Assignment
Write a 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:
• How do you define a global strategy?
• Are there other international strategies, and how do they differ?
• Identify a minimum of 3 possible countries and location options for globalization. Research each of these locations in the furniture industry, and document both the pros and cons of using these in global strategy.
• What country would you choose? What evidence can you provide in support of your choice?
• What evidence might somebody else, who does not agree with you, provide to support his or her choice?
• What could you tell somebody else to show he or she is wrong?
Primary Response should include:
• Definition of a global strategy
• Identified and described different International strategies and then highlighted how they differed from one another (Hint: different international strategies were flagged in the task scenario)
• Identified a minimum of 3 countries to research for globalization, shared pros and cons of each using these in a global strategy before selecting the one that emerged as the best option for FCF to pursue for global expansion and explain why. Note: the country that you select is the one that you will be researching from this point on in the class
• Acknowledged an opposing view of your country selection and then provided a solid rebuttal
• Adhered to Academic writing and formatting expectations
• Title contents are displayed at the beginning of the Primary Response
• Demonstrated how you applied the knowledge gained from your research by including in-text citations appropriately in the core part of your Primary Response
• Included a Reference section at the end of the Primary Response (must list a minimum of two credible sources and must adhere to APA formatting rules)
• 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.
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:
• What is your benchmark?
• Did it benefit from global expansion? If so, how? If not, why?
• Did this benefit or hinder the benchmark's domestic market share? Explain.
• Were there risks associated with the globalization?
• How were these risks minimized?
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:
• Why should resources be a concern in a global strategy?
• What resources may be a concern in the country you selected?
• How will this impact the decision to move to the country that you selected?
• How will this impact your competitive strategy in your global market?
Review the reference materials on global strategy as there is information that may assist with the assignment.
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).
Politics and Regulatory Frameworks
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).
The Resources and the Global Strategy
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).
The Resources of Concern in China
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).
How the Resources Influence the Decision to Expand into China
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).
Conclusion
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).
References
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.