PART A (Theoretical Approach)
Introduction
Expanding into foreign markets can be a beneficial opportunity for companies seeking growth and increased revenue. Additionally, a company may expand into international markets to improve brand awareness, reduce the risks associated with operating in one market, lengthen its product life cycle, and access new target consumer segments Antell and Wallgren (2012, pg 39). However, before entering a foreign market, businesses must assess the potential risks and rewards of doing business in that market. Pepra et al. (2017, pg 151) note that foreign markets necessitate dealing with various languages, customs, legislation, regulations, rules, and standards. The Global Strategy Framework and country attractiveness are crucial factors to consider when determining desirable foreign markets. This paper will discuss how these factors may affect a company’s overall business strategy and what steps it may take to reduce risks.
The global strategy framework
The Global Strategy Framework aids businesses in weighing the advantages and disadvantages of entering a foreign market. According to Johnson (2021, p 15), the global strategy aids businesses in choosing the best approach for their operations and the overseas markets they wish to penetrate. The Multi-Domestic, Global, Transnational, and International systems comprise the Global Strategy Framework.
The Multi-domestic strategy
The strategy aims to meet local needs by customizing goods and services for every market. However, upholding a consistent brand image and gaining economies of scale can be challenging. According to Gooderhan (2012), the strategy enables businesses to react to local market realities and client preferences. A company that employs this tactic has scattered organizational arrangements and a high degree of local autonomy. The business’s business-level strategy may be impacted by its need to modify its goods and services in response to regional consumer demands and market conditions. The company may need to invest significantly in regional research and development, advertising and distribution, and dealing with challenging regulatory and legal situations in every location. Companies may need to spend money creating local capabilities to address these issues, such as forming alliances with regional distributors and suppliers and ensuring they have a solid grasp of local traditions and customs.
The Global Strategy
A corporation with a global strategy is positioned to compete on the world stage as a standardized player. The method delivers uniform goods and services worldwide, allowing businesses to capitalize on economies of scale and preserve their brand identity. Companies can attract customers that value consistency and dependability across markets by establishing themselves as global brands. This strategy may not be appropriate for all regions and necessitate substantial investment in international marketing and branding. Zou and Tamer (1996, pg 64) highlight that the requirement to standardize products and services across markets to gain economies of scale while preserving a consistent brand image can impact a company’s business-level strategy. The company may need to make significant investments in international branding and marketing and manage intricate worldwide supply chains and logistics infrastructures. The company may need to spend on developing global capabilities, such as creating a centralized worldwide supply chain and logistics system and making sure they have a thorough awareness of global issues to mitigate these obstacles.
The Transnational Strategy
A corporation is positioned as an international player with a local concentration using a transnational strategy. By utilizing global assets and skills while adjusting to regional market conditions, the scheme aims to strike a balance between globalization and local responsiveness. Sirkeci (2013) mentions that businesses can attract customers who want products and services personalized to their local needs but with the dependability and consistency of a global brand by portraying themselves as a firm that can provide the best of both worlds. However, this strategy necessitates intensive collaboration and interaction between several business divisions. It could demand a sizable investment in R&D. The method can impact a company’s business-level strategy by forcing it to strike a balance between local responsiveness and global integration demands. Businesses sometimes need to make significant investments in international R&D, advertising, shipment, and the requirement for good coordination and communication across various business units and geographies. Companies may need to invest in developing global competencies to address these issues, such as creating a strong corporate culture that encourages diversity and collaboration and ensuring they have a solid grasp of the local and global markets.
International strategy
An international strategy places a business in the position of a foreign competitor in a new market. This strategy frequently entails exporting goods and services to overseas markets using partnerships or license agreements. Companies can attract customers that value local goods and services by establishing a reputation as a business that respects and appreciates regional cultures and customs. The international strategy might offer less influence over the brand image than other approaches and restrict a company’s capacity to adjust to local market conditions. The international system may impact a company’s business-level strategy if it is required to access new global markets via exporting or strategic alliances with regional competitors (Hitt et al., 2016). The local marketing and distribution of firms may be costly, and each region has its own complicated regulatory and legal systems that must be understood. Companies may need to spend money creating local competencies, such as forming alliances with local distributors and suppliers and ensuring they have a thorough understanding of regional cultures and practices, to overcome these difficulties.
The attractiveness of a country
Country attractiveness is the nation’s general attraction to foreign enterprises or investors. Lee (2016) suggests that a country’s attractiveness gauge how welcoming an economy, government, and social system are to foreign investment or market entry. The size of a country’s market, the resources it has access to, the likelihood of economic growth, political stability, the environment’s legal and regulatory framework, the cost and accessibility of labor, cultural considerations, and the proximity and competition of the country to other markets are all elements that might affect how appealing a country is. A nation with a high level of investor appeal is more likely to see an increase in foreign direct investment and faster economic expansion. Briefly, these factors include;
The Market
The decision of a firm to establish or extend operations in a particular nation can be significantly influenced by the size of that nation’s market. The potential for growth and revenue may be more significant in markets with a larger population. Consequently, businesses can invest abroad in countries with more extensive needs. When extending business operations to new markets, it’s also essential to consider the clients’ quality. As a result, businesses can more precisely evaluate their financial performance and make investment plans since excellent clients are more likely to generate steady and predictable revenue streams. The degree of market rivalry and a company’s ability to differentiate itself effectively should also be taken into account by businesses.
Political stability
Foreign businesses may find it easier to conduct business in a nation with stable political conditions. On the other hand, political unrest can engender ambiguity and pose risks to businesses. For instance, a business firm may be interested in investing in a country with a growing economy and a large potential customer base. However, if that country is known for political unrest and frequent changes in government, the company may hesitate to make significant investments (Haksoon, 2010). Businesses can carefully investigate the nation’s political condition before investing to reduce political risks. The technique can involve examining federal policies, political parties, and recent political events to better grasp potential dangers and possibilities. Lastly, businesses can forge solid bonds with local stakeholders like leaders in business and government. By creating these relationships, corporations can acquire vital insights into the local political landscape and develop strategies for handling future challenges.
Resources and Infrastructure
The standard and accessibility of infrastructure and resources like transportation, technological advances, skilled labor, communication, and energy can significantly impact a corporation’s capability to operate profitably in a nation. Businesses may find it more appealing to invest in that nation because of its sophisticated infrastructure and wealth of resources. Reduced expenses, increased productivity, and an improved business climate benefit from adequate infrastructure and resources. For instance, a company that relies mainly on transportation might profit from operating in a nation with an established transportation infrastructure, which can lower shipping costs and speed up delivery. Companies can cooperate with local governments to enhance transportation systems, invest in clean energy sources, or create supply chain alliances to provide access to vital resources to reduce the potential obstacles of insufficient infrastructure and resources. Businesses might also design more effective production procedures, create inventive supply chain approaches, or investigate new technologies to lessen their reliance on specific resources.
Conclusion
In conclusion, the attractiveness of a foreign market can be accessed by the global strategy framework and attractiveness of a country, among other factors. The Global Strategy Framework can impact a company’s business-level strategy by assisting in the selection of the approach that is best suited for the company’s operations and the international market it seeks to penetrate. Also, the most appealing foreign markets and the dangers of entering those markets can be identified with the aid of country attractiveness, which can impact a company’s business-level strategy. However, related issues while entering new markets must be considered to prevent operational losses, company brand, and consumer loyalty.
PART B (Reflection)
Global strategy was the primary strategy in the simulation of a Smartphone Company. As discussed in lectures 6 and 7, the strategy focuses on the effectiveness of foreign markets and factors for consideration to assess the effectiveness. The company must use these criteria to identify favorable markets and international states to venture into business. The company must develop and create its brand beyond its local markets and gain international branding in other nations. As discussed earlier in this essay, the effectiveness of a global market can be assessed using the global strategic flame, which briefly outlines the Global Strategy, multi-domestic, transnational, and international strategies are the key strategies to assess the effectiveness of a global market. However, in this case, using global and international strategies, the engagement and responsiveness to local markets to international markets could be much higher.
Additionally, the assessment can be done by weighing the attractiveness of a country. The attractiveness of a new market entry in a county will provide a better platform for investment and branding. The aim of seeking foreign markets, which was already covered in the preceding section and suggested objectivity in this regard, was to seek new trading partners in the foreign were the primary driving force behind the simulation exercise’s decision to adopt the worldwide approach. A market’s attractiveness is mostly determined by its size, growth, and quality of buyers. Every aspect that worried us in the simulation whenever we entered a new international market was present. The main goals of our company were to introduce and build brand recognition and maximize sales in overseas markets to generate sizable investment returns. Due to the global organization aspect of the company, which necessitates global human resource management, resource-seeking objectives also influenced our decision about the global strategy for the company’s workforce. To achieve standardization, we need to employ better logistic and freight strategies and supply chains to effectively promote our global strategy to distribute our products to local and international markets.
My role as the company’s product distribution manager is to develop strategies to ensure and oversee the effective distribution of products to buyers and retailers. Also, managing inventory, and budgets, monitoring relationships between suppliers and retailers, and tracking product performance are my prime duties in the company. I commissioned some team members to introduce the business in foreign markets in the U.S.A., Australia, and U.K., among others. In this case, we introduced our products in the U.S.A. markets. Monitoring inventory is very critical concerning supply and demand principles. Items in the inventory must satisfy market demands and orders. Introducing new items in new markets demands a stocked inventory to reflect the size of the market and its growth potential. As shown in the graph below, the company is well placed in the U.S.A. markets and the Netherlands. All weeks witnessed sufficient production and inventory to counter demand. However, other markets like the U.A.E., Germany, and France need better strategies in logistics and building brand awareness to increase demands and inventories in these new markets. This may involve modifying inventory policies by changing the decisions of suppliers and distributors or changing the number and capacities of local and international warehousing.
In our global strategy discussed in the previous section, seeking new markets, assessing the attractiveness of these markets, and related challenges affecting the decision-making concerning effective logistics management, budgets, and relationships between suppliers and retailers were raised to ensure standardization. Hiring logistic teams and professionals in distribution management in local and international markets would run the distribution of goods more effectively. Thus, new markets would have a surplus supply of items and better warehousing strategies. In the end, the brand identity was preserved since we could build uniform smartphones in all foreign markets and sell them aggressively, which may not have been possible if local leaders had only led the respective distribution teams in the various countries. Low sales could have been caused by product vulnerabilities that put marketing in foreign markets at risk.
As the product distribution manager, logistics and warehousing issues were the key challenges I encountered. This issue acts as a motive for strategy choice under market-seeking aims. I researched the target market to understand their local regulations, cultural barriers, and how they relate to distribution channels. Also, formulating and implementing comprehensive freight plans that include transportation, storage, and distribution channels to target markets was a key strategy to embrace. The plan can help the company reduce delays and errors impacting customer satisfaction and profitability in target markets.
Additionally, we invested in implementing technology solutions to help distribution managers automate and streamline logistics and warehousing processes in the company. These technologies included Transportation Management Systems (T.M.S.) and Warehouse Management Systems (W.M.S.). The technologies effectively reduce errors and delays, making logistics and warehousing more accurate and effective. Finally, partnering with other product distribution managers and distributors was better for leveraging local and foreign professionals and networks. Partnering with related stakeholders in distribution can help me build a long-lasting and effective logistic infrastructure from available resources. Finally, I should have engaged with the human resource team and the H.R. to hire staff in logistics and fund warehousing plans to make products available in demanding markets like Canada.
Reference List
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