800 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas..
As the firm looks for ways to offset the domestic downturn in sales, Deborah, the CEO of your company, wants to determine if a global strategy is a good fit for the organization. She has designated you as the manager for this project. You will work with your team to develop a global marketing plan for your organization.
You begin your research in deciding if and what the global strategy should be. You get your team together and begin to discuss a plan on how you will research this possibility.
You start the meeting by saying “Let’s brainstorm and start to get a plan together for a possible globalization strategy. Tiffany, I’d like you work with me to begin researching possible locations.”
Tiffany says, “I think we need to research some locations, but I think there is more to it than that. There still needs to be a decision on the type of strategy or approach we are taking. Would we use a multidomestic approach, a global approach, or a transnational approach? I’m still not entirely convinced a global strategy is the answer.”
“Great point, Tiffany. It is obvious to me as well that we need to explore a strategy that will put us in a better position to handle the economic downturn. We have to provide the board with the facts. They seem to be leaning in the direction of a global strategy, but I’m not sure it’s the right move either. That’s why we need to do research.”
Discuss the following:
Primary Response should include:
You spent the last week reflecting on both your appreciation of Deborah’s praise and the success of the organization, and then had a long weekend with your family. As you walk in to work on Monday, all you can think about is how excited you are about the future of the company.
You sit down at your desk and get started on your newest marketing proposal for Deborah when there is a knock at your door. When you call for the person to come in, Anna, the financial analyst, enters.
“Good morning,” she says. You are surprised to see that she looks nervous because Anna usually has a smile on her face.
“Hi, Anna. Is everything okay?” you ask.
“Well,” Anna begins, “I just finished our quarterly report. Our profit margins have dropped by 2% this quarter.”
After Anna leaves to send her report to Deborah, you start to wonder how you and your team can help fix this. Is a global strategy the answer, or should the company continue to focus on the domestic market?
You call a team meeting to learn about the progress of their research.
Tiffany, one of your team members, begins the discussion. “I think we need to look at some of the internal factors,” she says. “We know what our capabilities are on the domestic front, but what about in the global market? We have a fairly strong market presence here in higher-end markets, but how does that translate globally?”
“Well, I think we need to identify a benchmark to give us some more information to make a better decision,” you explain. Answer the following:
Mike, one of the marketing strategists on your team, stops at your office door wanting to talk. “We use fabrics that are made domestically; however, there are issues with using these same fabrics globally. There are laws and regulations that prevent us from shipping these fabrics to other countries. This is a huge concern. One of our primary selling points is the consistency of quality of our product.”
You confirm Mike’s concern, “That’s an excellent point,” you say. “Now you’ve just given yourself and our team more work for the presentation. I’m sure that will come up. One of the board members used to run a textile plant in China.”
Mike nods his head in agreement. “I imagine textiles will not be the only resource concern,” he says.
Consider the following in your response:
Management in Dynamic Environment
Management in Dynamic Environment
Expanding business operations internationally is one of the most significant strategic objectives of many organizations. This is because of the manner in which it broadens their horizons and also enhances the visibility of the brand in question. Such an endeavor does also increase sales since more potential clients are exposed to the goods and services on offer (Cao, 2011). Studies have indicated that the overall competition is reduced to a significant extent. Above all, a firm is able to mitigate vulnerability which comes as a result of the changes in trends. Nonetheless, there are challenges too (Moss, McGrath, Tonge, & Harris, 2012).
Expanding internationally introduces timing challenges. In addition to timing, language barrier becomes such a significant impediment, and so is the issue of currency fluctuation. At times, these issues can event eliminate profits in total, and hence the leverage of having to undergo the challenges of investing, say, in China is completely watered down (Nonaka, Hirose, & Takeda, 2016). It is also important to appreciate the fact that no one can accomplish credible business operations in a market that they barely understand. Knowing the market is the initial step, and such a market ought to be understood in depth. Finally, the local politics must never be ignored (Lessard, Teece, & Leih, 2016).
The political environments internationally tend to look quite different from the domestic environments. It is quite common for various governments to seize and to take control of the market, and even business units themselves. They argue that it is in their best interest, or at least the best interest of their citizens (Lessard et al., 2016). Such moves make the entire operational profits which could have been earned by businesses to disappear. In some cases, there are conditions which demand of an organization to operate in a certain way or risk complete confiscation or fining. The failure to allow a company to operate as it wishes means that creativity is discourages, or sometimes penalized (Cao, 2011; Moss et al., 2012).
Mike finds it concerning that even though the products and services being offered domestically meet the quality standards of a Western economy; such a high standard is still not acceptable in some of the middle-income economies. It could be that foreign firms are penalized or made to face tougher conditions so as to mitigate the kind of competition the local ones face. Now that a foreign investor is to compete for the same resources as the local firms, resources are such a issue of concern (Nonaka et al., 2016).
Succeeding with a global strategy means that a lot of funds have to be spent. Many firms allocate figures in terms of billions of dollars, which is a substantial amount of money considering that it might be borrowed from financial institutions. A huge chunk of the money is dedicated to marketing while the rest could be directed towards the setting-up and inaugurating the business enterprise. Investing such huge sums of money need one to be sure of the kind of markets and the activities they are engaging in. otherwise, a lot could be wasted without much gains (Nonaka et al., 2016).
Another resource issue is the lengthy time horizons. It is imperative to appreciate that global strategies are built in a long period of time. In fact, relatively new companies have always taken time to become established. A huge majority of what are now considered global companies started within just a single country. They then extended overtime. Time is a resource, and the stakeholders ought to have lengthy horizons in order not to rush decisions and actions (Cao, 2011; Moss et al., 2012).
In order to understand what is needed on the global stage, a firm needs keen stakeholders such as Mike. Additionally, the senior management has to be committed and also direct their efforts towards achieving the desired objectives. Of course, it is important to invest in research. Some firms differentiate between the ordinary research and development and market research (Nonaka et al., 2016). Those who tend to define ‘market research’ are keen on making sure that they exploit every opportunity that is availed by knowing the market. Research is usually geared towards rethinking the aspects of the value chain and business in general in order to improve the gains as much as possible (Lessard et al., 2016).
In summary, resources are a concern at the global level since there are many competitors and limited supply of these particular resources. The sourcing, securing, and utilization of these resources mean that various stakeholders are involved; and balancing their views is a complicated endeavor. In essence, those involved have to remain dedicated to delivering quality at all times irrespective of the kind of limitations they come across (Laats & Haldma, 2012).
A firm seeking to invest in China has to be concerned about resources since as a parent firm; of course, it has to make the largest share or even the entire 100% equity investments. This is not really suitable for small and medium sized organizations. China has a huge human resource, and there has been increasing competency since it is an educated society. Depending on the source, statistics show that literacy rate is in the range of 95%-100%. Chinese are industrious, and this has been recognized world-over (Moss et al., 2012).
Since the economic realignment that made China a market economy, capitalistic tendencies have resulted into a scenario where creativity is rewarded. China has become the “factory of the world” due to an enhancement of the level of infrastructure. Some studies have concluded that China has world-class infrastructure. There is also access to capitalistic enterprising via Hong Kong and Taiwan. In fact, it is imperative to appreciate that most manufacturing firms in Guangdong were initiated by Hong Kong and Taiwanese managers. These stakeholders did understand what it takes to run a factory, and they were thus up to the challenge (Laats & Haldma, 2012).
China has favorable governmental regulations. There is decent enforcement with low taxation regimes, lax labor laws, lax environmental laws, and lesser red-tapes. Even if Western firms could be committed to environmental protection, they still do find some of the regulations being derailing; and hence an environment like China that offers an expansive room for maneuverability could seem to be appealing (Cao, 2011; Nonaka et al., 2016).
Several countries are lining-up to take the place of China as global manufacturers once the trends make China undesirable. One of the results could be that the Chinese will start demanding for higher pay, and raw materials will become scarce. Among the countries to take the spot include Ethiopia, Vietnam, and even Nigeria. Before then, China is still a viable option (Cao, 2011; Lessard et al., 2016). China has efficient seaports and other forms of infrastructure, adequate human resource and raw materials, and the knowledge transfer is happening at a remarkable speed. Expanding into China will pay both in the short as well as in the medium-term, and the firm ought to proceed with the decision to invest into that country (Moss et al., 2012; Nonaka et al., 2016).
Vietnamese and Ethiopians are paid low wages, and this could be one of the factors which could make their markets attractive. Nonetheless, China still dominates in terms of infrastructure, managerial skills and experience, and level of innovation. The Chinese government is also way restrained as compared to those of several other developing countries of the world (Nonaka et al., 2016). Therefore, comparing the decision to invest in China with that of choosing a different leaves one with no doubt that China is, indeed, the best option on the table. This will give the firm a competitive advantage since the products will be delivered on a timely basis, and the quality is certainly assured to be competitive. This is a credible option, and the firm ought to exploit it (Lessard et al., 2016).
Cao, L. (2011, August). Dynamic capabilities in a turbulent market environment: empirical evidence from international retailers in China. Journal of Strategic Marketing, 19(5), 455-469. DOI: 10.1080/0965254X.2011.565883
Laats, K., & Haldma, T. (2012). Changes in the scope of management accounting systems in the dynamic economic context. Economics & Management, 17(2), 441-447. DOI: 10.5755/j01.em.17.2.2164
Lessard, D., Teece, D.J., & Leih, S. (2016, August). The dynamic capabilities of meta-multinationals. Global Strategy Journal, 6(3), 211-224. DOI: 10.1002/gsj.1126
Moss, D., McGrath, C., Tonge, J., & Harris, P. (2012, Feb.). Exploring the management of the corporate public affairs function in a dynamic global environment. Journal of Public Affairs (14723891), 12(1), 47-60. DOI: 10.1002/pa.1406
Nonaka, I., Hirose, A., & Takeda, Y. (2016, August). ‘Meso’-foundations of dynamic capabilities: team-level synthesis and distributed leadership as the source of dynamic creativity. Global Strategy Journal, 6(3), 168-182. DOI: 10.1002/gsj.1125
Q 1: Benchmark
A benchmark refers to standards developed by a company for the purpose of analyzing performance or quality level (Naga, 2011). In benchmarking, the primary metrics of a company are compared to companies under the same sector or to own operations. The concept assists a company to visualize performance, identify the areas that require improvement, and foster the company’s general performance. Benchmarking is subdivided into external and internal. Internal benchmarking refers to the comparison and evaluation of the performance and conduct of project teams and internal processes ( Frynas, 2015) . External benchmarking is a comparison of a company’s performance to that of other companies falling under the same sector.
The organization should use internal benchmarking. From the scenario, the organization aspires to focus on the internal factors. It is aware about its capabilities locally. However, it is unsure about its capabilities internationally. In addition, its establishment in the local market is fairly strong. It is however, unclear about the international market. By adopting internal benchmarking, the organization will be able to acknowledge its capabilities and establishment in the international market. As internal benchmarking is within an organization, it can employ the balanced scorecard’s finance perspective. This perspective aims at maximizing profit. It is an important aspect because the organization’s quarterly report indicates that the profit margins declined by two percent. The benchmark that can be used to monitor the organization’s financial performance is the gross margin. It can confirm a decline or increase in profit by calculating the gross margin and making comparisons between the current and previous quarter.
Q 2: Global expansion benefit
Yes, the organization benefited by expanding globally. It witnessed improved profits. The overseas markets are not saturated, unlike the domestic market. As a result, the organization has realized improved gross margins due to the expansion globally. In addition, it was able to establish its presence globally. The other benefits are advancement in growth globally, return on investment, universal existence, and increased productivity. It also has the opportunity to aim at the high-end markets in the global market. It can explore production services in countries where the manufacturing rate is low which will, in turn, enable it to promote its goods at feasible costs. Generally, international expansion has been a first mover advantage over the competitors, improved its bottom lines, and recorded more profit.
Q 3: Benchmark’s domestic market share benefit or hindrance
The expansion benefitted the benchmark’s market share of the domestic market. Its market share has improved because of expanding internationally. Notably, universal growth promotes cost reductions, technological advancement, and products differentiation, leading to a boost of its market share in the domestic market. An organization can charge premium when it differentiates its products. Its market shares have also improved as it can offer product varieties to the customers. Similarly, it can import the products at lower costs. Its share has increased in many areas due to feasible costs. Improved market share is also due to the ability to reach out to market segments that had not been targeted initially.
Q 4: Risks
Yes, there were risks as a result of globalization. The first risk is exchange rate fluctuation. The exchange rate between one currency and another fluctuates depending on the time period. The currency exchange rate fluctuation can result in losses or gains. The second risk is country risk. Country risk consists of economic and political risks (Hou, 2013). These risks have adverse impacts on the business. Political risks expose a company to money loss because of aspects such as terrorism and trade barriers. Economic risk is related to the finance state of a country and the ability to repay borrowed money. The other risks as a result of globalization are reduced quality control or quality control loss, long delivery times and production, difficulty in forming strong relationships with reliable and reputable suppliers and partners, and potential theft of intellectual property (N.A., 2015).
Q 5: Risks minimization
To minimize risks, the organization established some offices in the overseas country to check quality control and enhance quick delivery. It also safeguarded intellectual property. Moreover, it formed contracts with production facilities that are reputable, value quality, and meet product specifications. The company should take into account its national currency to do the business to minimize exchange rate risk. If it is unable to choose the national currency then, it should add a buffer to any invoice quotation made in a foreign currency or form a contract to share the risk between the seller and buyer. Second, make use of finance instruments such as futures, options and forwards to hedge risk (Hou, 2013). To minimize country risk, the company should analyze the host country’s political risk or approximate the economic condition and growth in the future by assessing the country’s gross domestic product, inflation, unemployment rate, among other measures.
Frynas, J. (2015). Global strategic management. New York, N.Y.: Oxford University Press.
Hou, X. (2013). Risk management in international business. Retrieved from https://www.soa.org/library/newsletters/risk-management…/jrm-2013-iss27-hou.aspx
N.A. (2015, March 31). Business risk factors. Retrieved from https:// www.renesas.com/ir/company/risk.html
Naga, A. (2011). Strategic management. New Delhi, India: Vikas Publishing House.
How do you define a global strategy?
The global strategy contains the International Strategies small as well as medium-sized firms since they move past their countries. Global strategy likewise includes the Strategic Management relate to all organizations considering the stratagems towards achieving their up and coming undertakings. It includes the ceaseless Global Management endeavors that unavoidably happen for associations that have been engaged with worldwide activities all through various years. It additionally conceals issues regarding the matter of Globalization as the universe ends up diminutive and we turn out to be involved with each other. Strategies give a long haul course to the organization. It assists the firm in accomplishing the upper hand to the firm. Furthermore, it conveys to the organization regarding its marketplace, benchmarks and the way to deal with the sources with an end goal to experience the aims of the foundation. Therefore, Global Strategy can be described as the concentration and scope of an organization as time goes on. This will achieve points of interest for the organization through its development of sources within a baffling climate, meeting the marketplace needs and fulfilling the investor’s desires (Hill, 2008).
The key universal strategies include transnational, global as well as multi-domestic. Each of these strategies comprises of unique methodologies trying to develop productivity through nations and attempting to be receptive to adaption in consumer slants as well as marketplace conditions all through nations.
This strategy is a system whereby organization endeavor to achieve the most extreme neighboring response by fitting their stock proffering and advertising stratagems to comparable disparate across the nation circumstances (Lakshman et al., 2017). The clearest approach towards defining this strategy is an organization that uses a unique strategy in each one of the marketplaces it works in the promotion, R&D and manufacturing endeavors tend to be built up in all key across the nation marketplace where business is done. An organization that uses this strategy penances capability with the help of highlighting responsiveness to neighborhood essentials within each one of its marketplaces.
This strategy helps with settling on decisions about the long-range course in reference towards global business (Lakshman et al., 2017). It is a methodology that thinks about the world as a marketplace as well as providing a resource with insignificant nearby decent variety. Basically, competitive advantage is built up generally on an overall establishment (Meyer & Su, 2015). Universal strategy: the company’s expectations associate chiefly to the home marketplace. By and by, there are objectives concerning outer activities and thusly require a global strategy. Quite, the upper hand – indispensable in strategy development – is built up predominantly for the home marketplace. Multinational organizations secure economies of scale through shared as well as marketplace tantamount stock in a few countries. Multi-domestic firms have an autonomous command center in different nations, in this manner, procuring extra limited management, in any case; at a hoisted rate of forging the economies of scale from value dividing and imposing business model (Hill, 2008).
In multinational strategy, the organization is entangled in a few of marketplace outside the country. In any case, it requires recognizing stratagems for each marketplace as buyer needs as well, perchance rivalry, are different in each country. Basically, the focused advantage is controlled autonomously for every country.
A transnational firm oversees operations in various countries with an assortment of levels of synchronization and blends of strategies and capacities (Elter et al., 2014). It unites worldwide degree, coordinating capacities and the use of single advantages of neighborhood marketplaces towards pushing deals, a piece of the pie and income increment. It incorporates working in different overall markets, contriving receptive authoritative arrangements and creating esteem included endeavors that exploit national correlations and refinements. Meyer & Su (2015) explains transnational strategic management as reiterations of basic learning and execution upgrades.
The 3 possible countries options for globalization, in this case, would be Japan, China, and Brazil. China is a key progressing player in the worldwide furniture advertise. Furniture is one of the nation’s most rapid developing fare areas. The furniture assembling of assorted types as well as materials is projected to be almost $ 15 billion that, with net tariffs of about $4 billion, demonstrating that apparent charge is approximately $ 10 billion (Lakshman et al., 2017). The continuous dissimilarity of interest, as well as imports, has set a piece of the Japanese furniture to advertising. The GDP value of Japan represents about 8 percent of the world economy. According to (Wood & Wilberger, 2015), gross domestic product in Japan is accounted for by the World Bank Group.
Moreover, Brazil is a standout among the most growing economies in the world (Meyer & Su, 2015). Through sizeable as well as creating cultivating, generation as well as management territories, Brazil economy is one of the highest in the hub of South American nations. The GDP worth of Brazil is around equivalent to 3.5 percent of the worldwide economy (Lakshman et al., 2017). Brazil has the highest obligation from the management department among countries such as Japan, China as well itself. It is a reflection of its capability of development in future. On the other hand, Japan is position 2 in the customary world after the United States. China has set up itself as a rising monetary center in Asia, as well as its relative worldwide significance is rapidly moving toward the greatest European economies (Elter et al., 2014).
Consequently, I would recommend Brazil as a nation for expansion as well as a country that can adjust towards global strategy. As I would see it, I believe that others might believe that maybe China would be lucrative due to its regularly expanding steps in the worldwide marketplace.
Moreover, I would allow them to know whether they would take the plans, they will locate that even as China and Japan keep on growing hence does Brazil grow. It is my projection that Brazil will continue growing at a fast pace.
Elter, F., Gooderham, P. N., & Ulset, S. (2014). Functional-level transformation in multi- domestic MNCs: Transforming local purchasing into globally integrated purchasing. In Orchestration of the Global Network Organization (pp. 99-120). Emerald Group Publishing Limited.
Hill, C. (2008). International Business: Competing in the global marketplace. strategic direction, 24(9).
Lakshman, S., Lakshman, S., Lakshman, C., & Lakshman, C. (2017). The dynamic change in expatriate roles: strategy type and stage of internationalization. Management Decision, 55(8), 1770-1784.
Meyer, K. E., & Su, Y. S. (2015). Integration and responsiveness in subsidiaries in emerging economies. Journal of World Business, 50(1), 149-158.
Wood, V. R., & Wilberger, J. S. (2015). Globalization, cultural diversity and organizational commitment: Theoretical Underpinnings. The world, 6(2), 154-171.
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