Business Globalization Strategies Essay Examples & Outline
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Business Globalization Strategies
Starbucks Corporation is an American company, based in Seattle, Washington, that has become a global coffee company. Starbucks is the largest coffee house company in the world. A 2013 review revealed that Starbucks had 20,891 stores in 62 countries, including 13,279 in the United States, 1,324 in Canada, 989 in Japan, 851 in China, 806 in the United Kingdom, 556 in South Korea, 377 in Mexico, 291 in Taiwan, 206 in the Philippines, 171 in Thailand, and 10 in India. The company remains to be a force to reckon in the beverage sector based on its reputable international success and its influence on the global platform. This paper seeks to delve into globalization and competition in the global market, by analyzing the prospects of Friend Z’s, an organization that seeks to enter into global business and compete favorably with existing players in the coffee house business.
One of the greatest advantages to Friend Z’s going global is the access to wider markets. It must be noted that with globalization, the company could be in a better position to reach out to larger markets as opposed to localization in America. If Friend Z’s were to remain localized in America, then the reach to different markets will reduce. This will also imply that the company’s capability in terms of expansion is reduced, as the markets are concentrated within a given location (Pullman & Moore, 2000). Looking at the Wal-mart strategy, global expansion has widened their scope and made it easier for growth in that they have already covered a good size of the American markets.
Going global will help Friend Z’s in the spread of political risk to various regions and locations. It must be noted that with outlets all over the world, the risk of business failure due to negative market forces, economic performance, or political instability is reduced. Revenues generated by many other outlets in different countries will cover the poor start of Friend Z’s that may be experience in a particular country. This was quite evident with Starbucks and Wal-Mart Corporation during the peak of the 2008 global financial crisis. During this time, these companies had some outlets in most affected countries. Outlets in other locations that were performing helped cover losses and poor performance recorded in some countries such as Greece.
The greatest challenge to Friend Z’s will be pegged on increased political risk. Investing in America or in a single country will be much comfortable, because it could give the company an opportunity to study the markets external forces and develop necessary growth and sustainability strategies. When compared to going global, it could imply that Friend Z’s will be exposed to greater political risks (Pitta, Weisgal & Lynagh, 2006). Changes in political environment and upheavals in countries with Friend Z’s outlets may negatively influence the growth and establishment of the organization in that market.
For the management of Friend Z’s to go global, there must be a clear-cut procedure and considerations on which countries to start the investment. This calls for a critical analysis of several market environment factors, which should be considered when making a decision on what country to establish the business outlets. These factors include the political environment, the legal environment, and the social structure. All these factors will be analyzed differently and collectively in identifying a sustainable target country to set up the new coffee shops (Johnson, 2009).
The political environment could be an important consideration for the management team on which country to make the investment. The management of Friend Z’s should have to consider the stability of a country and its leadership. Whereas certain countries may offer good platform for growth in terms of economic potential, some may not be viable because of the political instabilities and upheavals that can lead to disturbance of the company’s operations. This can be analyzed in view of civil wars, exorbitant taxes, and restrictive multinational company regulations, which are political decision considerations. Analyzing of these factors provide the management team with a history of the country as an indicator of the political environment.
The political environment will also be linked to the legal environment. The political class and players are charged with responsibilities of creating laws, including those dealing with business regulation. For effectiveness during market research, the management of Friend Z’s must consider the prohibitive legislation's in place and the possibilities of ratification of laws that seem be against multinationals. This may include taxation and other labor related laws. Legislation on conducting business in various countries will be analyzed against the countries operational strategies. For instance, the management team should consider whether a country provides a favorable working environment for expatriates (Johnson, 2009). This could be important, particularly where expatriates have to provide the technical support to staff and other persons working with the company. The legal environment could also look at other issues such as bureaucracy and the ease of doing business in different countries as may be defined by the law and government policy.
The social structure of different countries will help in informing the decision by the management on what countries Friend Z’s will visit. The special structure of a country transcends the basic value of people and things they hold dear to their lives. In getting into new markets, Friend Z’s have to operate in an environment where people hold different perceptions and thoughts about different products and forms of interaction in the society. Friend Z’s management also have to consider other social issues closely associated with culture and communication means used by citizens of different countries. Whereas the company could have expatriates, it must involve locals to ensure the involvement of local communities and their empowerment. Locally, sourced staff will only work effectively where the communication style adopted is contingent to the social structure and characteristics of that society. This could involve making a determination on whether that society has taken up a centralized system of communication or it could be easy to institute vertical and horizontal communication structures at the organization. Social structure will also bring in considerations such as religion, family life, and time concepts.
By going global, Friend Z’s have to consider a number of global strategies that will oversee establishment of its coffee shop units throughout the world. Considerations on exporting, licensing, joint ventures, or direct investment need also to be done. Based on the provisions of these approaches to global business, various advantages and disadvantages could be drawn. This includes the mission and long-term objectives of Friend Z’s. The objective of Friend Z’s is to becoming a leading player in the Coffee and Restaurant industry, providing services to different people across the globe (Lymbersky, 2008). The intention of the organization is to provide hot and cold beverages that include whole-bean coffee, micro-ground instant coffee, full-leaf teas.
The main product of the company and the fact that the company has not started will limit the company to various strategies. In the first place, the company has not been established as a brand in the local and the international markets. With this in mind, licensing could be ruled out as one of the company’s strategies (Pullman & Moore, 2000). Licensing will be viewed as an option once the company has established itself and is recognized as a brand just as is the case with multinationals such as MacDonald’s and Starbucks.
The joint venture and direct investments present the two strategies that can be reasonably applied to Friend Z. The joint venture option calls for the company to engage another player and possibly strike a deal in carrying out joint operations. This may include Friend Z’s leasing the brand name from MacDonald’s or Starbucks as part of its internationalization strategy (Lymbersky, 2008). Whereas this strategy may work, it rules out the possibility of the company remaining with its brand name, Friend Z’s, as the company will be forced to take up the brand name of the already existing business partner. Direct investment will be the choice for Friend Z. Through taking up direct investment, the company advocates for better placement in the market and be able to create a brand name in different markets. Direct investment platforms will also allow the management of the company makes their own strategic decisions, without having to get instructions from other quarters, as is the case with joint ventures.
Friend Z’s will consider expansion and growth into the outside world through establishment of units in various markets. Britain is one of the business locations or countries the company seeks to target (Douglas & Neil, 2009). Great Britain will be a preferred business location because of the favorable environmental conditions the country poses for the growth and sustainability of Friend Z’s.
Britain provides a favorable business location for many multinational companies and is home to great players in the coffee and restaurant industry including MacDonald’s and Starbucks. The country is well positioned to provide a good market for the products of the company as its citizens are known to be ardent consumers of coffee, tea and other snacks, which aids in marketing of Friends and its branded products.
Perhaps to help in marketing of its products, the management of the company can take up a multi-dimensional approach to marketing. This has to be considered through inclusion the marketing and product orientations to marketing. Whereas the level of competition is high in the country, with numerous coffee shop brands and multinational, quality will remain to be the centre sage of Friend Z’s operations (Douglas & Neil, 2009). The company should seek to raise the bar of quality beyond that of its competitors to get some competitive advantage. Britain is also a vast country with large populations to mark the target market, which provides a pedestal for growth. The company will be in a good position to reach out and induce demand for its products.
The culture of Britons and residents of Britain is moderately rated. This means that the country has a balance in terms of extremes of cultural differences. Being at the centre of transport between America, Europe, Asia and other regions, the country is cosmopolitan. This implies that cultural backlash is likely to remain at the minimal level. Starting the business in the global markets in Britain will facilitate expansion leading to various outlets that can be established in its vast locations (Weidenbaum, 2002). This will act as an incentive for expansion into other European regions.
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Johnson, W. (2009). Environmental Factors of International Business. Retrieved 14 October, 2013
Lymbersky, C. (2008). Market Entry Strategies: Text, Cases and Readings in Market Entry Management. New York: Management Laboratory Press.
Pitta, D. A., Weisgal, M., & Lynagh, M. (2006). Integrating Exhibit Marketing into Integrated Marketing Communications. Journal of Consumer Marketing (23.3): 156-166.
Pullman, M. E., & Moore, W. L. (2000). Optimal Service Design: Integrating Marketing and Operations Perspectives. International Journal of Service Industry Management (10.2): 239-261.
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