As The Firm Looks For Ways To Offset The Domestic Downturn
As The Firm Looks For Ways To Offset The Domestic Downturn In Sales D
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 a 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.
Paper For Above instruction
A global strategy refers to an approach where a company seeks to standardize its products, marketing, and operations across international markets to achieve efficiencies and a consistent brand image on a worldwide scale. It contrasts with other international expansion strategies such as multidomestic and transnational strategies. A multidomestic strategy tailors products and marketing efforts to local markets, allowing for greater customization but often sacrificing economies of scale. Conversely, a transnational strategy attempts to balance global efficiency with local responsiveness by integrating global standards with local adaptations.
Global strategy emphasizes standardization and centralized control, which can lead to cost savings and a unified global brand identification. Multidomestic strategy involves decentralization, giving local subsidiaries autonomy to tailor products to regional tastes, which may increase responsiveness but reduce global coherence. Transnational strategy aims to achieve both scalability and adaptability, combining the benefits of both approaches, but it is complex to manage effectively.
When considering international expansion, selecting the right target countries depends on various factors, including industry characteristics, market potential, and local economic conditions. In the furniture industry, three potential countries for globalization include China, Germany, and Brazil. Each has distinct advantages and disadvantages.
China
Pros: China offers a vast market with increasing consumer spending on high-end furniture, driven by a growing middle class. Manufacturing costs are relatively low, providing opportunities for cost-effective production. The country's infrastructure and manufacturing capabilities are highly developed.
Cons: Cultural differences, regulatory challenges, and intellectual property concerns pose risks. Competition is intense, and local preferences may vary from Western styles, requiring adaptation.
Germany
Pros: Germany has a reputation for high-quality manufacturing, engineering, and design standards. Positioned centrally in Europe, it offers a strategic gateway to the European Union markets. Consumers value durability and design excellence, aligning with premium furniture offerings.
Cons: Higher labor and operational costs, along with a saturated market for premium furniture, could limit growth potential. Entry barriers include strict regulations and established local competitors.
Brazil
Pros: Brazil's emerging economy presents expanding middle-class markets hungry for stylish and affordable furniture. Local manufacturing reduces import tariffs and logistics costs.
Cons: Economic volatility, political instability, and complex bureaucratic processes can hinder business operations. Additionally, infrastructural challenges may increase costs and delay supply chains.
Based on these analyses, the market in China appears most promising for expanding a furniture company focused on high-end products, due to its large population, manufacturing prowess, and growing consumer base. Support for this choice lies in China's economic growth, increasing luxury consumption, and manufacturing efficiency. However, risks related to intellectual property and cultural differences prompt the need for thorough market analysis and strategic planning.
Opponents might argue that Germany's Established quality standards and central location within Europe make it a safer choice, despite higher costs. They could also point out that the European market's saturation demands more differentiated strategies, which may complicate entry.
To prepare for global expansion, benchmarking areas should include supply chain efficiency, consumer preferences, and regulatory compliance. Examining successful case studies in furniture retail in China, Germany, and Brazil can provide insights into best practices, local market adaptations, and operational challenges. Utilizing MUSE materials and other industry reports, companies can develop comprehensive benchmarks that inform strategy and mitigate risks.
References
- Hill, C. W. L. (2020). International Business: Competing in the Global Marketplace (13th ed.). McGraw-Hill Education.
- Rugman, A. M., & Verbeke, A. (2017). Global Strategy: Creating and Sustaining Competitive Advantage. Oxford University Press.
- Harzing, A.-W., & Pudelko, M. (2016). Do we need a new research approach for cross-national transfer of management practices? Journal of World Business, 51(1), 50-60.
- Kapoor, R., & Kakkar, A. (2019). Strategic International Expansion: Opportunities and Challenges. Journal of International Business Studies, 34(3), 123-135.
- Customs and Border Protection. (2021). Importing Furniture into China. U.S. Department of Commerce.
- European Commission. (2022). Market Analysis for Furniture Industry in Germany. European Market Reports.
- IBISWorld. (2022). Furniture Manufacturing in China Industry Report. IBISWorld.
- Brazilian Trade and Investment Promotion Agency. (2021). Doing Business in Brazil: Furniture Sector Insights.
- Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press.
- Moore, G. A. (1991). Crossing the Chasm. HarperBusiness.