Business Strategies

January 9, 2018

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Business performance in various sectors differs considerably. There are industries where competition is limited to the national market and does not depend on what happens outside of it. This form of competition is called multi-country or multinational. Achieved in one national market, competitive advantages are limited by its borders and cannot be transferred to other countries where the firm operates (Cullen & Parboteeah, 2009). For each country company should develop its own strategy. Global competition exists when prices and competitive conditions of national markets are closely linked. In this case, it makes sense to use global strategy: the competitive position of the company in one national market significantly affects its position in the other (Lamont, 2002). In the face of global competition, the company provides its leadership activities in all markets, but it is especially necessary for this to gain an advantage in strategically important countries, where the maximum size of the market and a well-developed infrastructure is.

Issue A

Multi-country approach to business differs from the global one in two major ways: first of all, such business is much less centralized and production, distribution and promotion of the products are subject to the changes caused by the local customers’ preferences. Another difference is much weaker dependence on the companies’ general policies, procedures and culture. There are much less opportunities in this case to control activities of the company’s international quarters and achieve standardization (Thompson, Gamble & Strickland, 2006). At the same time, such approach is more customer-oriented and in many cases it helps to generate bigger profits and get bigger market share.

Multinational strategy consists in adapting a strategic approach to the conditions of each country in which the firm operates. This means creating in the target countries the legally independent companies with private development strategies appropriate to the national context, with minimal coordination. This strategy is also characterized by a focus on the local suppliers and full adaptation to the specifics of the national demand, culture and customs of the country. The main purpose of multinational strategy is to ensure local conditions of the country, rather than a competitive advantage in the global or even national scale.

That is why production of personal computers is one of the cases where multi-country strategy may be chosen. Computer is a complex electronic device, capable of doing a lot of different operations, often not related to each other. Depending on what exactly operations the customer is going to perform at his/her computer, the hardware is chosen and installed. The most powerful computers are used by gamers. In those countries where the child labor is widespread, where most of the games are prohibited or where it is culturally not accepted to play computer games, computers may be tailored to serve other needs and contain weaker video adapters, central processors and less RAM.

At the same time, these computers may be sold together with monitors, acoustic systems, keyboards and all possible devices to raise the profits. In some poor regions personal computers will be tailored in a way that will allow to minimize the price. In the richer regions computers may be more powerful, contain the newest preinstalled software or have a number of peripheral devices sold together with the system unit. In this same way the company’s promotional initiatives will differ. It will be hard to keep to a single corporate culture depending on where the computer is sold; quite different properties of the product are addressed with different accents made. A company cannot claim to provide only the newest and most technologically advanced units when in some regions it is more economically reasonable to sell old or pre-owned personal computers, tailored to serve the basic educational needs.

However, it is necessary to mention that personal computer is not the most suitable example to prove efficiency of multi-country strategy. Both of the strategies may be used in this case. It depends on what the target audience of the company is and what market segments it is going to fight for.

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Issue B

The washing machine market is one of the biggest on the market of household appliances. The market of washing machines relates to the commercial line and market of end-consumers (Lynch, 2009). The end-consumer washing machine industry has already gained a certain example of companies with brand names that are well known all over the world: Samsung, Whirlpool, etc. Market of washing machines is growing in a global perspective. Such situation is supported by different facts. First of all, the population is growing and, as a result, the amount of washing machines’ customers is growing simultaneously. It is essential that all machines that are used by population are breaking, failing and morally and technically outdating; therefore, one time in several years people who already have washing machines have to buy the new one. This tendency is also supported by producers of the companies that make innovations, which are ecological friendly, cause less harm to people and surrounding environment. The next fact that affects the growth of washing machines’ market is connected with the new potential markets that exist in this sphere. Companies try to launch their products in new countries that are still developing and have niches in this industry.

Production of washing machines needs the usage of some low-tech components – parts of the whole machine, which are being one of the biggest possibilities of the company to decrease the costs of its products. Production of such components is not very hard, thus this makes the company be flexible in developing of such standardized components and be able to change components’ varieties, quality and parameters.

As it was noted, washing machines are household appliances, which are the obligatory commodity in any developed country. Thus, it is easy to find this kind of product in any big retailer. Such retailers always offer customers a range of brands and types of washing machines. The main competition here is obtained through the image of the company and its brand in the market and in the world.

There are not big differences among washing machines in different countries and markets; however, existing verities are not significant, for example: power supply, programs’ range. Therefore, the best strategy for washing mashing companies is the global one. However, this strategy should be verified for different countries because of cultural differences, effective methods of advertising campaigns and creation of market advantages. However, it is possible to develop one effective advertizing campaign for different markets. In such industry as washing machine industry, global position of the company in one country has serious impact on its position in the other. The competitive advantages of the company, which won in the national market, can be effectively supplemented by benefits in other emerging markets in other countries. This suggests a significant scale-up that reduces the cost of research and development and allows the company to apply its latest achievements (Spulber, 2007). The main objective is to determine the value chain, its components and implementation of activities in the world.

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Global strategy for washing machine sphere involves the use of two methods by which the company can gain a competitive advantage or hide certain flaws in some countries: first, the placement of certain activities in different countries to work best on the market in many countries, and secondly, coordination of activities of dispersed offices. Based on the facts stated above, for washing machine industry’s global strategy is the most suitable, effective and efficient one.