DQ 1: Summarize the most important benefits and risks associated with diversification into global markets.
There are benefits and there are risks associated with diversification into global markets. Diversification into global markets means a company is seeking to have the control in one central area instead of in many different areas because ultimately they are seeking to control their costs. The main advantage of a global market is that a company does not need to make a lot of variations of a product. They can instead just make one quality standardized product, which means it is easier for the company to keep everyone on the same page in regard to any changes or innovations to their products. Ultimately having a global market means
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For example, the creators of Sesame Street have not only tailored their show to be in different languages depending upon where it’s aired, but they have also tailored the shows characters and their experiences for the specific market. The article also mentioned how Google adapts its interface for the specific market that it is accessed in especially when it featured the characters from Sesame Street on its interface. I found it pretty interesting that these two companies would go to such great lengths to adapt to the local markets.
References
A quick example of local adaptation. (n.d.). Retrieved November 16, 2013, from International Business and Strategy Blog: http://internationalbs.wordpress.com/2009/11/16/a-quick-example-of-local-adaptation/
(2012). Chapter 7: International Strategy. In G. G. Dess, G. T. Lumpkin, A. B. Eisner, & G. McNamara, Strategic Management (pp. 257, 259-260). New York: McGraw-Hill/Irwin.
DQ 3: According to Theodore Levitt, what are the three assumptions that favor the pursuit of a "pure" global strategy? Briefly provide counterarguments to each assumption?
According to Theodore Levitt there are three assumptions that favor the pursuit of “pure” global strategy. The first one is that customers worldwide are starting to all want the same things. If this were true, I’d be able to buy the same things that I can buy in the United States in
One of the most important “dos” is for countries to pay renewed attention to the market selection which they are competing in. More precisely, these countries should focus on maximizing their opportunities where they can find cultural, administrative/political, geographic, and economic affinities. Companies use three different techniques to compete globally. These techniques are adaptation, aggregation, and arbitrage. According to Ghemaway, companies must be able to “vary products, policies, market positioning, and so on to suit local markets.” However, this method of adaptation is intended for companies which have large success and not those who have marginally. Another, important “do” is for “companies to externalize some of the costs of adaptation via franchising, joint ventures, or other types of partnerships.” Some “don’ts” are not put adaptation above all because it would get rid of competitive advantages and not to over-rely on localization. Relying too much on localization would hinder the value of across borders for a
So for such move they should follow an international strategy where it applicable to all markets. Firms can gain various benefits from international strategies such as increased market size, greater returns on
One of the benefits of a global market would be more specialization. Global markets would be able to use the best products and services from qualified parts of the world at a decreased cost. With more specialized products on the market; the consumer would have more options and choices at their disposal. In short term and long term will result in greater products for the consumer and it would be less expensive for the businesses.
Pearce, J. A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13th ed). New York, NY: McGraw Hill.
Today, firms have to deal with a global marketplace; marketers have no other choice. Participation in global marketing has begun to shift from a mere “option” to an imperative. The world is becoming more homogeneous. Distinctions between national markets
According to Levitt, the successful global corporation does not abjure customization or differentiation for the requirements of markets that differ in product preferences, spending patterns, shopping preferences, and institutional or legal arrangements. But the global corporation accepts and adjusts to these differences only reluctantly, only after relentlessly testing their
This paper contributes to the global strategy literature by outlining the four debates that we believe to be frontier issues with which the field will engage in the years to come. Its purpose is to review four current debates taking place in the field of global strategic management and international business. The review provides in-depth coverage of the four major global strategic management debates, comprising: (1) cultural vs institutional distance; (2) global vs regional geographic diversification; (3) convergence vs divergence in corporate governance, and (4)
An application into the case of Lincoln Electric shows that this company is correct in doing international expansions. Such actions are suitable for the market development strategy when the company wants to increase sales outside the domestic market. In addition, because of diversified markets during the global expansions, this company has customized products to fit for or developed new ones. Thus, it is changing towards diversification strategy. The both success and failures of Lincoln during the international expansions are helpful for other industries. Importantly, a thorough understanding of the local is a key for international expansions (E. Porter,
Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.
Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.
Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other reasons to internationalize their business may be to become
This is the first Masters level and business focused class I have ever taken. Most topics are completely new to me, although there have been a number that have peaked my interest, for the most part this materiel is all new. The concept of incorporating a global focus into one’s business plan seems practical since today’s age of technology is expanding the reach of all but few businesses. To focus strictly on the domestic possibilities limits a businesses’ potential and minimizes the broad reach of resources that a global environment offers. Prior to this class I did not realize how many advantages are associated with a global outlook. The following are some of those advantages: managers and entrepreneurs have access to a larger talent pool for possible employment; natural resources are abundant both labor and supply; the possibility for growth is enhanced; and with that comes the possibility for increased profit. In order for entrepreneurs and managers to reap the benefits of a global business, they must first structure a business plan based on their strategic vision to incorporate a more globally focused business process. When venturing into uncharted waters such as the global market or foreign investment, there are a number of pitfalls related to cultural variations that can derail even the most successful of domestic companies. Therefore, it is imperative for managers and executives to develop a globally focused business plan based off of stringent
“A global strategy must match the globalization potential of the industry as defined by the cost, market, government and competitive environments”
As trade increases hyper-competition grows forcing organizations to go global. By a company going global it requires them to rethink strategy and reform (Ananthram and Pearson, 2008). Global organizational structure is the way a company aims to merge local preferences with global strategy. The definition of global strategy is “strategic choices that have the characteristics of being globally uniform or integrated,” (Yip et al., 1997) such as standardization of products, uniform marketing, and competitive moves, but all globally (Townsend et al., 2004; Zou and Cavusgil, 2002; Bayraktar and Ndubisi, 2014). Global strategic strategy is a way to adjust to globalization. Globalization is “the economic and social process by which economies and communities grow inextricably interdependent “(Jhirad et al., 2009). The recent financial crisis (Das, 2010), large amount of poverty, and climate change are all problems that show how the world is globally connected because all countries impact each other (Jhirad et al., 2009).
There are four international competitive strategies that include: global standardization, localization, transnational, and international. Global standardization is a business model based on pursuing a low-cost strategy on a global scale. Localization, on the other hand is a strategy that is focused on increasing profitability by customizing the company’s goods or services so that the goods provide a favorable match to tastes and preferences in different national markets. Moving on transnational strategy, which is a business model that simultaneously achieves low cost, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network operations. Last of the international competitive strategies is the international strategy which involves making products at home, while leaving other functions to foreign business units.