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International Strategies

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International Operations Strategy Analysis Coca-Cola
Coca-Cola
Nokia
Nokia

McDonald’s
McDonald’s

Dow Chemical
Dow Chemical
IBM
IBM

US Steel
US Steel
Procter & Gamble
Procter & Gamble

Four Basic International Operations Strategies International enterprises who by definition have to have a presence in more than one market must endure both pressures for cost reductions and for local responsiveness. The biggest challenge for these companies is to find the right balance between the two approaches because these place conflicting demands on business operations. Practically all multinational firm use the above strategies or some variation of them when it comes to international operations. For example, Coca-Cola is well known for using relatively standard brands, formulations, packaging, positioning and distribution channels in its global markets (Vogt, 2015). Similarly, research shows that even though McDonald’s has tried to customize their offering to match local consumer preferences. However, the company’s philosophy remains loyal to the idea that the customer would experience a standardized service and quality regardless of geographical location or McDonald’s restaurant (Loukakou, 2012). Companies such as IBM and P&G face relatively different scenarios when attempting to have a presence in global markets. These companies have the luxury of not facing very high cost reduction or local responsiveness pressures. Consequently, these companies can develop new products at home, market them locally, and then transfer them wholesale to foreign markets (Hill, 2013). As stated in other works, our company’s new product to be introduced in different markets around the western hemisphere is an association football competition that will draw revenues from sponsorships, attendance, and television deals as well as several other distribution channels. That said, in order to establish a profitable business our product needs to have a presence in multiple countries which makes our company vulnerable to cost reduction and local responsiveness pressures just as the companies depicted above. The majority of the tournament’s revenue will come from broadcasting deals from the different television stations across the United States and Latin America. That said, our cost reduction measures will be heavily dependent on the amount of revenue the competition generates on a per game basis. Moreover, said revenues will at the same time be dependent on the amount of viewership the competition draws. Alternatively, as expected the only way our tournament will draw enough viewership to procure acceptable profit margins is to attract top talent from the best teams to play in our competition. The nature of our product allows us to provide a standardized product that will satisfy the demand from all the countries involved and even others whose team might not be part of the tournament. That said, the biggest issue with regards to operations strategy is the cost of media distribution. As a late entrant into the market, one of the biggest risks is the insufficient demand that might occur as a result of competition generated by other international tournaments. Consequently, said scenario has the potential to increase our broadcasting costs per game due to the stipulations aforementioned. The low pressures for local responsiveness and increasing cost pressures enables us to narrow down the possible operations’ strategies that best fit our long term objectives. We can look at an international strategy and find that the few benefits do not outweigh the costs. An international strategy would allow the company to leverage economies of scale because the company can essentially sell the same product on the western hemisphere. However, imminent competition from other tournaments force us to be mindful of costs (O’Farrell, 2015). A localization strategy would not be a viable option for our enterprise because such strategy is best suited when consumer preferences are heavily differentiated across target nations. As mentioned before, the most popular sport in Latin America and the rest of our target segments is without a doubt soccer. Consequently, a localization strategy would not be appropriate because consumer preferences are in fact very similar (Rigby, 2006). A transnational strategy would be ideal for the financial objectives of our firm if local responsiveness and cost reductions were both low. Nonetheless, our firm does not need to simultaneously achieve cost reductions and high local responsiveness because our “product” can be thought as meeting universal needs. Trying to use resources to implement said strategy would be inefficient. On the other hand, a global standardization strategy would best fit our operational objectives due to a variety of reasons. High competition from already established tournaments will lead to intense cost reduction pressures. Nonetheless, the similar preferences that most of our target markets share will fortunately lead to relatively low local responsiveness pressures. Consequently, based on the strategic fit map depicted above our firm’s best option in terms of operations strategy would have to be a standardization strategy (Vogt, 2015).

References O'Farrell, R. (n.d.). Advantages & Disadvantages of a Global Strategy. Retrieved October 21, 2015, from http://smallbusiness.chron.com/advantages-disadvantages-global-strategy-11664.html Rigby, D. (2006, April 1). Localization: The Revolution in Consumer Markets. Retrieved October 21, 2015, from https://hbr.org/2006/04/localization-the-revolution-in-consumer-markets Vogt, C. (n.d.). What Is Global Standardization in Marketing? Retrieved October 21, 2015, from http://smallbusiness.chron.com/global-standardization-marketing-25939.html Loukakou, M. (2012). Product standardization and adaptation in International Marketing. Retrieved October 21, 2015, from http://hv.diva-portal.org/smash/get/diva2:543563/FULLTEXT01.pdf Hill, C. (2013). The Strategy of International Business. In Global business today (8th ed.). Boston: McGraw-Hill Irwin.

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