Global Local Dilemma and Entry Strategies

Global Local Dilemma and Entry Strategies

Introduction

The Global Local Dilemma that MNCs face is the pressure to respond to local needs in a market with each region or country. MNCs generally attempt to offer the services and products that will attract the customers in closely satisfying expectations and cultural needs.

In today’s globalised world, the firms tend to operate in a global scale. Just by following a particular goal, they have the account on the confined differences. Now, the conduct of organisations in the foreign markets has been considered for decades for understanding the factors, which are influencing choice between the standardized global and local marketing.

The assessment will embark on the “Global-Local dilemma” on which organisations seek to function globally with variety of entry strategies. However, the global drivers with local needs would be evaluated in relation to the context and theory with predictive examples.

Global Local Dilemma

Globalisation though has increased the mobility for people, the new communication technologies has emphasized cultural diversity among many states. According to Hitt, et al. (2016), the potential trend on the trans-nationalisation has been raising issues for the global communities to mingle differences in cultural expression, like values, ideas and creative expression.

For few industrialised nations, the vulnerability and trade of the cultural models in an environment works as a driving force. This is where it is significant to highlight the growing substance of cultural variety because of an international policy program. Fu and Nowak (2013) have defined that organisations are also realising cultural diversity within the organisation, rather to facilitate the organisational glory.

Nonetheless, some of the policy plan can create the task easy and inclusive. From a broader outlook, the cultural diversity can direct by communicating among the employees regarding dissimilar values of peers in facilitating sustain and encouraging success of all workers (Hamel and Prahalad, 2013).

Now, if the cultural diversity could be managed well, there can be good potential to analyse the diverse workforce for organisational benefits.

As opined by Liu et al. (2016), the “core predicament for global marketing” is the option between selling similar product across the boundaries, and the execution done for local promotion strategies to respond to the local differences. An international product could contain the local values, which gives the service or the product to a higher score of identification.

From Contingency Approach, it states that there may be a theory for marketing strategies or business that applies for all businesses. By unifying products, the promotion, sales programs and price distribution channels can form an ultimate form of standardization. According to Buckley (2014), if the markets are not integrated perfectly, the involvement in a nationalized market serves to stability the macro-economic trends that are less connected.

Due of this, trans-national companies could experience higher performance in the market, as investors identifies the reward performance stability (Rickard and Kono, 2014). Better spread across the international market decreases risk outline of the overall selection of the several business units that in turn could make effect on corporate performance.

However, there can be international diversification that yields the cost benefits, just by allowing firm to expand with distinctive competencies, and boosting production economies. Thus, it will allow the cross-subsidization in the markets in order to seek a monopoly advantage.

However, McFarlin and Sweeney (2014) have stated that the transnational company also considers global market being a leader in cultural development for an exclusive market.

The set practices for the multinational strategies present the standardized products, which addresses the global market for an extended period. Even the control of a mother company on subsidiaries emphasizes by taking centralised actions and effective planning.

Range of External and Market factors influencing choice of the international entry mode

For answering this, the choice of entry mode is defined through some internal factors like:

  • Company Size
  • Profit Targets
  • Management Risk Attitudes
  • Market share
  • Experience in MEMS

Skorvagova and Pasztorova (2014) have brought forward two internal factors that add dimension to the subject, like Payback or Speed. Besides, Differentiation and Complexity could be a product factor, which is relative to the industry. Now, the internal factors regarding resources, product and management would work on the goals, motives, networks, customer relations and strategies.

On the other hand, in case of the external factors, a holistic model for the market entry mode is defined with the entry mode procedure. It will make a huge emphasis on the market growth rate, market barriers, industry feasibility and characteristics of overseas business environment.

Motohashi (2015) have also brought external factors in a competitive business situation, considering the Choice of the entry mode. Because of this, choosing the market entry mode will be decided on Home country factors, target country factors and the production factors (Johanson and Mattsson, 2015).

Hence, it is decisive that the target country’s environmental factors would be accounted on the influencing area of an entry mode decision. Now, some of the external factors are:

  • Low sales potential
  • High sales potential
  • Dynamic economy
  • Low production cost
  • High political risk

Global drivers and local needs with advantages through examples

 Global Local Dilemma and Entry Strategies

Figure 1: Drivers of Internalisation

(Source: Learner)

According to De Villa et al. (2015), one key success in today’s global world is the relation between the marketing teams, which is charged with succession brand at limited and global levels. Most companies build the marketing structure because operating behaviours helps to attain global and local initiatives. Some of the key drivers are as follows:

Connect: As opined by Johnson and Tellis (2008), all the marketers should share understanding of the market actuality at global and local levels. The local teams need to identify the success of the market that drives team work and they have to be confident with the local marketer’s work.

For instance, GlaxoSmithKline consumer healthcare over the last three years have re-organised organisation’s marketing model to hub on the top-performing brands (Holtbrügge and Baron, 2013). The market expertise for managers is working for the five brands that are designated with global brands through “innovation”.

Inspire: Each global brand has the insight where both attracts the customers to work for it. This is where the globalised brand leaders have to ignite for the passion to nurture brand’s growth area.

For instance, the Dove brand internationally has derived significance of building the self-esteem for women that has embraced with mission to forge stronger emotional bond connection (Staykova and Damsgaard, 2015). In order to catalyse the global marketing firm, Lagnado has employed the host communication tools with the help of web chats, newsletter, interactions and conferences.

Focus: It would show a vigilant focus on the commitment made on the priorities that are crucial for the development of the organisation. Understanding this finds the new Coors Light global management team has started for coordinating the market initiatives to develop a page document to outline the brand’s strategy, mission and vision.

Organise: One pitfall that do not clarify roles would be the operating model that is crucial to enforce the behaviours in team (De Villa et al. 2015). This needs a post evaluation that has to be taken a better step to make things clear.

Build: Efficiencies and growth may accelerate when the marketers speak just one marketing language on other’s mistakes and success. For reinforcing an activity, the leaders have to reward on the specific behaviours to account on the attitudes that encourage good communication (Hernández and Nieto, 2015). For instance, the marketers working on the OMO Soap brand has created a “Dirty Club”, which is a global society to support OMO around the globe.

Pros and Cons of Market entry strategies in relation to the context

Exporting

It is regarded as the traditional form of operation in most foreign markets when defined with marketing of goods produced in one country with other. Here, the tendency might not attain much detail when the market information is compared to the manufacturing in the marketing country (Holtbrügge and Baron, 2013).

The pros of exporting include reducing the potential risk of the operating overseas, or giving an opportunity to lean the overseas market before just investing the mortar and bricks (Johnson and Tellis, 2008). The Con could be mainly mercy of abroad agents and lack of command to be weighed against the advantages.

Franchising

In case of distribution, a franchisor is considered a supplier that allows the operator, or to use supplier’s trademark to distribute supplier’s goods. For franchisor, the franchisee could be a major alternative to building the Chain stores for distributing goods, which avoids liability and the investments of a chain (Staykova and Damsgaard, 2015). The pros could be the freedom of employment or the proven trademark whereas the con may be decreased risk of failure.

Licensing

According to Hernández and Nieto (2015), it includes little involvement and expenses. The cost here is signing of an agreement or policing for implementation. For example, Coca Cola is a good instance of licensing while in Zimbabwe, the United Bottles has permit to make Coke.

The Pros could be a way to create the overseas operations that open the doors for a low risk manufacturing relation. In quest, the capital is not tied with foreign operations, as there may be options to buy into a partner existence or stipulation to acquire the royalties in stock (Motohashi, 2015).

The cons could be partial form of contribution to length the trademark and precise product processes. Licenses can become the competitors by overcoming to have the Cross Technology transfer deals.

Joint ventures

Joint venture is a form of association that implies good collaboration more than having a transiting period. Here, a local firm attains interest in existing foreign firm. The Pros could be the joint financial strength or sharing of a certain risk.

On the other hand, the Cons could be partners that do not have good control over management. However, the partners might have diverse views on the anticipated benefits.

Potential risk and rewards with each entry strategy

In building an entry strategy, time could be a crucial factor. This stage of creating an image and building an intelligence system through promotion takes effort and money. In case of exporting, the risk could be to lose focus on the home markets and the existing customers.

In overseas market, the remote relations may be thousands of miles away. One has to think of a new market where they can find new reasons to buy the products (Johanson and Mattsson, 2015).

The rewards may be the leading of larger production that could lead to better margins and higher economies of scale. It is evident that the R&D budget may work harder with the change of existing products to suit the new markets.

For Franchising, the risk could be the regulatory risk that is regulated to offer franchisees in order to ensure the franchise laws. Like the other business expansion, it also needs capital and investment for developing a system to satisfy the regulatory obligations.

Rewards could be to expand the system to analyse the ability to generate economies of scale and negotiating ability with the key suppliers (De Villa et al. 2015). On being a franchisor, one can benefit from expanding with diversified revenue streams.

In case of Licensing, the risk may be relying on licensee’s capability to commercialise a patent, or having a poor strategy to damage the product success. However, the rewards may be the licensee is quite liable for the costs of marketing, sales and distribution.

Thus, the licensee would pay the right to hold for a license to the patent. Lastly, for Joint ventures, the risk lies in the imbalance of resources and capital invested by partners that leads to conflict of interests (Holtbrügge and Baron, 2013).

However, the rewards could be having a flexible lifecycle where there could be far more investment opportunities for better market prospect.

Conclusion

The report concludes on the Global-Local Dilemma making integration to the development of actions for an economic country. It is considered that the advantages are present with the local strategies, which are being unique to the host country.

The assessment also shows a link where the international market entry strategies are been developed to show empirical focus on the risk and rewards. In quest, the increasing demand for the innovative products done through the market entry strategies are made to deliver demands, and expertise the new way of innovation.

References

Buckley, P.J., 2014. International integration and coordination in the global factory. In The multinational enterprise and the emergence of the global factory (pp. 3-19). Palgrave Macmillan, London.

De Villa, M.A., Rajwani, T. and Lawton, T., 2015. Market entry modes in a multipolar world: Untangling the moderating effect of the political environment. International Business Review24(3), pp.419-429.

Fu, F. and Nowak, M.A., 2013. Global migration can lead to stronger spatial selection than local migration. Journal of statistical physics151(3-4), pp.637-653.

Hamel, G. and Prahalad, C.K., 2013. Creating global strategic capability. In Strategies in Global Competition (RLE International Business) (pp. 25-59). Routledge.

Hernández, V. and Nieto, M.J., 2015. The effect of the magnitude and direction of institutional distance on the choice of international entry modes. Journal of World Business50(1), pp.122-132.

Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and beyond. Journal of World Business51(1), pp.58-73.

Holtbrügge, D. and Baron, A., 2013. Market entry strategies in emerging markets: An institutional study in the BRIC countries. Thunderbird International Business Review55(3), pp.237-252.

Johanson, J. and Mattsson, L.G., 2015. Internationalisation in industrial systems—a network approach. In Knowledge, networks and power (pp. 111-132). Palgrave Macmillan, London.

Johnson, J. and Tellis, G.J., 2008. Drivers of success for market entry into China and India. Journal of marketing72(3), pp.1-13.

Liu, S., Perry, P., Moore, C. and Warnaby, G., 2016. The standardization-localization dilemma of brand communications for luxury fashion retailers’ internationalization into China. Journal of Business Research69(1), pp.357-364.

McFarlin, D. and Sweeney, P.D., 2014. International management: strategic opportunities & cultural challenges. Routledge.

Motohashi, K., 2015. Global business strategy: Multinational corporations venturing into emerging Markets. Springer Science+ Business Media.

Rickard, S.J. and Kono, D.Y., 2014. Think globally, buy locally: International agreements and government procurement. The Review of International Organizations9(3), pp.333-352.

Skorvagova, S. and Pasztorova, J., 2014. THE GLOBAL CRISIS AND SMALL-AND MEDIUM-SIZED ENTERPRISES: THREAT OR CHALLENGE?. European Scientific Journal, ESJ10(7).

Staykova, K.S. and Damsgaard, J., 2015. The race to dominate the mobile payments platform: Entry and expansion strategies. Electronic Commerce Research and Applications14(5), pp.319-330.

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