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Strategic Management: Analyzing Global Expansion and Diversification Approaches

Evaluation of global expansion strategies and corporate diversification models.

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    Strategic Management: Analyzing Global Expansion and Diversification Approaches Discussion 1, Week 4 What issues are likely to arise in a developing country when a global giant like Coca - Cola begins operations there? What kinds of advantages does such an expansion bring to the globalizing organization? When a global giant begins operations in a foreign country there are four important factors that shape a company’s strategic approach to competing in the foreign markets; the degree to which there are important cross - country differences in cultural, demographic, and market conditions, w whether opportunities exist to gain a location - based competitive advantage, the risk of adverse shifts in currency exchange rates, and the extent to which governmental policies affect the business environment (Gamble & Thompson, 2011). The huge difference in operating in the US vs. a foreign like china is the operation cost. In 1997 the typical Chinese family earns as little as $100 a month so companies can hire much cheaper labor (Pechter, 1997). This also makes the company face problems in selling their own product in that country. What is produced may not be affordable, so the question they also face is the company established for production or establishment of a new product to a foreign country. When the workers pay scale is so different the product cost less and then there is a bigger profit margin to be made, but these profits are not as grand as it sounds. With an American company moving into foreign soil the difference in culture comes into play that adds extra cost and even the regulations that govern that country may lead to added training or changes in how the company operates their vs. in America. Also, the raw materials that are supplied from foreign countries are more easily transported to factories established their again add a bigger profit margin. This is all balanced with the cons of operating there, one is how stable is their economy. In countries that have an unstable economy the risk may outweigh the gains and the company may face a huge loss. Reference: Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management: The Quest for Competitive Advantage (2nd ed.). New York: McGraw - Hill Irwin Pechter, K. (1997). Intel wants to be `Nike of computer business' in China. Advertising Age International , I2. Retrieved from EBSCO host .

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    Discussion 2, Week 4 Consider how a large diversified organization sets strategy. PepsiCo, for example, has beverages (Pepsi, Mountain Dew, Gatorade, Tropicana, Aquafina, Dole, and tea and coffee through partnerships with Lipton and Starbucks) and food companies (Frito Lay, Quaker, Sabritas, Gamesa, and Latin Americas Foods). Do you think all the business units should have the same strategy, or should they be independent and set their own strategies? Our text states diversity into new industries always merits strong consideration when ever a single - business company encounters diminishing market opportunities and stagnating sales in its principal business (Gamble & Thompson, 2011). There is an old saying, never put all your eggs in one basket, and that’s how companies should strategies. While not every company can afford to diversify it when they become large enough they should at least some level. The economy is flexible as well as the public’s tastes, so what’s popular now may not be in twenty to thirty years from now. While there are other instances why diversifying should happen this particular one should a main driving force in my opinion. Reference: Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management: The Quest for Competitive Advantage (2nd ed.). New York: McGraw - Hill Irwin 1. Question : A “think global, act global” approach to strategy - making is preferable to a “think local, act local” approach when Student Answer: a big majority of the company’s rivals are pursuing localized multicountry strategies. country - to - country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. plants need to be scattered across many countries to avoid high shipping costs.

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