Turkey is an exciting destination for multinational enterprises that seek to expand business to new a global marketplace. What make it more attractive are its economic and structural reforms initiated after it experienced financial meltdown in 2001 (Yaprak 29). Besides the country has a stable political environment, which creates robust traction for foreign direct investments particularly after it went through a hiatus for over 18years. Additionally, it has comparative advantages invigorated by its geographical location and its membership in the European Union. The custom union enables Turkey to allow globalized companies operating in it to circulate produced products within the zone. More importantly, Turkey has a robust and a huge young population with high incomes and driven by a diversified private sector (Lymbersky 108). The macroeconomic environment is attractive to globalized companies. This research paper discusses the globalized companies in Turkey and the world and explains the procedure of globalization of big companies not only in Turkey but also in the entire world.
Companies planning to expand business enterprises are faced with several globalization procedures. Experts define globalization procedures as systematic and institutional paradigms that enable companies to enter and trade products, human capital, technology, managerial skill and other critical resources into the host country (Siriner 32). The procedure for globalization into turkey can be categorized into four including export/import trading corporations, franchising, licensing and strategic alliances and partnerships.
Globalized companies can enter Turkey through export/import agents or even renowned trading companies such as the Turkey trading houses. These import/export agents are attractive to multinational companies entering Turkey because they bear less financial risks and allow foreign companies to integrate easily and access useful local market information. This model of entry is suitable for companies with scanty knowledge in international operations. However, some big companies also use it because entry costs such bills of landing, invoices, and clearance customs are borne by the agent. It has to be noted that import/export agents operate as intermediaries and may serve more than one multinational company (Parlabene 80). Besides, since the producer produces products from the domestic country, they lack control of the marketing mix, which is the greatest undoing for relying on export/import agents. One big firm that uses this model in Turkey is Olam international, which is a cashew nuts producer (Yaprak 64). It produces its products from Mozambique, Tanzania, and Nigeria where they are grown and uses export/import agents to enter into Turkey. The second company that uses this export/import agent model is Walmart when entering Turkey and other global markets; it sources its raw materials from local farmers located closer to its warehouses (Sönmez 75). Sourcing raw materials locally saves Walmart on shipping costs and ability to stock smaller quantities in its warehouses. Finally, Apple, which is a communication and information company, uses export/import companies to supply its mobile communication gadgets from Seoul and United States to Turkey (Czinkota & Ilkka 13).
The second procedure for globalization is partnerships and strategic alliances with Turkish local partners. Ideally, strategic alliances are contractual agreements entered by enterprises highlighting rules of engagement and cooperation between the parties for common purpose. Firm entering into Turkey or any other foreign market must make a decision regarding the value the partnership that is supposed to deliver -tangible and intangible benefits (Moran 93). In particular, strategic alliances and partnerships with local firms are advantageous because certainly the local firm understands better the local market, culture and best methods of doing business as opposed to a foreign firm. Ultimately, a foreign firm must enter into a strategic alliance with a reputable and recognized brand that has strong pre-existing relationship with customers (Yaprak 31). For instance, Fujitsu, which is the largest supplier of telecommunication and information technology infrastructure, entered into a strategic alliance with Quantum. Quantum is a Turkish communication company. The strategic alliance was to enable Fujitsu to leverage its reputation and expand its market in Turkey (Siriner 40). Additionally, when Xerox enters any market internationally, it signs strategic alliances with companies in order to grow sales and integrate in the new market. Ultimately, strategic alliances are advantageous because they assist the foreign company acquire investment as it enters the new market. Notably, in Turkey, globalizing companies are required to collaborate with local companies when entering the market (Lymbersky 110). The advantage with this policy is that it makes it easier for foreign companies to acquire market share and use the infrastructure of the local firm to distribute and market its products. For example, Walmart had a difficult time entering and growing business in Mexico until it acquired a local partner. Another example is Norvatis pharmaceutical company; it enters into strategic alliances with producers and manufacturers to help it produce, develop and test antimalarial drugs in prevalent malaria zones. It recently entered into partnership with a local firm in Kenya to help it supply and distribute antimalarial drugs in Kenya and beyond (Siriner 45). The disadvantage with this model is that the foreign company lacks direct control of distribution, market and advertising of its brand. There is a likelihood that the partner’s strategic goals may differ significantly with those of the foreign company (Parlabene 74).
The other procedure for globalization is franchising. In essence, franchising is a special form of licensing where the franchisor is entitled to sell its product independent from those of the franchisee. The franchisee uses independent intangible assets such as trademarks; however, the franchisor has an obligation to assist the franchisee in operating the business through training and promotion (Czinkota & Ilkka 15). In Turkey and other countries, fast food chains and service companies such as tours and travels and hotel companies commonly use franchising. In particular, McDonald’s and Starbucks are the largest franchisors in Turkey, which are global competitors in the sale of American burgers. The local business environment does not culturally bind McDonalds and Starbucks as franchises; in addition, they employ local personnel for purposes of integrating with the host population. The challenge with franchising is the hurdles involved when a business enterprise tries to adapt to the local market (Yaprak 14).
Finally, companies have an opportunity to use licensing as a procedure for globalization. Licensing is a situation where a local firm agrees to offer a foreign firm the opportunity to use it processing, manufacturing, intangible properties, and expertise to do business. This mode of globalization is common for companies that possess differentiated and legally protected intangible assets, such as brand names, product designs and production technologies (Root & Franklin 42). An example in the international front is Disney, which licenses some of its characters and producers in market categories such as apparel and toys. This model presents foreign companies with a low risk model of market entry and adaptation for international markets (Siriner 21). Another example of big company that uses licensing is Coca Cola, for instance, in Zimbabwe, it has licensed a company by the name United Bottlers to produce coke products (Yaprak 48). The advantage of licensing is that it offers foreign companies the opportunity to enter foreign markets and manufacture at low risk. In addition, the connection between the licensed company and the foreign company means that both companies benefit through either advertising or distribution. Further, capital investments are not confined in the foreign operations and there always exists opportunities to acquire the partner or even benefit from royalties (Lymbersky 98).
In conclusion, Turkey has a macroeconomic environment suitable for globalized companies. Its stable political environment and sound financial markets offer multinational companies an ample ground to expand their enterprises. However, multinational companies have four procedures of globalizing into Turkey, which include forming strategic alliances and partnerships, franchising, licensing and using export/import agents.
References
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