplying wooden sleepers and bars; sleeper impregnation plants which are dried and impregnated with antiseptics wooden sleepers and rails; ballast career which extract the ballast; gravel plants that produce crushed stone track; rail welding train manufacturing welding new and old rails; the factories supplying rails, fastenings; locomotive depot operational; locomotive repair depot ; railcar repair and maintenance depot (ICP-10); track; power supply distanc?; signaling and communications, trade Union.

Competitors. On the Railway, apart from PMS-56, there are three travel machine stations, which compete with PMS No. 67 St. Tashkent; PMS No. 66 St. Zhanahat; PMS No. 303 St. Karatorin.

From all the above discussion it can be concluded that the enterprise ICP No. 56 affected by many factors. Their combination gives a clear picture of the situation of the enterprise market at this point in time helps to identify hidden threats and opportunities.

 

 

2.2. The reasons for the choice of the Mongolia market as a potential foreign partner

 

The market of Mongolia was chosen for the following reasons:

? track machine station ?56 already carried out repair and paving work on the territory of the country in 2009. A joint project of the JSC “KTZH” and Mongolia laid a railway line Mandalas ? Archant ? Delany. The total length of line of 52 km.

Currently there are several projects between JSC “KTZH” and Mongolia for the construction of new railway lines. For example:

? the project of construction of new railway lines in the area Dalanzadgad (Tavantolgoy) – Zuunbayan;

? the project of construction of new railway lines on the site saynshand – Bayantumen;

? a project to extend the railway line on the plot Cetyl-Kuragino through Mongolia to China.

The goal of these projects is the development of coal deposits in the Gobi and copper deposits, the attraction of container traffic in correspondence of the China-EU.

Years of implementation: 2020-2030

Expected results of the project:

? strengthening export potential of Mongolia with a stable position of the country on the world commodity markets;

? development of mining industries and implementation of projects for the extraction of minerals in areas where new rail lines;

? increase of employment and the living standards of the population due to the opening of new industrial enterprises, including in sectors related to the railway transport.

In the framework of these projects have a track machine station ?56 has all the chances to take part in the laying of new railway lines. This is accompanied by:

? geographical location of the ICP ?56 (this track machine station is the closest 5-and PMS located on the territory of ??R, Mongolia);

? past experience of joint projects between JSC “KTZH” and Mongolia in the construction area of Mandal ? Archant – Delany in 2009.

PMS ?56 follows a growth strategy, because this strategy is aimed at constant development lies in setting goals above the level achieved in the past. Growth strategy the company will be sold due to increase in repairs, access to foreign markets (including Mongolia), improving the quality of work, improving productivity, and, consequently, will contribute to the achievement of the strategic objectives of the enterprise.

 

 

3. Conclusions and recommendations

 

In cooperation with foreign partners there are a number of problems requiring solutions. These include:

a) language barrier;

b) for transportation of construction and repair materials and maintenance vehicles across the customs border;

C) the unstable political and economic conditions in the potential partner country (unnecessary high costs)

Consider the above mentioned problems in more detail.

a) when carrying out laying and construction works in Mongolia in 2009, the personnel of the enterprise are faced with the fact that some of the workers sent from Kazakhstan(PMS No. 56) spoke in the Kazakh language, and the other part, Mongolian partners, and Mongolian. In this connection misunderstandings between multi-lingual workers, which slowed down the work.

The problem of the language barrier are invited to resolve as follows:

? to find workers who speak the same language;

to hire an interpreter to overcome the language barrier.

b) for the passage of the customs border (in this case the transport through it of track machine equipment) is a range of activities. One of the components of a more rapid passage of the customs border is risk management. Taking into account all risks facing the enterprise, and perhaps the more rapid passage of the customs border.

So, this paper discussed the main forms of exit of a firm in the international market, their advantages and disadvantages, and basic strategies used in modern management for the method of entering foreign markets.

The aim is to offer management strategy, the company PMS-56 Central Asia CDC DRP – branch of JSC “KTZH” for the development of a new enterprise market of Mongolia.

In the framework of the goal was achieved the following objectives:

? the basic strategy of an exit of the enterprise on the market of Mongolia;

? studied criteria and conditions of choice of foreign market;

? analyzed factors affecting the decision on the release of the company on the market of Mongolia;

? developed recommendations on the formation of management strategy for entering the enterprise PMS-56 Central Asia CDC DRP – branch of JSC “KTZH” on the foreign market.

The first Chapter discussed the theoretical basis of choice of a foreign market.

In the second Chapter an analysis was conducted of the activities of the Branch of JSC “KTZH” “Central Directorate for track repair” structural subdivision of Directorate for track repair, track machine station number 56; this characteristic of the external environment of the company; reviewed the market of Mongolia and consecrated the reasons for the choice of the Mongolia market as a potential foreign partner; the problems identified.

In the conclusion the findings and proposed the complex of measures on elimination of existing problems.

Summing up we can say that when entering the foreign market of Mongolia enterprise track machine station ?56 may face many problems. Their rational solution would facilitate the occupation of a new niche that exist in the market, improve the company’s image, strengthen foreign trade relations and establishing long – term partnership with foreign partners.

 

References