An international business strategy is important to ensure success of multinational companies. The market entry strategy must be carefully analyzed to enable the company meets its objectives. It is challenging for a company to operate in another jurisdiction away from the country of incorporation. A business strategy aims at formulating various goals and business functions that leads to profitability. It is at this stage that potential markets are identified, market competitors are analyzed and how to counter them (Raghunath).
- What are the two types of pressures that firms competing in the global marketplace typically face? Under what types of conditions do these pressures arise? (1 point)
Firms competing for the global space normally undergoes both systematic and unsystematic challenges. The well established companies in the host country poses a great competition challenge to the market entrants. The second pressure is results from the market information and adaptability to the new products by the new entrant. The operating environment in the host country may be different from home environment (Raghunath,32).
- What are the four main strategies or approaches firms may follow to face these pressures? Describe the basic approach of each of these strategies, specifically in terms of its response to the two basic pressures. (2 points)
There is a great challenge in recruiting competent employees who should match the Companies expectations and target levels. The legal structure may be different and to some extent unfriendly to foreign incorporated companies. To solve the challenge of competition the market entrant need to devises a proper strategy of how to capture the market. This is achieved through recruiting a highly skilled and experienced marketing team with adequate knowledge of the market. Market entrants need to align their goals to that of the authorities in the new market. This enhances their acceptability and the government ensures friendly legislation to encourage foreign companies and investment. To have the right employees for the job the entrants should undertake personnel development to ensure the right skills and technical knowledge.
- Once a company has identified the general strategy it will pursue in an international market, it must determine how it will enter the market (entry mode). Discuss how the need for control over foreign operations varies with a firm’s strategies and core competence. What are the implications for the choice of entry mode? (1 point)
Once a company has devised an international business strategy the next step is formulate a market entry strategy. This will be through direct exporting or indirect exporting; a trusted distributor is appointed to represent the company in the overseas market. The other option is to undertake production directly in the host country. Manufacturing and production in the host country will take the form of; greenfield project, business alliance, joint ventures and turnkey project (Ketelhonn et al). A market entrant may also consider licensing another producer in the host country to undertake production on its behalf. Franchising will entail the market entrant giving production rights to another company to function as per its standards and specifications. By choosing a direct entry into the host country the market entrant will be able to have full control on production and have the guarantee for high quality. Indirect entry dilutes the level of control and may compromise the quality of goods and services against the parent company expectations.
4a. Why do you think that Roberto Goizueta switched from a strategy that emphasized localization toward one that emphasized global standardization? What were the benefits of such a strategy?
Coca Cola company has established a global presence for many years. To maintain global competitiveness on the soft drink industries, modern marketing strategies must be adopted. Coca Cola is famous for its direct entry strategy into the market through foreign direct investment. The company maintains various plant and machinery all over the world with a facility for bottling. The main reason why Coca Cola uses direct entry strategy is to enable full control for its products and ensure market satisfaction. To increase sales volume Roberto Goizueta switched the localization strategy to a market friendly global standardization strategy. The benefits of the global standardization strategy ensure uniformity among all branches worldwide. All the coca cola products are unique and same. This ranges from the bottle size, shape, quality and packaging. The problem with localized standard for a multinational is the inability to meet product goal as per the parent company objectives.
4b. What were the limitations of Goizueta’s strategy that persuaded his successor, Daft, to shift away from it? What was Daft trying to achieve? Daft’s strategy also did not produce the desired results. Why do you think this was the case?
The limitation of Goizueta strategy is inability to provide global information regarding a product. It makes it hard for a company to market products between countries. This strategy is not applicable to Coca Cola who have an objective of making a similar to the whole market. It is expensive to market a single brand of the product in a specific market as there is no economies of scale. The Daft strategy which focused on adopting similar strategy per market would not produce the required results since some market were complex to handle than others. The market was used to equal treatment which changes in the Daft strategy.
4c. How would you characterize the strategy pursued by Coca-Cola under Isdell’s leadership? What is the enterprise trying to do? How is this different from the strategies of both Goizueta and Daft? What are the benefits? What are the potential costs and risks?
Isdell’s strategy advocated for products that meets consumer tastes and preferences. The benefit with this strategy is that it enables Coca Cola to produce customized products as per the market need. The potential cost with this strategy is the inability to capture the different tastes in the global market and come up with a solution.
4d. What does the evolution of Coca-Cola’s strategy tell you about the convergence of consumer tastes and preferences in today’s global economy?
The evolution of Coca Cola strategy shows that the customers should always be treated like a king. The tastes and preferences should be taken from all Coca Cola markets to enable production of customized soft drinks.
5 a. Why did Cemex decide that it should expand internationally?
The reason why Cemex decided to expand internationally is to expand its market, increase its sales and profitability. India has transformed from a low income country to a medium income which has resulted from high economic growth. JCB have high market prospect from the Indian market.
5 b. Why did Cemex choose to use wholly-owned subsidiaries instead of licensing or exporting to participate in the international market?
The reason why Cemex chose to use wholly-owned subsidiary is to enable total control of the market and to avoid agency related problems.
5c. Why did Cemex prefer to buy another company (acquisition) instead of going into a country and starting a completely new operation (greenfield ventures) as a way to enter these foreign markets?
Cemex preferred to acquire another company to make it easy to enter the market. The acquired company had a lot of experience and in the market.
5d. GE used to prefer acquisitions or greenfield ventures as an entry mode rather than joint ventures. Why do you think this was the case?
The reason why GE preferred acquisition and use of greenfield ventures than joint ventures is to avoid diluting its profits and level of control.
5e. What attracted JCB to India back in 1979? What were the benefits of making a significant investment in the country?
JCB was attracted to the Indian market as a result of change in economic policy which increased the purchasing power for the general market. It would be easier to market products and make high revenues.
5f. Which entry mode did JCB use to enter India? What advantages did this entry mode have over other ways to expand into the market?
JCB used a direct entry strategy to get in the Indian market through foreign direct investment. This has made it easy to control the market through direct influence on production.
5g. In your opinion, has JCB business strategy and approach to India paid off? Was the company’s decision to make a significant commitment to the market a good one?
This entry has paid off through increased sales and profitability to JCB from the Indian market. McDonald’s an American multinational uses the localization strategy to influence the market. This explains why their products vary with the market. the advantage of a localized strategy is the ability to address the specific need of a market.
6. McDonalds localization approach in the international market
In an effort to appease each individual market McDonald has recently shifted its global strategy to a more localized strategy. The multinational offers a range of food products and services depending on the tastes and preferences of the market. the advertising language is in the main language used in the host country (Collins,34-35). The company follows the set rules and regulations as per the specific country legislation.
McDonalds uses a different menu for its markets in England, south Africa and Hong Kong. E marketing is more common in England and Hong Kong than it is in south Africa. Indigenous cuisines have been introduced in each market to attract a huge pool of local customers. Free delivery services are available in all markets served by the company.
Works Cited
Raghunath, S, and Elizabeth L. Rose. International Business Strategy: Perspectives on Implementation in Emerging Markets.2017. Print.
Ketelhöhn, Werner, Jan Kubes, and James C. Elbert. Cases in International Business Strategy. Oxford: Butterworth-Heinemann, 2015. Print.
Collins, Tracy B. Fast Food. Farmington Hills, MI: Greenhaven Press, 2013. Print