GBE

GBE_ACTIVITY 05_CASE STUDY_ANALYSIS OF TWO INTERNATIONAL STRATEGIES_14THJAN2018

In the late 1990s after a significant amount of globalization had taken place, business analysts began to examine the

success of various strategies for doing business in other

countries. This examination led to the distinction between various

orientations of international strategies. The main distinction was between multi

-

domestic (also called multi

-

local)

international strategies and global strategies. Multi

-

domestic internati

onal strategies refer to those that address competition

in each country or region on an individual basis, whereas global strategy refers to addressing competition in an integrated

and

holistic

manner across country and regional boundaries. Hence, multi

-

dom

estic international strategies attempt to

appeal to the needs of customers in different countries or regions, while global strategies attempt to standardize products

and marketing to work across boundaries. Instead of relying on one of these strategies, mu

ltinational companies might

adopt a different strategy for different products or services. For example, a company might use a global strategy for its

electronics and a multi

-

domestic strategy for its appliances.

Critics of the standardization approach argu

e that it makes two questionable assumptions: that consumers' needs are

becoming more homogenous throughout the world and that consumers prefer high quality and low prices over advanced

features and functions. Nevertheless, standardized global strategies h

ave some significant benefits. Companies can reduce

their marketing expenditures, for example, if they use the same ads in all their markets. PepsiCo, for example, uses the

same televisions ads in all of its national markets, saving an estimated $10 millio

n a year. Besides marketing savings, global

strategies can lead to other kinds of benefits and advantages in areas such as design, packaging, manufacturing,

distribution, customer service, and software development.

Some people argue that companies must cus

tomize their products or services to meet the needs of various international

markets, and hence must use a multi

-

domestic strategy at least in part. For example,

KFC

planned a standardized approach

to its foray into the Japanese market, but the company soo

n realized it had to change its strategy to meet the needs of

Japanese consumers and customize its operations in Japan. Consequently, KFC introduced smaller pieces of foods to cater

to a Japanese preference, and located restaurants in crowded areas along w

ith other restaurants, moving away from

independent sites. As a result of these changes, the fast

-

food restaurant experienced stronger demand in Japan.

The development of regional trading blocs has promoted an emphasis regional strategies as companies deve

lop plans to

take advantage of the conditions within various trading blocs such as the North American Free Trade Agreement (NAFTA),

the European Union, the Asia

-

Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (

ASEAN

).

In

addition, the United States has signed 16 different trade agreements with South American countries, creating a

foundation for a

trading bloc

consisting of all North and South American countries. Consequently, companies have been

establishing regional strat

egies designed around these trading blocs. Nike, for example, established central warehouses for

its European distribution, just as it has a central warehouse for its U.S. distribution. This strategy has enabled Nike to re

duce

its inventory, cut down on re

dundancy, reduce costs, and enhance availability. In addition, News Corporation originally

relied on a global strategy with its STAR

-

TV satellite television network; attempting to provide the same television shows

across Asia in English. The company quickl

y switched to a multi

-

domestic strategy, providing programming in local

languages after receiving low ratings and advertising dollars with its first approach.

A variety of corporate collapses, and the revelation of unethical and illegal practices in many i

nternational companies, has

led to a focus on Corporate Governance and Ethics in the early twenty first century. Issues of what constitutes socially

responsible behavior are likely to be a major part of global strategy for the coming years

.

GBE_ACTIVITY 05_CASE STUDY_ANALYSIS OF TWO INTERNATIONAL STRATEGIES_14THJAN2018

In the late 1990s after a significant amount of globalization had taken place, business analysts began to examine the

success of various strategies for doing business in other countries. This examination led to the distinction between various

orientations of international strategies. The main distinction was between multi-domestic (also called multi-local)

international strategies and global strategies. Multi-domestic international strategies refer to those that address competition

in each country or region on an individual basis, whereas global strategy refers to addressing competition in an integrated

and holistic manner across country and regional boundaries. Hence, multi-domestic international strategies attempt to

appeal to the needs of customers in different countries or regions, while global strategies attempt to standardize products

and marketing to work across boundaries. Instead of relying on one of these strategies, multinational companies might

adopt a different strategy for different products or services. For example, a company might use a global strategy for its

electronics and a multi-domestic strategy for its appliances.

Critics of the standardization approach argue that it makes two questionable assumptions: that consumers' needs are

becoming more homogenous throughout the world and that consumers prefer high quality and low prices over advanced

features and functions. Nevertheless, standardized global strategies have some significant benefits. Companies can reduce

their marketing expenditures, for example, if they use the same ads in all their markets. PepsiCo, for example, uses the

same televisions ads in all of its national markets, saving an estimated $10 million a year. Besides marketing savings, global

strategies can lead to other kinds of benefits and advantages in areas such as design, packaging, manufacturing,

distribution, customer service, and software development.

Some people argue that companies must customize their products or services to meet the needs of various international

markets, and hence must use a multi-domestic strategy at least in part. For example, KFC planned a standardized approach

to its foray into the Japanese market, but the company soon realized it had to change its strategy to meet the needs of

Japanese consumers and customize its operations in Japan. Consequently, KFC introduced smaller pieces of foods to cater

to a Japanese preference, and located restaurants in crowded areas along with other restaurants, moving away from

independent sites. As a result of these changes, the fast-food restaurant experienced stronger demand in Japan.

The development of regional trading blocs has promoted an emphasis regional strategies as companies develop plans to

take advantage of the conditions within various trading blocs such as the North American Free Trade Agreement (NAFTA),

the European Union, the Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN).

In addition, the United States has signed 16 different trade agreements with South American countries, creating a

foundation for a trading bloc consisting of all North and South American countries. Consequently, companies have been

establishing regional strategies designed around these trading blocs. Nike, for example, established central warehouses for

its European distribution, just as it has a central warehouse for its U.S. distribution. This strategy has enabled Nike to reduce

its inventory, cut down on redundancy, reduce costs, and enhance availability. In addition, News Corporation originally

relied on a global strategy with its STAR-TV satellite television network; attempting to provide the same television shows

across Asia in English. The company quickly switched to a multi-domestic strategy, providing programming in local

languages after receiving low ratings and advertising dollars with its first approach.

A variety of corporate collapses, and the revelation of unethical and illegal practices in many international companies, has

led to a focus on Corporate Governance and Ethics in the early twenty first century. Issues of what constitutes socially

responsible behavior are likely to be a major part of global strategy for the coming years.