When would a firm choose to operate on a transnational basis? Under what circumstances would a firm use a localization strategy? When would an international strategy be employed? Support your answers with examples. Firms look to operate on a transnational basis primarily to penetrate into foreign markets and expand their business. After tasting success at home, several firms make investments to expand globally in order to attain market share and boost revenues.
Transnational companies have coordinating and operation-controlling power in multiple countries, even if they do not own them. General Motors, Ford, and Wal-Mart are amongst the world’s largest transnational companies. Japan, North America, and Western Europe account for about three quarters of the world’s transnational companies. When operations go international, localization strategy takes center-stage for firms. Firms use a localization strategy when they counter differences in management styles and cultural practices.
Localization strategy is used by firms to adapt and cater to the choices and expectations of foreign customers and quickly occupy new markets. McDonald for instance, which operates in 119 countries, is a good example of a company that maintains its global brand identity successfully by using a localization strategy to adapt to the tastes and temperaments of diverse cultures across the globe. In short, localization strategy helps a firm deliver a unique customer experience that exceeds geographical boundaries.
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An international strategy is employed by a firm to create value through core competency transfer to a foreign market in which native competitors are not equipped with those competencies. Typically, a firm comes up with an innovative product and introduces it into the foreign market. As the demand for the product increases, the firm begins to export the product. As foreign competitors start production, the firm starts production abroad. The firm then standardizes production and relocates it to countries with low cost production opportunities.
Xerox and Proctor and Gamble are examples of companies that followed this model and implemented an international strategy. References: http://www. slideshare. net/clemaitre/tn-cs http://www. ibscdc. org/Case%20Studies/Abstracts/Strategy/Corporate%20Strategy/COS0043. htm http://classes. bus. oregonstate. edu/ba447/Gonzalez%20(Winter%2008)/BA%20447%20-%20day%201. ppt How do the 4 Ps of marketing differ in a global business environment? Give examples from your own organization or one you are familiar with.
The 4 Ps of marketing, namely: product, price, placement, and promotion vary widely in a global business environment as firms attempt to get their marketing mix just right so that they sell the right products, at the right prices and places, using promotion methods that are most suitable. A global company like Coca-Cola for instance essentially creates a single product and tweaks it differently for different markets. The sugar and corn syrup formulas of Coca-Cola are packaged using the contour bottle design with the dynamic ribbon in different shapes and forms.
Coca-Cola bottles in some countries come in standard beverage-bottle sizes of those countries, with wording in native language as well. The price of a Coca-Cola varies from market to market due to production costs, ingredient costs, delivery costs, expected profit margins, competition, and so on. Coca-Cola’s product placement varies from country to country based on how the company wants to offer competition in the targeted market. Vending machines are not common in all countries and in US for instance, Coca-Cola is sold by the pallet through warehouse stores; however, in countries like India, such an option does not apply.
Coca-Cola has moved away from the idea of sending the same message across globally in the wake of its global promotion strategy failure. Coca-Cola uses customized promotional strategies and regional themes instead of universal ones in order to counter varied language and cultural barriers of the global market. References: http://www. thetimes100. co. uk/downloads/theory/marketing_mix_(price,_place,_promotion,_product). pdf http://www. stamfordonline. com. my/courses/dba/dba206/DBA%20206%20Week%2010%20&
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