Hi Anna Is everything okay you ask Well Anna begins I just f

“Hi, Anna. Is everything okay?” you ask. “Well,” Anna begins, “I just finished our quarterly report. Our profit margins have dropped by 2% this quarter.” After Anna leaves to send her report to Deborah, you start to wonder how you and your team can help fix this. Is a global strategy the answer, or should the company continue to focus on the domestic market? You call a team meeting to learn about the progress of their research. Tiffany, one of your team members, begins the discussion. “I think we need to look at some of the internal factors,” she says. “We know what our capabilities are on the domestic front, but what about in the global market? We have a fairly strong market presence here in higher-end markets, but how does that translate globally?” “Well, I think we need to identify a benchmark to give us some more information to make a better decision,” you explain.

Answer the following:

What is your benchmark?

Did it benefit from global expansion? If so, how? If not, why?

Did this benefit or hinder the benchmark\'s domestic market share? Explain.

Were there risks associated with the globalization?

How were these risks minimized?

Solution

Q1) Benchmark is the best industry figure in terms of financial performance on comparison with competitor data. Benchmarking is done to identify the potential of the market and set the goals for the firm.

Q2) The firm can benefit from global expansion by setting the right goals through benchmarking and creating strategies to acheive the goals considering how much potential the industry has from a revenue standpoint.

Q3) The domestic market share is also benefited as the expansion strategy will create a positive sentiment in the minds of investors thus resulting in overall spike in the share. As the firm already has a stronghold in domestic market, it just added more value to the share.

Q4) The risks associated with globalization include -

1. Unpredictability of global markets resulting in higher capital and operational costs as opposed to revenues

2. Difficulty in understanding customer preferences and customizing accordingly.

3. Unavailability of skilled resources to recruit

4. Possibility of complex regulations in the foreign country hindering the expansion plans of the firm.

5. Domestic market might be ignored to a small extent as the firm concentrates its resources and money to expand globally.

Q5) The risks can be minimized by -

1. Analyzing the global opportunities and understanding the regulatory landscape of the country in which the firm plans to expand

2. Identifying the local as well as global competition in the country based on which the firm needs to strategise.

3. Understanding the consumer preferences and customizing products accordingly