Integration vs. National Responsiveness
Integration vs. National Responsiveness
Introduction
This paper entails a critical analysis of the economic integration and national responsiveness activities of a multi-national company which operates in many countries across the globe. The company in question is the Coca Cola Corporation, whose mission statement summarizes its objective of operating in every corner of the globe. In this paper, a comprehensive analysis of the strategies that have been applied by the Coca Cola Corporation on the international scale will be discussed from the perspective of whether they entail economic integration, or national responsiveness. Accordingly, the paper will also compare the company`s activities in the international markets with its domestic operations to determine the distinct differences in these two approaches. The issues that the company has faced in its internal operations will also be duly discussed. The paper will conclude by giving recommendations on how Coca Cola and other multinational enterprises can embrace their international operations so as to ensure that they achieve the goals and objectives that they have laid down.
According to Ghobadian, 2014, pg. 4, there are three main strategies that multinational enterprises apply in their international activities. These strategies are the global strategy, the multi-domestic strategy and the transnational strategy. The suitability of each of these strategies largely depends on the underlying objectives of the business entity in question. These characteristics include, the economic sector in which it operates, the cultural philosophy of the organization, its targeted market in the international sphere; and finally, its scale of operations both from a local and international perspective (Jonathan, 2014).
The economic sector in which a business entity operates largely determines the international business strategy which the entity ultimately adopts. Some economic sectors favor the centralization of the manufacturing processes of an entity due to the associated economies of scale, while some sectors demand that the entity adopts an integrated approach to its core business (Barney, 2014, pg. 72). A company`s cultural philosophy also determines to a large extent the international business strategy which it adopts in its global expansion drives. This emphasis is particularly evidenced in business organizations that engage in the franchising of their brands. In such instances, significant efforts are normally put in place to ensure that these international branches mirror the local business organization in as much as is possible (Kling, 2014, pg. 125).
Thirdly, the targeted market, which a business intends to capture in the international business environment also significantly determines the business strategy that the organization adopts (Christian, 2014, pg. 53). For example, some entities may target a specific portion of the population of a country based on demographics such as their average income levels. In this regard, the entity would adopt the appropriate strategy which would ensure that the products and services reach only the identified market segment, as opposed to a wider mass market approach which the entity could alternatively adopt (Christian, 2014, pg. 53).
Multi-Domestic Strategy
The Coca Cola Corporation has adopted a variety of business approaches in its international operations of selling its products across the globe. One of the strategies that the company has adopted is the Multi-Domestic Strategy. According to Parker, 2014, pg. 941, the multi-domestic strategy entails the integration of the local aspects of the market where a company seeks to enter into its product proposition, so as to ensure that it easily penetrates this sphere. Consequently, the multi-domestic approach begins with a company seeking to understand the local market intricacies and dynamics that define it. Consequently, the company remakes its product or service offering in a manner that suits the dynamics of this market. In this regard, this strategy can be perceived as a following strategy, where the multinational enterprises merely follow the dynamics that exist within a market, as opposed to trying to create or initiate new market trends (Lin, 2014, pg. 935).
Although the Coca Cola Company maintains its primary beverages in the same form and ingredients as they are sold in its local North American market, the company has adopted the multi-domestic strategy in its marketing and Corporate Social Responsibility initiatives with a view of reaching out to the local market (Coca Cola, 2014). This implies that the company has a different marketing strategy for each of the countries where it operates. These marketing strategies are primarily dominated by the social-economic aspects of the specific countries and regions where the company may have pitched tent. This approach ensures that two neighboring countries may have completely different marketing approaches, though the underlying product remains the same.
In terms of the company`s Corporate Social Responsibility activities, the corporation has studied and identified the most pressing needs of the societies in which it operates particularly in the third world countries. These needs range from a variety of social aspects such as the provision of clean water and health facilities, to the provision of infrastructure facilities in some instances (Coca Cola, 2014). According to Hood, 2012, pg. 250, Corporate Social Responsibility is one of the most effective approaches that modern business entities use in the sale and marketing of their products, especially in the international markets. Although the primary motivation for CSR activities is to give back to the society, these activities also play a big role in building the brand value proposition of a business entity since they imply that the company cares for the community in the same way that it cares for its interests (Killing, 2013, pg. 4). In this regard, the multi-domestic approach plays a significant role in the formulation and creation of effective CSR activities of a company in its multi-national activities.
Global Strategy
As previously mentioned, the Coca Cola Corporation has adopted a variety of approaches in marketing its brand internationally, which include the adoption of the Global strategy. This strategy entails the selling of the products or service of a business entity in the same form that they are manufactured and sold in the countries where the multi-national enterprises are primarily domiciled (Jansson, 2009, pg. 88). This approach is applied by many multi-national enterprises and it represents a nationalistic approach to doing business by an entity rather than an integrated economic approach in its global operations. The choice of this strategy by a business organization largely also depends on its underlying goals and objectives, and the target market, which the entity intends to sell its products to in the new markets (Peng, 2013, pg. 400). The Global Strategy is also primarily influenced by various economic and operational factors that may require that a company adopts this approach in a specific country, so as to consequently guarantee it's success (Alain, 2012, pg. 333). This approach implies that, for example, the same Coca Cola drink, which is sold in North America is the same drink, which is sold in Europe, South America and in the Asia- Pacific regions.
In terms of some its core operation, the Coca Cola Corporation has adopted the Global Strategy primarily because it wishes to maintain a certain level of its brand identity across the globe. This approach is best manifested by the company`s beverage recipes that are distributed to its subsidiary operations across the world (Coca Cola). The end result of this process is the same quality of the Coca Cola drink being experienced by all the company`s consumers, despite their specific geographic regions in the world. The uniformity in the tastes of the Coca Cola drink is similar in all the other products that the company manufactures and sells all over the globe (Coca Cola, 2013).
The Coca Cola Corporation has also adopted the Global Strategy in regards to the branding of its products and in some of its advertising activities. From a branding perspective, the company packages its products in the same size, form and, material in all the countries where it operates. This uniformity in branding ensures that the products are easily identifiable by both local and foreign consumers within the countries where they are sold. The company also designs promotional materials that are used across the globe to communicate certain messages about the company as a global brand, rather than a domestic operation especially in the United States (Coca Cola, 2013).
Thirdly, the company applies the Global Strategy in the running and management of its operations at its regional head offices. This approach has been adopted by the company to ensure that it streamlines its operations, and that it creates operational efficiencies that are replicated in each of the countries where it is found. In this regard, the organization`s cultural practices that are found in its headquarters in the United States are the same practices that are found in its more remote locations, such as in Sub-Saharan Africa. This approach has enabled the company to create a hierarchical system that facilities the effective flow of information within the organization`s global network (Coca Cola, 2013).
Transnational Strategy
The third strategy which is used by multinational enterprises in undertaking their global operations is the trans-national strategy. According to (Cullen, 2009, pg. 139), this is a hybrid approach that incorporates elements of both the Multi-domestic and the Global strategies into one. In many instances, creating a harmony between these two distinct approaches can prove to be a challenging affair for the concerned business enterprises. In this regard, this strategy is applied in most cases by organizations that operate in countries where they are required to adapt to this strategy by the existing laws (Tallman, 2010, pg. 122). For instance, in some conservative countries, the local government demands that the respective states must own a share of these local operations in their sovereign capacities. In most instances, the multi-national enterprises are forced to adapt to the Transnational Strategy so as to accommodate the operating demands of these legal and regulatory authorities (Tihanyi, 2012, pg. 326).
Although the Transnational Strategy is perceived as being inefficient by some multi-national entities, the Coca Cola Corporation has adopted this approach as a key value driver in some of the markets where it operates due to the accruing benefits and operational advantages. For example, this approach has enabled the company to source for some of its raw materials at discounted rates in some of the countries where it operates such as Brazil. These advantages are attributed to the positive relationship that this strategy has helped the company build with some of the suppliers who happen to be major government corporations (Coca Cola, 2014).
The transnational strategy has also enabled the company to pursue some of its corporate social responsibility initiatives such as its pursuit of sustainable agricultural practices. As a manifestation of this outcome, the company initiated the Bonsucro Program, which assists sugar cane farmers to adopt efficient farming practices that result in increased yields on their produce. This program initially began in the South American countries of Brazil, Mexico and Argentina, but it is now gradually spreading to some Asia-Pacific countries such as the Philippines (Coca Cola, 2014). The success of this initiative is largely driven by the success that the company has experienced as a result of its engagement in the Transnational Strategy of international business.
The Coca Cola Corporation is also involved in large sponsorship deals that cut across many countries and geographic regions across the world. In 2014, the company sponsored the FIFA 2014 World Cup in Brazil with the help of the world football governing body, FIFA. This sponsorship was not limited to the host country only, but it was spread to practically all the countries where the company operates. The ability of the corporation to launch simultaneous football sponsorship deals in each of these countries, under the umbrella of the World Cup was directly attributed to the application of the Transnational Strategy in the company`s pursuits in this regard (Coca Cola, 2014).
Finally, environmental sustainability is a critical component of the operational agendas of all major corporate organizations today, particularly those with an international presence. Consequently, it behooves these organizations to actively participate in the restoration and preservation of the environment for the generations of the future, and also to guarantee their subsequent operations. The environmental sustainability programs that the Coca Cola Corporation has initiated are mainly geared towards the creation of working cooperation with other local stakeholders such as government agencies. In this regard, the company has continually used the Transnational Strategy to advance this agenda and to initiate these projects within the countries where it operates (Coca Cola, 2014).
Conclusion
This paper has analyzed and comprehensively discussed the business practices and activities of the Coca Cola Corporation in its global operational agenda. The paper has reviewed the three main international business strategies that are adopted by the company. These three strategies are the global strategy, the multi-domestic strategy and the transnational strategy. In closing, the business strategies that multi-national enterprises such as the Coca Cola Corporation adopt in their international operations largely depend on the specific industry, in which the businesses operate, and their underlying goals and objectives in the international realm. However, it is recommended that these enterprises should adopt a hybrid-strategy that incorporates aspects of both its domestic and international markets, so as to create a unique product proposition that serves all their markets uniformly.
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