Assignment Details

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.”

Domestic profit margins have dropped by 2% this quarter. You 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?”
Discuss the following:
•       How do you define a global strategy? Compare and contrast global
strategy with other international expansion strategies.
•       Identify a minimum of 3 possible countries 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 an alternative choice?
•       Recommend two or three areas to benchmark in preparation for the
decision regarding global expansion. MUSE materials provide
information regarding this topic.
The materials found in the M.U.S.E. may help you with this assignment,
such as the audio file Benefits of Globalization. This file provides
real-world experience, which may help you with this assignment

 

*Sample Answer

Global Marketing Plan

Introduction

Domestic profit margins have dropped by 2% this quarter and a global strategy could act as a remedy. A global strategy is different from other international strategies. However, it is apparent that expanding business activities to countries such as China and Mexico would accrue numerous benefits to the company. It is paramount that the company examines several areas to determine whether the potential benefits of global expansion outweigh the cost of penetration.

How do you define a global strategy? Compare and contrast global strategy with other international expansion strategies.

A global strategy is an organizational guideline for operating business activities on a worldwide scale (Twarowska & Kąkol, 2013). It entails establishing a single approach that is applicable for subsidiaries throughout the entire globe simultaneously. The global strategy is different from other international expansion strategies, such as importing and licensing, to some extent. First, international approaches assume that the subsidiary should be in-charge of the local business prerequisites unless there is a rational reason for any changes. On the contrary, the global approach holds the centre responsible for standardizing its merchandizes and operations across various nations unless there is a fit logic behind not doing so (Twarowska & Kąkol, 2013). Another difference revolves around integration and competition. International strategies provide their subsidiaries with the autonomy of planning and executing competitive moves. On the other hand, the global approach prepares and carries out rivalry battles on a worldwide scale.

In spite of the differences between the global approach and the international strategies, the two have a few similarities. Both approaches focus on generating substantial revenue for organizational stability (Twarowska & Kąkol, 2013). Regardless of which entities are responsible for planning and standardization of operations, both strategies pay attention to aspects such as competition to maximize on the present opportunities to generate adequate income. Another resemblance is that the approaches target on the foreign the market (Twarowska & Kąkol, 2013). International strategies focus on the newly acquired marketplace which is usually another country and the global strategy tend to consider the entire world as one economic system.

Identify a minimum of 3 possible countries for globalization. Research each of these locations in the furniture industry, and document both the pros and cons of using these in global strategy.

According to Wee (2017), most countries that are top exporters of furniture are also major importers of the same products. The high rates of importation of the furniture are a reflection that there is still a substantial gap within the market and this is a market niche that the company would fill. Three possible locations for globalization, in this case, would be the Netherlands, Mexico, and China.

The advantage of investing in the Netherlands is that the country still imports about seventy percent of such merchandizes Wee (2017) depicts. Hence, the Netherlands is a suitable region for the company because the area offers the company more than 50% space to meet the domestic needs. Nonetheless, the primary disadvantage is that the Netherlands generates revenue of approximately USD 4.2 billion from its furniture exportation annually which is relatively small compared to other countries such as China. Hence, the firm would not have a significant opportunity to leverage on exportation. More so, the country recently encountered an economic downturn. However much there is hope of improvements in the near future, moving to the Netherlands involves substantial risks.

Moving to Mexico would be beneficial for the organization because the location tends to export larger quantities of furniture than the Netherlands. Wee (2017) asserts that the exportation value for Mexico amounted to about USD 9.7 billion 4 years ago. Moreover, the domestic demand for furniture is significant as the country continues to import huge quantities over the years. Nonetheless, doing business in the location would be challenging in the sense that registering property in Mexico is normally an arduous task. According to Garrido (2018), registration of property almost consumes double the time Organization for Economic Co-operation and Development (OECD) nations take. Another con is that protection of investors, in this day and age, continues to be a contentious matter in Mexico. The region has a long way to go in regards to enhancing some critical issues involved in the business.

Expanding to China would be advantageous for the company due to the large demand of furniture both locally and internationally. In 2014 for instance, China’s exportation revenue amounted to around USD 93.4 billion (Wee, 2017). Nevertheless, moving to the region would be challenging for the company due to the stiff competition available in the region.  Some of the rivals would include top manufacturing companies such as Yihua Group and Guangdong Oppein Home (Wee, 2017). The company would have to put in a lot of work to remain relevant within the industry.

What country would you choose? What evidence can you provide in support of your choice?

Out of the three countries, China is a suitable location for the company. Chinese furniture has always been in high demand because the country is known for offering top class merchandizes. The stiff competition would thereby be an opportunity for the company to learn some essential elements in regards to manufacturing. As a result, the overall value of the company’s products would significantly increase on a global scale. Additionally, Galvin (2017) claims that China is set to have 400 million people as of the year 2020. Hence, China would provide the company with a huge pool of clients and consequently increase the chances of the firm to succeed in the furniture industry. Moving to China provides the company with a substantial opportunity to enhance its overall productivity.

What evidence might somebody else, who does not agree with you, provide to support an alternative choice?

Nonetheless, someone else would argue that China is not a suitable space for the firm and that the company should consider expanding to Mexico. Galvin (2017) affirms that China solely favors domestic enterprises and limits foreign ones. Thus, since the furniture sector in China is already dominated by Chinese companies, the organization would encounter great challenges. The firm should thereby consider Mexico as the appropriate location since the Mexican government has implemented tough actions over the years which have eased the entire process of starting a business as (Garrido, 2018) portrays. It would be easier for the organization to navigate the unfamiliar environment in Mexico than China.

Recommend two or three areas to benchmark in preparation for the decision regarding global expansion.

One of the areas to benchmark in preparation for making decisions concerning global expansion is the current state of the business. A company should only expand its business to new locations only when it has established a solid foundation back at home (Entrepreneur Media Inc, 2016). The foundation provides a firm with confidence and financial strength to handle a novel market. It is also important that the enterprise assess the compliance area. Ethics may not differ from one place to the other but legislation regarding conducting business does (Entrepreneur Media Inc, 2016). Regulatory techniques mirror a country’s receptivity to foreign investment. Therefore, it is essential the management understands laws concerning tax, liability, and customs.

Conclusion

In brief, it is substantial that the firm benchmarks several aspects before expanding its practices to other location. Benchmarking would help the business have a clear image concerning its potential costs and benefits as a result of penetrating new markets such as in China and in Mexico. Based on elements regarding compliance and the current state of the organization, China seems to be a suitable location for the company to move its activities.

 

References

Entrepreneur Media Inc. (2018). Global expansion: 5 things to consider for international expansion. Entrepreneur. Retrieved from

Galvin, J. (2017). The challenges and benefits of expanding a business to China. Retrieved from

Garrido, F. (2018). Top challenges of doing business in Mexico. TMF- Group. Retrieved from

Twarowska, K., & Kąkol, M. (2013). International business strategy-reasons and forms of expansion into foreign markets. Poland: Maria Curie-Skłodowska University, 55. Retrieved from

Wee, R. Y. (2017). Top furniture exporting countries. World Atlas. Retrieved from