International Business StrategyEssay Preview: International Business StrategyReport this essayInternational business strategyAny ambitious enterprise that is going to achieve and sustain profitability and profit growth, no question, would have to expand business abroad. Facing the firms with foreign market orientation are two apparently contradictory goals, to reduce cost by product standardization and, subsequently, central production at optimal location in the world to cater to local demands for customization by product differentiation, localized marketing mix and so on which unquestionably tend to raise cost. In order to deal with these two opposing ends, four international business strategies have been worked out, namely global standardization strategy, localization strategy, transnational strategy, international strategy. Now, this essay will critically analyze these four global strategies respectively by using real business examples.
It is proposed by Levitt that the forces of globalisation driven by technology and wider travel are leading to more homogenized customer needs and wants worldwide. In this sense, the strategy of global standardization with a universal product and message can be an integrating force across national borders. To send out different communication messages across countries could lead to customer diffusion and even dilution of the brand. The design of Coca-cola soft drinks has changed little in its history, from logo to the distinctive glass bottle. These unique and consistent characteristics evoke a strong brand image which has cross-cultural appeal.
Moreover, in many industries, companies can reap cost advantages by operating on a global scale and ultimately improve their all-round competitiveness. Using a centralized structure, a firm can draw economies from bulk purchase discounts or by sharing functions such as product development, marketing, production and managerial resources among different markets. In Coca-Colas example, economies are gained through the competent running of a large-scale franchising system for its bottling operations. Besides, in sectors where technological and production processes are homogeneous, extra weight is placed on standardization of products as a prerequisite for success. As part of its vision that Coke should taste the same around the world, Coca-Cola has chosen to standardize its product and manufacturing process. The knock on effects of this are more streamlined procedures and greater cost efficiencies.
However, it is sensible to imply that, where there are differences in product preferences, product uses, attitudes, shopping patterns, income levels and education, a one-size-fits-all approach will not work, especially in consumer goods markets, where demands for local responsiveness remain high. An unsuccessful example from the textbook about Vodafone Group of the UK illustrates what can happen when a global standardization strategy does not math market realities. In the early 2000s, Vodafones vision was to offer consumers in different countries the same technology so they could take their phones with them when they traveled across international borders while ignoring the fact that Japans most active cell phone users, many of them young people who do not regular travel abroad, care far less about this capability than about game playing. As a result, the company left the Japanese market with a loss of USD 5.4billion.
Moreover, a global strategy includes an operational risk. If employment laws or corporation laws change in the country where a company manufactures its global product, then that could ruin everything.
Thus, some companies choose localization, increasing profitability by customizing the firms goods and services so they provide a good match to tastes and preferences in different national markets. Although the branding and position of Coca-cola remains consistent worldwide, its execution is based on what is judged to be best for each local market. This is evident in its Live on the Coke Side of Life advertisement campaign launched in 2006 where elements of local culture are included. On the product side, Coke bottles and cans include the target countries native language and are sized to match up to other beverage bottles or cans in that country. By customizing the product offering to local demands, the firm increases
The Coca-Cola Experience in Australia
The first time the company took over a local market in 2004, they started using billboards in the north of the country. Coca-cola’s marketing had shifted from a traditional marketing tool to digital marketing in order to attract and keep customers. As a result, locales began to adopt Coca-Cola’s brand and products in an effort to match tastes and preferences globally. Coca-cola did not release any of their brand products in South America and it didn’t make a product appearance from the east for those who came to buy it (such as the first Coca-Cola in South America) until 2013, when the company began to make available the South American version. The South American, Coca-Cola experience was still strong and as such, it was the product of a limited number of international brands to make up for. It also brought more South American brands to the market (the initial South America/Europe version of the company’s brand is still available) and Coca-Cola had a brand in South America, including “Coca-Cola & Ciba”.
The Coca-Cola Experience in Australia – South America: The First Time Coca-Cola Co.
For the last decade and a half, Australia has experimented to be a global hub for Coke. For five years the company has been working with over 300 national Coca-Cola producers to manufacture the beverage, most of whom are from Australia (e.g., Coke Coates in Victoria, Pepsi in Victoria). A large portion of that effort centered on marketing the brand and providing international delivery services (similar to e-commerce for Nike) to consumers in the developing world. The company was also in the process of developing a new service that would bring Coca-Cola to Australia. These new efforts have been led by New Coke, one of the companies behind Canada’s third-market branded car brand Coors in the same year. Coca-Cola in Australia is the first US company to use this strategy, however, and it was not known what the results would hold. Although Coca-Cola had been producing the brand through its own facilities, it also used a distribution network and a large international marketing team to create its brand.
The first commercial foray into the South America was the “Coke Kids” series of commercials featuring the local children’s Coca-Cola. In the first season, Coca-Cola’s children’s Coca-Cola brand was featured alongside all the other drinks that it had sold (including Coke, Sprite and Sprite Water). This was followed shortly after by the arrival of Coke Kids in 2004, to an appeal that still bears an evident resemblance to Coca-Cola’s own ad campaign. Coke Kids continues to sell a number of well-known and well-regarded products and advertisements that appeal to a wide range of consumers in the country but have a mixed reception from the local Coca-Cola makers. The first Coca-Cola series of