Corporate Strategy Totto Global
Corporate Strategy Totto Global aspires to be a great company that is trusted by people all over the world and contributes to society’s progress.
Corporate Strategy Totto Global
This assignment sheds light on the corporate strategy and analysis of the complex environment of a company, Totto.
The report analyses the scope and chance of making this company global through strategic analysis.
Corporate Competitive environment
Businesses operate in changing environment that offers challenges for modernising the production process;
hence, a competitive and unstable business environment is created.
The competitive business environment is referred to as the organisational setup,
both tangible and intangible, in which a business operates, functions,
and competes with other companies (Sołoducho-Pelc and Sulich, 2020).
Totto operates in a global environment with products such as backpacks, clothing and accessories,
and it has expanded its domain in countries such as Columbia, Cali, and other 48 countries.
As per the views of Hopkinson et al. (2018), maintenance of a global economy for expanding businesses challenges
such as emergence complexity, “strategic integration”, financial downturns and “challenging profitability”.
Totto, in a similar way, faces stiff competition in terms of cultural and language barriers, political pressures of law enforcement, and artificial fibres.
. Totto expanded its market in several phases, from supplying factory products to chains of shops to opening retail stores,
and then through franchise taking, the store expanded internationally.
The undertaking of the franchise model has been the major decision for Totto for developing in the global market
that helped the company rolls out its operations in the Latin American market.
Totto built partnerships for running franchise and sub-franchise operations; this corporate strategy has stimulated the company.
As per the views of Hassan et al. (2021), franchising is a method of strategizing businesses
wherein the entrepreneur is placed at the base of the pyramid and gains opportunities in the business sector.
It uses an efficient operational strategy and leadership system that small enterprises grow tremendously.
The strategic factors that have helped Totto gain success in the global competitive environment
are location, brand reputation, strong advertising and marketing.
Corporate strategic management depends on the four main factors:
resource allocation, trading, portfolio management, and organisational structure.
As per the views of Pröllochs and Feuerriegel (2020), strategic management includes all the analysis, decisions,
actions that an organization takes to gain a competitive advantage.
In this context, several tools and techniques such as SWOT analysis enable an organization to know its environment.
Sustainable competitive advantage
External factors Analysis
Porters Fiver forces Analysis-have done the external factor analysis
Competitive Rivalry- A huge number of competitors can experience with large number of equivalent products in market, thus, high competition.
Bargaining power of suppliers- the power of suppliers remain low because there are more producers and totto’s suppliers provide them with items in cheap.
Bargaining power of Buyers- customers play a significant role and have high potential for taking products in cheap rates, as suppliers are more.
Threat of Substitutes- Totto has a good competition in the markets of developed economy. Therefore, it targets underdeveloped and developing economy for most of its sales
Threats of new entrants- Totto has been able to grab world market for a long time, thus, the risk of new entrants in market is relatively low.
- The key opportunities for the firm are- venturing in new countries
- Uses low cost to attract customers.
- Special economic zones in European countries can help expand Totto.
- The Key Threats to the Company are- Government interventions
- China -USA trade war,
- Chinese labor prices hike.
- Pandemic caused reduction in profits due to disrupted supply chains.
Organization and Organisational development and governance
The organization Totto is a family organization that works internationally by cooperating on a different country governance level.
The business must manage its stakeholders (both external and internal), shareholders, debt holders
and others so that value is produced for all and maximised (Zeibote et al. 2019).
Factors such as time, equipment, finance, and competition make up a company’s corporate governance.
Totto’s corporate governance is crucial as it enables the creation of company culture and positive reinforcement to work accordingly.
As per the views of Roehrich et al. (2020), inter-organizational governance helps in achieving success at multiple levels
through the analysis of relational and contractual management and their interplay.
International factors of organizational governance-
- Creation of Company in working framework improves business growth for international collaboration, design and implementing frameworks for designing ideas.
- Alignment of interest of the company owner and managers, namely Yonatan Bursztyn’s, helped business decisions with the international shareholders. The stakeholder decisions enable the company to create brand trust and reputation.
- Good networking needs to be established among the leading companies working in Columbia and other subsidiary firms in several countries such as Mexico, Ecuador, and others.
- The main thing to look after in Totto company and its outlets is to work on the “operational coordination, corporate strategies, expansion, advisory agents.
Relationships to successful corporate strategy formulation
Strategic objectives help a company think long-term and create formal goals to achieve.
As viewed by Magnani et al. (2018), strategic objectives play an important role in choosing foreign
markets to enter through strategies such as “investigation of firms” and the potentiality of the host country.
Totto has created strategic objectives of two or four-year plans to develop retail business,
establish outlets, and give franchises to other operators.
The company works by finding distributors at different places and creating a chain business.
The company’s operational objectives are short-term objectives that helped achieve the strategic objectives.
One of the major operational objectives of the company has been to open a permanent office in Hong Kong
and operate from that region to other parts of the world. As per the views of Aydiner et al. (2019),
enterprise proper resource planning in a standardised way to put forward decision-making and improve business performance.
Totto works in a close network of connections between its sub stores and country distributors.
The company can further apply an ERP system to enable strategic decisions conducting sustainable entrepreneurship (Pohludka et al. 2018).
Impact of organisational culture- Organisational heads use organisational culture to formulate corporate strategy and assess it. As per the views of Alina et al. (2018), organisational culture includes employee motivation, opinion, competitive advantage, and effective working that links with the goals of strategic management. A company creates a good organisational structure with a brand image, good employee base and optimum functioning. Totto has all of these features a brand image, employee base and proper functioning; thus, it has a better position in corporate strategy.
Politics- International politics and internal corporate politics plays an important part in the growth and expansion of a firm. As per Yang et al. (2019) views, the government’s intrusion into businesses for achieving socio-economic objectives can make or break the corporate environment of a business. Apart from this, governments controlling resources hinder outside companies from setting up their strategy. Totto, similarly, faced political uncertainties in Venezuela.
Stakeholder influence- Sustainable management has been a crucial part of corporate governance globally, and stakeholder participation or power plays an important role in the decision making level. As per the views of Yoon and Chung (2018), corporate social responsibility plays a positive role in stakeholder influence; it creates a brand image and helps in rising financial performance.
Social responsibility and ethical issues- Corporate strategy of Totto Company will include decision making based on the community and society’s benefit and the company’s benefit.
Changes in the complex, competitive environment
The company’s background suggests its global expansion strategy that started with distributorship and ended in a giant firm.
As per the views of Jimeno-Morenilla et al. (2021), the implementation of technology and industry 4.0
enables companies to customise products and enhance production efficacy.
Studies suggest that research and innovation can only break deadlocks in a competitive business environment.
Assessing the market needs and then innovating the business model helps create
and run a valuable business and efficient decision-making (Dressler and Paunovíc, 2021).
The company, since its inception, has risen to a huge market occupying 39707 currency as its “net increase in cash”
however; the company has a high range of liabilities due and liabilities of stakeholders.
Totto’s business environment started changing when its profit earnings stagnated from Columbia’s business due to high price issues and tax pressure.
Spain and Portugal’s market and retail stores were costly, making Totto change its corporate strategy from franchise to small stores again.
In the recent future, Totto is considering opening a need in the US after doing business in Latin America and European regions.
Multiple factors form due to economic globalization, such as regional competitiveness, developmental stage of a country,
price of raw materials affect the expansion of businesses internally (Zeibote et al. 2019).
Totto has been able to alter its corporate strategies and revamp its business from time to time.
In conclusion, Totto Company works at an international level,
and it has expanded itself and grown its revenue exponentially through corporate strategies.
The cash flow returns that the company has been able to acquire have been huge,
and there is still a promising future for the company.
The foreign entry strategies and operational objectives of the company are appropriate for its firm,
and hence it can be said that there is the scope of becoming a giant company in the world.