Business Analysis of an Eco-Friendly Footwear Company
Info: 7389 words (30 pages) Dissertation
Published: 17th Aug 2021
Tagged: BusinessBusiness Analysis
Table of Contents
Introduction (The Birth of a Brain Child)
1.1 Description of Allbirds product portfolio by using the BCG matrix.
1.2 Justification of relation to the product life cycle and the innovation adoption curve.
1.3 Strategic advice that could give allbirds best direction in its business endeavours:
2.1 Allbirds’ is performing highly here are some sign of its success.
2.2 Claim and discuss how they have achieved this.
Theoretical explanations of competitive advantage, organisational structure and metrics for success.
3.1 Strategic advantage through innovation
3.2 Tangible and intangible resource to pursue an innovative strategy
4.1 Future challenges for Allbirds
5.1 Allbirds as a global organization, the degree of risk and profit associated with it.
5.2 Profit associated with global organisations/Allbirds
5.3 Risk for a global organisations/Allbirds
Introduction (The Birth of a Brain Child)
Allbirds co. started out as an idea of one man-Tim Brown. Allbirds is a shoe company established in 2016. It is San Francisco-based start-up aimed to design eco-friendly shoes footwear company formulated by Tim Brown and Joey Zwillinger. Allbirds launched its foundation activities in 2004 by doing all supportive background work. It brings a new utilitarian Wool runner footwear by using New Zealand superfine merino wool to make shoes with key features like sustainable source, minimizing odor, removing moisture and comfortable in all weather. Most of production, promotion and designing work is done with the help of overseas outsource support. However, its carbon footprint is 60 percent smaller than a typical synthetic shoe (Deborah, 2017).
1.1 Description of Allbirds product portfolio by using the BCG matrix
Boston Consulting Group (BCG) matrix it is also known as growth-share matrix or the product portfolio that was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyze their business unit that is their product lines (Kombrabai, n.d.). For example, some companies dealing with many product lines. Then what kind of a strategy they can follow. For example, there is a company like Unilever, Procter & Gamble (P&G) all these companies are dealing with different product lines and they are dealing with different business units in the world or in different countries. It helps to know how they can decide as to how much resources will be allocated to different units. So, in the same way, it helps to Allbirds in identifying the key area to keep track on. BCG matrix helps the company to allocate resources. It is used as an analytical tool in brand marketing, product management, strategic management and portfolio analysis to develop the matrix ref matrix. It considers the market growth rate and the relative market share of the Allbirds business. It is operating their business currently in America and New Zealand (Deborah, 2017). According to BCG matrix, its product can be classified in one of the four categories based on the markets share and as well as the market growth rate.
In my perspective Allbirds product is lying in between this green aero
Relative market share
Market Growth Rate
Image 1 source: https://www.sketchbubble.com/en/powerpoint-bcg-matrix.html
Image 2 source: http://www.quickmba.com/strategy/matrix/bcg/
1.2 Justification of relation to the product life cycle and the innovation adoption curve
Firstly, a cash cow is a product with high market share and low market growth and cash cows are needed to milk the fact that the market share is high. It means that the product is strong in the market and the businesses may be able to charge a higher price (Mason, 2016). So Allbirds product is not lying in this situation because it has market coverage only in The USA and New Zealand. Even number of customer are very low because the allbirds product is in introduction stage of its life cycle. As per the innovation adoption curve, the customer of allbirds is lying in innovator or early adopter categories (REF). Secondly, Allbirds product may be lying in as a star category. Then, it should have a high market share and high market growth. Star also spars its dominant product in the market as allbirds providing a unique concept. But, they must work harder to maintain that lead in market share that is because the market is growing quickly and rival businesses can gain market share by attracting the new customers who are entering the business as a result rising stars (Mason, 2016). For example, Adidas and Nike’s also introducing the same kind of shoe variant in the market to attack the customer of wool runner shoe. (REF) So, here Allbirds needs to work harder to maintain that lead in market share. The company also needs to require high levels of marketing expenditure to retain their status if they manage to do so the benefits will come as there will be the cash cows once the market matures they will be on growing stage in product life cycle (PLC) stage and have more customer base (Mason, 2016). According to Everett, how fast the population adopts innovative ideas. The Early majority who are more risk avoiders will try to purchase after seeing the innovators experience and late majority as well after filing the chasm. Consequently, it will take the product to the maturity level of it PLC stage. In adoption curve as the highest set point of known customer and will grow continuously in a number of customers and that’s why a star category becomes very important.
Thirdly, becoming a star is not simple as that a cash cow situation. Generally, become a star from the question mark category. Like now allbirds is in question mark situation. It has low market share and high market growth so in this market the market grows very fast but the product has got a low market share. The capability of becoming the star for the company is good in somehow. This is because the market growth is rapid offering a business the possibility of growing its market share through new customers which is far easier than trying to tempt them from a rival. If a business wants to develop a question mark category it will require to spend a lot of money on marketing (Mason, 2016). Moreover, it may not succeed and that is why the company needs to be very careful in business planning. Allbirds should select its strategy by doing a carefully investigation its product growth, its market demand and other factors.
Finally, a product classified as a dog has low market share and low market growth and at current time allbirds business is growing and it’s gaining market share and have more chance of growth in the market so its product is not lying in dog category (Mason, 2016).
1.3 Strategic advice that could give allbirds best direction in its business endeavours
According to my perspective, Allbirds product is currently lying in two positions of product portfolio chart first one as a question category because it has a very low share in shoe market industry. Market share and the chance of market growth are high because they are providing a unique product with high quality and comfortability feature on a peanut price (Ref). So, they have more opportunities in the market because customers are liking their product (Ref). Strategy at this level should be analyses to determine whether the business can be grown into a star or may be degenerate into dog category. Secondly, we can consider allbirds product in star category because it has a unique product concept and they generate a new market for wool runner sneakers. As a result, rivals are trying to copy Allbirds product to capture their market share. So, here Allbirds need to work hard to gain maximum market share otherwise competitor will gain this opportunity. Moreover, they also need to work on their market penetration strategy by organizing thoughts towards building a market strategy or by simultaneously making a decision about the target market with a marketing tool. Like, four P’s as price, place, product, promotion. Therefore, allbirds should invest more to grow are as a star product category.
2.1 Allbirds’ is performing highly here are some sign of its success
Allbirds is performing at a highly successful rate as they started their business last year and become a success to gain attention from the market where they targeted their customer with a unique product idea. Allbirds is making more efforts in their product line. It also wins the award in product design 2016-17. According to Tim Brown, 2017 with Ideolog …link college material- I think that New Zealand is operating at a very, very high level from a design point of view,” says Brown. “We know that. We might not be great operationally, or at scaling businesses or accessing capital, but the design in our products, and our product design, is operating at just an immense level. Moreover, a level of brand execution is so impressive across the border and becoming well known to the world and having the partnership with well-known brands. For example, its collaboration with companies from different, creative cities, it headed to the capital recently and partnered with the Wellington Chocolate Factory, Supreme Coffee and Garage Project to create limited edition shoes ( ref)ideolog. All these are the sign of a successful company. During their first year in business, the company raised $7.25 million from investors including Lerer Hippeau Ventures, Red Sea Ventures, Slow Ventures, Peterson Partners and Western Technology Investment ( ref) Wikipedia. So, increasing in the number of investors is also sing of success. Furthermore, allbirds shoes are becoming popular as world comfortable shoes in the market ( ref).
2.2 Claim and discuss how they have achieved this
Allbirds product quality is quoted in many press release that allbirds shoes are world best comfortable, soften, sustainable with the ultra-style and reasonable price range (Press, 2016). Tim Brown and Joey Zwillinger who are the key person in the company. Tim Brown told his story behind its success in an interview with HENRY OLIVER, 17 Oct 2016 Idealog ref. The idea for Allbirds came from a burst of curiosity that Tim Brown realised during his playing experience. He realised a need for a design aesthetic in casual footwear that avoided loud colours, huge logos and synthetic materials (Samson,2016). To fill that, I decided to create something simple, and anti-design more utilitarian than anything, that used mindful materials for a sustainable product. (Tim Brown 2016) and (Samson,2016). Before entering the market, they did a research on its feasibility study in 2014, he started to do some research activities through a bio-scientist to know using Marino wool making shoes is possible and is got green signal and got initial start-up for kickstart and tested this idea on crowdfunding site Kickstarter, quickly raised total about $119,000 funds in five days and takes a help of a friend from San Francisco to build a product and its brand identity (Deborah,2017). After doing all background research and financial support by support of its strong investor and other processes they launched Allbirds first shoe publicly in March 2016.
Theoretical explanations of competitive advantage, organisational structure and metrics for success.
2.3 Competitive advantage
Why a customer buys a Coke over Pepsi? Why a customer spends $100 for a sneaker of a certain brand? More specifically, why a traveller bought a ticket in the Jet Star over New Zealand airline? (as a New Zealand region view) The possible answer could be competitive advantages. It is a set of unique features of a company and its product or services that are perceived by the target market as significant and superior to other competitors (Lombardo,2003). There is mainly three competitive advantage that company can use. They are cost, product or services deaffrication and niche strategy.
Cost competitive advantage is when a company can utilise its skilled workforce, inexpensive raw materials, controlled costs, and efficient operations to create maximum value to consumers(Lombardo,2003). 9999 ref… In New Zealand Supermarket, PAK’nSAVE supermarket is using the cost advantage strategy by providing a very large selection of grocery deals and low prices deal. Its retailer strength and size are well known as low-cost leadership in the market. PAK’nSAVE supermarket strategy can be successful by its core competency in employee’s skills, size and time of order and control over supplier and its managements systems well. Costs can be controlled in many ways. For example, reengineering, sharing the resource, and best example in supermarket and airline which are providing self-checkout facilities etc.
Another way is that companies can take competitive advantage in the market through product/service discrimination. If a company’s product or service has a valuable, unique offer for consumers, then there may be loyalty and product or service discrimination from the customer (Lombardo,2003). For example, Apple Inc. is offering it premium product iPhone to its customer and they have a great brand value in the market. So, the company is taking the competitive advantages of product differentiation. One knows that cost competitive advantages can easily be attacked by the introduction of a new competitor or new technology. But in the case of a unique product or service, it is harder to compete in the market. The company must offer something to the consumer besides just a low price. In respect of Allbirds have a great competitive advantage but they need to work hard on this edge. (Lombardo,2003)
One more effective way in which companies can take competitive advantage in the market through its niche strategy. Niche strategy is based on a specific product to target its audience, reaches target audiences, niche marketing programs have a better chance of reaching their target customer. Price setting advantages, when a company markets a unique product to a niche audience than a business can set-up prices to increase profitability. Like Apple. Inc products, while the production cost per unit may be higher for specialised products for Apple but it can be covered by targeting its audience at mass production level to meet the demand. Niche markets are segments within your larger target customer those have similar attributes (Archer,2004). For example, similar demographic, buying behaviour and lifestyle traits This option would be better for Allbirds to make a future decision with concerning this niche strategy to take competitive advantages. Through strategic marketing tactics, specialised industries can use marketing and advertising to directly appeal to their niche market.
So, for Allbirds its best suit that to obtain niche business strategy that sells a single type of product within a specific category, as Allbirds is selling its shoes within a specified category. While Allbirds may not appeal to broad groups of consumers, they can meet the special demands of the smaller groups they target. The fashion of Allbirds shoes run to counter large trends. Moreover, niche strategy has more option to take competitive advantages. So, this option would help to Allbirds to achieve its common goal.
2.4 Organisational structure
To arrange the activities in a simple and effective way of smooth execution of its day to day activities an organisation at various level of work and nature of work. More specifically, it defines the root of doing formal relationship within the organisation.
The basic reason behind designing the organisational structure should be followed to the specific organisational goals, the type of structure your company, division, or team implements are depends on its goals those one trying to achieve. Because Finally, an organisation may be filled with great people, it would fail to operate efficiently if the structure of the organisation was formulated poorly (Devaney,2014)
So, we need to define a well-managed and effective organisational structure. For this one need to note before defining these structures one must understand the way of control and nature he/she want in the organisation for that we also need to understand the building block to arrange the order of organisational structure. For example, the chain of command and control, decision making power like centralization and decentralisation, specialisation and formalisation and departmentalization in organisational structure. Several organisational structures are available to use in the various organisation according to their requirement. Here are some examples of some of them:
Functional Organisation Structure
Most common types of organisational structures, the functional structure departmentalizes an organisation based on the type of common job purposes (Devaney,2014). For example, a functional structure can get all the markets together in one department, together with a group of all salespeople, and all customer service groups together in the third department. This structure allows maximum range of specialisation for employee’s skills and in their performance and is easy to measure the growth on every level (Devaney,2014).
Divisional: Product-Based Organisation Structure
In the divisional organisational structure as a structure that is meeting many smaller functional structures according to particular wings in a business like electronic division, food division, home goods division (Devaney,2014). For example, every wing has their own structure that can have its own marketing team, its own sales team, etc. This type of structure is good for those organisations which have multiple products. This structure would not be perfect for Allbirds business.
Divisional: Market-Based Organisation Structure
Another divisional based organizational structure is the market-based structure, in which the divisions of an organization are based on the markets and its customer types. This is the structure for an organization that is unique to specific market areas for products or services.
Process-Based Organisation Structure
Process-based organisational structures are designed to the end to end the flow of various processes which runs in a sequence, such as research & development, customer acquisition, and order fulfilment (Devaney,2014). It’s not like, functional structure, it works as a process-based structure not only displays activities but also how these different activities work with each other. This structure helps to the organisation to deal with changing the trend in the market by providing a great way for improving speed and efficiency and is suited to those organisation, who has rapidly changed business environments (Devaney,2014). For example, electronic industry and technology providing organisations.
Divisional: Geographical Organisation Structure
The geographical organizational structure establishes its divisions based on geography that can include territories, regions, or districts (Devaney,2014). This type of structure is best suited to organizations that need to be near sources of supply and/or customers for delivery of goods and any onsite support services. The main drawback of this structure is that, it can be easy for the decision to be decentralized in the form of a geographical divide. Which can be hundreds of miles away from the corporate headquarters (Zoratti,2015).
Matrix Organisation Structure.
Unlike other structures we have seen so far, A matrix organisational structure does not follow conventional model but it has a different approach that gives every employee equal and dual reporting system or pathway. Generally, there is also a functional reporting line and a product based reporting line (Devaney,2014). Matrix structure organisation has two ways of controlling and reporting line. One as direct reporting and another one are indirect but less strong. The main focus of the matrix structure is that; it can provide both flexibility and more balanced decision-making power and its application whenever it required with a quick and efficient communication. Its primary pitfall: complexity, which can lead to confused employees (Zoratti,2015).
Justification for suitable organisation out of current trending organisational structures
Currently, employee strength in the Allbirds could be around 10 to 20 employees so they are must be using a flat organisation structure that allows them more flexibility in their working and decision making. But for future references as the company is growing rapidly. They should design a different and feasible organisational structure to accomplish their goal. While designing this structure they should be more flexible and change or redesign their structure with the changing time or when it required. Allbirds will diversify its business boundaries to grab more market to expand their business. For this they can choose divisionally: geographical organisation structure or matrix organisation structure (previously explained). Because these two frameworks allow them to control and smoothly running of all organisational level. It also ensures that what an organisational need with fewer pitfalls in their communication and other processes. Like customer oriented employee development, freedom for decision making, customer support and feedback priorities etc.
2.5 Metrics for success
A business metric is a quantitative measure that is used to detect and evaluate the status of a particular business process. It has a unique way of measurement and defines the pathway for company success (Business metrics, n.d.). Moreover, metrics are used to track all areas of business and these metrics are varied from business to business. For example, for a marketing company it will work as a tool to know incremental in sales, web traffic sources, social sentiments etc, for a sales company it would measure the sales growth, product performance, average purchase value, profit margin, customer value, cost of acquiring a customer etc, and it would be different measurement tools for a financial and other services providing company (Business metrics, n.d.).
To be successful in a highly competitive business environment, Organisations should control on their sales. The best way to control sales is by providing the right performance indicators and metrics to your sales team (Business metrics, n.d.). A business must ensure to measure its performance on daily to weekly monthly, quarterly and yearly measurement tools and define some standard of working or benchmarking or work in daily operation to achieve its long-term goals.
For example, a student of this paper “Strategic Management” preparing their assignment as per direction and given guideline in course module. This document works as a benchmarking tool for Student use to achieve a good grade or their very purpose.
Before starting about Allbirds we should discuss a bit about a company Apple, Inc. who applied innovation strategy as a tool for its future growth. Apple company started out as an idea of one man, Steve Jobs. It has been a successful company for several years now Apple is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players and sells a variety of related software, services (Johnson,2012). The key factor for everything that Apple, Inc. does is technology and providing superior quality feature and services through its product. Technological innovation can help a top company create competitive advantages. Most of the products in these industries are based on technological innovation. Competitors must introduce new products frequently to keep up with current market trend. Investing in R&D is also very important. But how to do more research and development so one must have skilled and innovative staffing and a flexible and effective way of communication with top management. So that one has a great idea then he can share it with top management. The PLC of any product in this industry is shorter than other industries product. So, research and developments can help these products have more staying power as Apple gaining competitive advantage through its innovative design, software services like hackproof, virus proof etc. by encouraging research and development activities (Johnson,2012). Apple, Inc gain all these achievements by providing a unique and innovative strategy of serving their customer with latest design and technology because Apple has a strong competitive advantage in their skilled employee who are matching with company core value and they have their own manufacture both software and hardware (Bajarin,2011). It gives them more flexibility and control in decision making. So, the essence of this text is to more focus on quality research and development of a product with great organisational values and keep on developing the product.
3.1 Strategic advantage through innovation
During the strategy formulation, we need to think about organisation with these factors like internal organisation strength, weakness like marketing wings human resources capabilities, production skills and external available opportunities and threats. Organization need to identify some key point and try to use innovation to get and stay ahead of competitors. There are many mechanisms to gain strategic advantage out of which some are chief for Allbirds that can be considered are Strategic advantage through innovation like a novelty in product and novelty in Process (Bessant,2014). Firstly, using the mechanism of novelty in product refers to offering something no one else can or a service or firstly product is given by you or first people who launch the product and you have mastery in your product. For example, Allbirds launch first wool shoes in the world with great features like best wool material and best quality sole with a sustainable source of production and well designed. Secondly, Novelty in the process means providing a product in ways others cannot match faster as you can such as lower cost, fine production, quality and more customised etc. For example, Allbirds is providing its product wool sneaker and wool loungers with great comfort and quality only for UD $95 (Allbirds,2017). The process of making wool runner by using very fine New Zealand best quality merino and processed in the best Italian fabric processor unit to produce a fine quality of wool and after then the journey of a wool shoe making(ref). Moreover, its carbon footprint is 60 percent smaller than a typical synthetic shoe (Deborah,2017). Allbirds also added a new way to gain a more strategic advantage with the mechanism of extending competitive factors by moving to basic competition like low price, quality of product and choice of product and shoes without any branding and logo. Moreover, Allbirds shoe designing work is done by Auckland base designing company that gives it a superior fine ultra-design to win awards of simplicity (ref).
3.2 Tangible and intangible resource to pursue an innovative strategy
To pursue an innovative strategy company should utilise its both resources such as tangible and intangible. Tangible source refers to those sources with are physically presence and can be used as to show case the company physically presence. Moreover, these resources also help to organisation to define its organisation culture. Than a question of protection, how do we protect these resources will rise. These resources are easy to understand or easy to copy but hard to replicate by new or close competitors. For example, land, building, machine, technology but by having all these things a company cannot make a profit as its competitors do. So, with tangible resources adding the value of intangible resources also have high importance. Example of Intangible resources are: organisation culture, core value and its employee’s skills power and understanding of company strategy and active participation in company growth. Company relationship with traders, distributers. Company need to pursue these sources during the innovative strategy formulation. Means how to use these resources in organisation strategy. For example, a company decided to choose best location strategy for business in the nationally or internationally. This strategy could be possible but depends on business operation and strength of company at financial level. Because investing in location might be expensive and hard to legally protect.
Strategies work as a firewall for company operations and its formulations depends on organisation structure and sometimes vice-versa. In strategy development, one must know that right format, direction to achieve its goal. Moreover, this work should be done on a fast track. Every should be done in a fast way if we going to change how it will change the company cultural value. Defining the value of organisation such as a company want to be customer centric in their cultural value. Or a college wants to be a leading college in the country as a practical learning organisation. So, in this section, the essences of text are to define the strategy with having a concern for future opportunities and especially challenges.
4.1 Future challenges for Allbirds
Allbirds is a start-up company. During strategy preparation and further development, they must inspect some of the future challenges that may be possible. They have need be aware about internal weakness and external threats. Firstly, they do not have much experience in this industry. This may be a weak point but they can take help from professionals to overcome this issue. Allbirds also do not have their own design lab and taking help from outer agency. Raw material process press is also done by external organisation. So, thing is they are mostly outsourcing their product production. Therefore, they may be get a threat in outsourcing. can face a challenge of supply chain management. Secondly, when they are doing some intangible outsourcing like product design that is easy to transmit but, in case of tangible outsourcing like raw wool, shoes sole, finished raw material and other thing, for that they need to arrange some proper supply chain management to collect them all in one Place to assemble all thing as final product. Thirdly, Allbirds is formulated last year and competitors already exist in the market with famous brand with high value, position, market share and also with high wealth power. So, Allbirds is lacking at brand value but that can be created by more marketing and advertising strategy with the help of experts help as they are currently taking a San-Francisco base company. But for a large level branding and advertisements they also need a huge investment of money but they do not have strong financial position. Moreover, allbirds product is only available for online sales and only in two countries, currently available where they are delivering their product, America and New Zealand. They are still looking for investors. May be this is also a possible reason why they are not looking in other countries at the moment.
Some future challenges for Allbirds
- Supply chain risk management.
- Financial position of company.
- Lack of resources like own manufacturing units, design unit, lack of expertise experience in retail market.
- Brand is not popular.
- Dependency over outsource (Many activities in the company).
Supply chain risk management.
According Tim Brown Allbirds performance is good at the moment and has a good supply chain. He mentions this in his interview with an Idealog interviewer and this time they are selling their product in America and New Zealand only. We know that they also have a very small share of market share and not much popular so at the moment they have less demand. Consequently, manufacture suppliers, shipment dealers and other raw material supply are running well. But in future when Allbirds become a well-known brand and customer will create demand at a huge level. Furthermore, deficient of raw materials is a concern for this risk, suppliers going bankrupt, a failure in a better relationship with client and failure of the partnership, inferior quality of the supplied goods, and delays by the supplier (Diabat,2015). Moreover, some competitor will also take the same source of raw material supply to make their product as good as like Allbirds. So, on that time this supply chain system required more attention and resources from Allbirds to make its progress continuously.
Financial position of company.
From the very first day as a start-up they are raising money before doing any next plan for their business and as a strong relationship with outer support, one must be credible sources of finance to feed their services. Fortunately, currently, allbirds have numbers investor to support them at the current level. But for becoming a bigger company they need some strong financial back instead of several investors. Because having many investors would be a threat in future for business in decision making and its growth plans or maybe spoil its corporate value.
Lack of fundamental resources.
Allbirds brainchild has a good brain to perform all activities in a well way. As it is shown by Allbirds early success. But for making progress continuously it required a lot of things to run parallel. A company at least have some brand value at global as they are recognising their company as a global company, skills of current employees are not matching with the core value of the company. So, lack of experience in staff is lying in. Moreover, a company should provide their product to sell at local outlet store because many customers buy a product through visiting a retail store that allows them more option for observation and confidence about product quality and comfortability.
To address these challenges allbirds can use following recommendations.
- Supply chain risk management may arise when they are going to expand their business boundaries in upcoming time. So, they can make the future contract with their suppliers to ensure future dealing. In some end, they can define a future layout for their supply chain at a large scale as per company expansions policy.
- Financial position of a company only can grow by its own value and from its business expansions. To address this issue Allbirds need to contact a bank who gives them more freedom in fund usage with interrupting in their internal business operation or any management activities.
- For resources development, Allbirds need to make design strategy in a way that supports them in developing their basic resources such as their well-skilled employees, business value.
- Brand awareness of Allbirds is not much popular as other brands. As a company is in its developing stage they also need to invest money on company branding to attain market value. To create a great brand image, they can sponsor, organise some local or national events or tournaments to grab particular market or maybe they can sponsor at international level as we know Allbirds is a global company. Secondly, Allbirds can support some social support a large level as they currently doing at small scale (Allbirds,2017).
5.1 Allbirds as a global organization, the degree of risk and profit associated with it
A company who wants to grow their business at global level needs several things before going or targeting global market and there are several ways that a company can choose to for its expansion at global level. For example, franchising, licencing, joint venture, exporting, wholly subsidiary company etc. Moreover, a company also needs to design a strategy plan to control and manage the company business at global level. Furthermore, A company should provide same quality worldwide and try to standardise their product to reduce the cost per product and invest to over the global market. For example, establishment, marketing and other expenses.
Allbirds is a shoe selling global company and rendering its services in two countries at the moment or maybe planning to expand their boundaries in other countries for being a truly global. Globalisation helps a company to the increase in international exchange, including trade in goods and services as well as exchange of money, information, ideas and information. But also, company needs to aware about the laws of different countries, rules, tax norms, cultural values etc.
5.2 Profit associated with global organisations/Allbirds
An organisation who entering the global market can gain several advantages and increase the business profit. It helps them to increase the size of potential markets and allows to take advantage of arbitrage opportunities. In case of Allbirds can increase in sales figure with global market and market differentiation gives added value to expand product’s life cycle. A company can gain local service to increase market share like low cost advertisement and low labour cost, low delivery cost etc. Developing a new ‘lower end’ product with less functionality for markets that cannot afford higher prices
5.3 Risk for a global organisations/Allbirds
Operating a business is not always profitable sometimes it is full of uncertain risk and certain risk. Defining the uncertain risk could not be possible as one does not know when they happen for example a region where risk of flood, earthquakes, arise of local problem other risks. But certain risk can be identify and can be avoid by pre management.
Possible risk for a company in global market.
Political and economic risk: Social unrest, terrorism, laws and their enforcement,
Currency risks: Currency exchange fluctuations, appreciation in US dollars etc.
Management risks: Culture and customs, language, income levels, customer preferences, distribution system etc.
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