Discuss how an organization should identify the best strateg

Discuss how an organization should identify the best strategy for competing in a global marketplace and the four approaches typically used.

Solution

Globalization is means merging and integration of world market into single market. To identify the best strategy for competing in global market the company should identify the norms, taste, values and preference of customer of foreign market and internally analyzing company in perspective of corporate goals, financial strength, knowledge to access to specific foreign markets, and its competitive advantages.

Examples: McDonalds ,Pepsi.(these product are globally accepted)

Best strategy for competing in a global marketplace

The four basic way outs in which companies can use to market their products or services globally are exporting, joint ventures, manufacturing and contractual agreements

1.EXPORTING

This type of participating in foreign markets is inexpensive, and have low-risk because it is easy to initiate as local distributors can be found easily, and requires minimal capital investment..

Exporting is of two types:

a. Indirect exporting – It means simply selling of goods for resale in foreign countries, which involves less management and strategy. The method of indirect exporting is selling goods in the home country which buyer and ships and sell to a foreign market.. Another method of indirect exporting is ‘utilizing intermediate’, in which export management companies (EMCs) sell the product through commission.

b. Direct exporting: In this products are directly sell to companies or consumers in foreign countries, and have control over the marketing and distribution of their products and avoid the cost of paying an export management companies.

2. CONTRACTUAL AGREEMENTS

In contracting, multinational company make an agreement with host country company to handle one or several dimensions of its strategy in that nation. A common contract manufacturing is common example of this, in which a manufacturer in the host country agrees to manufacture goods at the conscience of the multinational firm. Firm with strong marketing or distribution network are benefited.

Another popular contract agreement is licensing, in which multinational company (the licensor) gives a local firm (the licensee) the rights to use their trademarks, copyrights, patents or proprietary information. And Licensee Company agrees to produce and market the products of licensor’s, and to pay the licensor a fee, based on sales volume.

3. JOINT VENTURE

In a joint venture, a multinational company joint with a company in a host country and share risks and capabilities. Host Country Company provides access to channels of distribution (local), government contracts, and sources of supply, or to use its technological or marketing skills. Joint venture allows the multinational to overcome trade restrictions and nationalistic barriers to success in the foreign country.

4. MANUFACTURING

The fourth approach to getting goods into foreign markets is through fully owned manufacturing facilities, in a form of foreign direct investment. This is most risky. It begets a large investment. However, it ensures good of control over production activities.