International Business
Multinational and Global Strategies
Worldwide, the question concerning what strategy to utilize is deemed to be a paramount strategic problem for all the companies competing in international markets without exception. For this issue, the phenomena of both aforementioned strategies are going to be discussed thoroughly.
Sometimes, the necessity of multinational strategy development results directly from fairly significant discrepancies considering cultural, economic, political, and competitive circumstances that take place throughout the whole globe. The more local markets’ conditions differ, the harder it is getting to cultivate a multinational strategy. This tends to reveal because a company forms its strategic approaches that actually correspond the situation of every overseas market. In such a manner, an entire multinational strategy appears to be a body of particular strategies directed towards each state. Most of all, this type of strategy best fits the branches where a multinational rivalry prevails.
Talking about the global strategy, it seems worthwhile noting that it is a soi-disant mirror image of the multinational one. It best suits the branches bearing a global competition. The company’s global strategy is duly performed in case it realizes more or less the same competitive strategy within all its pervaded countries. At the same time, there exist some slight kinds of otherness in the usage of strategy in different countries. This is very important because a company ought to adapt to specific local competitive conditions. However, fundamental approaches of a company (reduction in expenditure, differentiation, or concentration) are unchangeable all over the world. Apart from this, the global strategy involves the following:
1) Both consolidation and cooperation of the company’s strategic actions in the world;
2) Sales at the places where a considerable demand for production is available (in the predominant majority of countries or in general).
Primary and Secondary Market Research
The market research (or data acquisition) is a very labor-consuming stage of marketing research, as the larger half of the required information has a merchant nature and is not announced. Let us first turn upon the concepts of both primary and secondary information. Primary information stands for data collected for a specific target for the first time, while the secondary one signifies the already existing information (in other words, it is collected for alternative purposes).
The marketing research starts from collecting the primary information in case when there is no necessary secondary information or when the current data is already outdated. As is often said, it is better to begin with secondary data acquisition first, as it does duty for a starting point of the investigation; moreover, it is more available and costs less money and efforts).
Primary Information
There exist three methods of collecting the data: observation, experiments, and questioning. Here, the sales monitoring, questionnaire, and technical methods of supervision are accessible. Talking about sources of information, one should undoubtedly mention production customers, ad agencies, raw material suppliers, marketing firms, personnel of rival companies, information analysis services and so on so forth.
Secondary Information
Well, secondary market research is comprised with both organizational interior and exterior data that was already gone through preliminary analytical processing. Among its huge list of sources, I would like to single out reference editions, scientific reports, analytical articles devoted to market development etc.
In order to better comprehend the nature of each kind of market research, their pros and cons are going to be provided.
Franchising and Licensing
Difference
First of all, franchising appears to be an entire method, whereas licensing calls one part of activity only. It refers to the whole business, including know-how, intellectual property rights, trademarks, and business contacts. Actually, franchising is governed by securities law, while licensing is governed by contract law. If licensing does not need any kind of registration, franchising do require this. The other noticeable point concerns the territorial rights: in licensing, licensee is capable of selling either products or similar licenses within the same area, when in franchising, these rights are offered to franchisee. Last but not least issue is a control factor. A franchiser has a continual control over his or her franchisee, and licensor does not obligatory supervise licensee. A franchiser one always delve into thorough selection of candidates for franchisees; moreover, the replacement of the last one is not possible without franchiser’s permission. A franchise is usually given for start-ups, while a license is guaranteed for time-proven companies.
Benefits and Drawbacks of Franchising
Worldwide and Dual Pricing
1. Here, we are to consider the entire context of the international market. Dual pricing policy tends to be generally used when a company trades both in the domestic market and abroad. It is meant by setting completely distinct prices for goods sold at home and within the global market. Thusly, the main issue appears to be a degree of sensitivity to local conditions of the market where a product is sold.
2. As for the aforementioned paragraph, worldwide pricing is worked out for companies aiming at international markets and it is not obligatory sensitive to local market conditions. Hence, the same (unique) price for selling production is set for all the countries.
3. Each of the strategies is designed for a company to increase the demand for its products worldwide. I would even say both strategies are like a strategic weapon considering a conquest of the international market.
4. In essence, worldwide pricing is much more difficult to be implemented. That is because it falls short of sensitivity in local markets. The whole global market is comprised with a great range of its submarkets. In such a manner, it appears hard to establish a unique price for goods within all of them (fn. – submarkets), as each one has its own demand and supply.
The main pros of using a dual pricing strategy is that a company takes into consideration such aspects as local rivalry, market distance, and the rates of local currencies.
Specific Decisions of a Company
In its nature, the subsistence of a company is always a result of entrepreneurial skills that stand for a risk. The same thing to a firm itself, as its activity is always risky (aiming at maximizing profit, of course).
Reinvesting Profits The phenomenon means investments of realized gains from the current activity in order to sponsor new capital projects. This kind of expenditures helps both to concentrate a company’s investments within the same object and to expand the production. Reinvestment seems to be an endless process until the moment an average investor takes possession of his or her money received from investment. If not so, the amount of money tends to multiply by the chosen discount rate year by year.
Scaling Back
Considering this issue, I feel the desire to such two aspects as ageing of a company (refers to its life cycle) and its recession (generally – decline in investments). Both of them make a firm to scale down its productivity. The main difference amid these facts is that in the first case a company is already time-proved and is not that effective as earlier, while the second circumstance reveals a lack of necessary financing to reach the minimum expectations from the activity of a company.
Divesting Local Operations
It generally appears to be a very arguable issue. This type of divestment may stand for the company’s unwillingness to gain benefits from local markets and to find its bearings in the context of international expanding. The process can be a consequence of a short demand “at home”, a disadvantageousness of marketing within the origin area, or even an undesired degree of rivalry in the local market.
Compensation for Non-Managerial Workers
Frankly speaking, the duly management of a company is very important; however, its running is impossible without adequate personnel that undoubtedly describes the general image of a firm. Non-managerial employees comprise almost the entire effectiveness considering company’s subdivisions and departments. The volume of their work is often enormous, so a worth compensation is in demand. This compensation is a perfect match for the size of salaries they earn.
For sure, there are no doubts about the fact that some factors can have a direct impact of the amount of compensation. It was already mentioned that the job scope probably plays the most significant role here. If a non-managerial employee works over-capacity or if his or her labor efficiency makes the company’s climate more favorable, the measure of bonuses will surely tend to increase.
The other noticeable point I would like to draw your attention to is the raise of employee’s skills. As he or she becomes more qualified, a new appointment or higher wage may be held out.
Last but not least issue is when an employee grows to be a team leader of the current department. This appears to be a kind of assistance for the managerial unit of a company. Managers are capable of communicating with both their divisions and subdivisions with the help of such workers. In such a manner, company’s targets are achieved easier and more thoroughly, as a team leader can better organize the activity within a certain department.
