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Plot the position of the following firms on Figure 12.8: PG, Coca Cola, MTV, Ford, Vodaphone, Avon. In each case, justify your answer

Lecturer
: BUSINESS
Trương Thị Minh Lý
INTERNATIONAL
MANAGEMENT
Group Members:

Nguyễn Trần Nhật Huy
Trịnh Hà Lam Anh
Đổng Minh Vũ
Tạ Thụy Tố Quyên
Nguyễn Hồng Diễm Châu

GROUP ASSIGNMENT
Task: Plot the position of the following firms on
Figure 12.8 (sách Kinh Doanh Quốc Tế hiện đại,
page 494): P&G, Coca Cola, MTV, Ford,
Vodaphone, Avon. In each case, justify your answer.


PROCTER & GAMBLE (P&G)

Stage 1: International Strategy
In the early years when P&G's establishment grew quite rapidly. The
Company relies on its focus on product development at its parent
company and its subsidiaries to operate under the strategic direction of
its parent company. Subsidiaries are established in other countries
primarily to expand the market in order to seek profits and sales to be
transferred to the host country. As a result, the pressure to cut costs and
meet local needs is low.
Stage 2: Localization strategy
After the Second World War, as consumer demand and the world
economy changed, as barriers to trade emerged. P&G now pays attention
to the needs of consumers in different countries around the world.
Hence, pressure from high local adaptation and low cost cutting
pressure.
Stage 3: Transnational strategy
However, in 1990, a sharp decline in sales and profits (negative)
throughout the quarter immediately, because:
- The cost of marketing, product research,... is too big.
- In an economic downturn, P&G is still focused on developing higher
quality and higher priced products.
- Failure to accurately determine the needs of the market.
In the following years, P&G focused on controlling the cost structure
and grasping the demand of the market.
P&G’s strategies:

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COCA COLA – Transnational Strategy
Coca cola has HIGH pressure of Local Responsiveness and HIGH
pressure for cost reduction.


Local Adapting Pressure:

Coca cola focuses on the improvement on local flavors. For examples,
Coca cola made an impression in vegetable & fruit juices market in Asia
in 1999 by replacing Hi-C brand in Japan with Qoo brand, which was a
drink maintaining 20% real juices riched in canxi & vitamin. Then this
brand headed forward China market in 2001. At China and Pacific Asia,


the definition of the customers about the freshness and health linked to
the usage of real fruit juices. Coca cola introduced the Minute Maid
Pulpy that contained real fruits, therefore provided a products which was
not popular in North America but was favored in these areas. . The rise
of local brands and familiar flavors in developing countries is a trend
that global manufacturers can not afford to despise. Therefore, Coca
Cola’s pressure on local requirements is also very high.
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Pressure for Cost Reduction:

Coca cola is suitable for the Transnational Strategy. Downward pressure
on costs can be concentrated in the consumer product industry, where
the significance of the differences is not so great and prices are
competitive. The beverage market is an example: part of the Coca-Cola
market has fallen into the hands of competitors. In the context of
competition between the brands in the beverage market today, especially
the development and acquisition of competing market share like
Pepsico, Coca-Cola’s pressure to reduce costs is very high to maintain
sales and market share. Moreover, beverage products do not differ much
between the products of different brands and the cost of Coca-Cola's
marketing and production and R&D activities is very high. From all the
above factors, Coca-Cola's cost-cutting pressure is relatively high, and it
is also important for Coca-Cola to survive in the marketplace.

MTV – Localizational Strategy
MTV Networks has HIGH pressure of Local Responsiveness and
HIGH pressure for cost reduction.


Local Adapting Pressure:

As the US has seen the launch of more TV stations and advertising begin
to slow MTV has been seeking growth from its international interests.
By 2005, MTV Intemational accounted for 80 % of viewers but only 15
% of revenues. There are significant difference in consumer tastes and
preferences between markets, when differences in infrastructure and
traditional practices require customization, and when host government
demands require local adaptation.
MTV is a good example of a company that has had to pursue a
localization strategy. MTV has varied its programming to match the
demands of viewers in different nations. If it had not done this, it would
have lost market share to local competitors its advertising revenues
would have fallen, and its profitability would have declined.Thus, even
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though it raised costs, localization became a strategic imperative at
MTV.


Pressure for Cost Reduction:

At the same time, it is important to realize that companies like MTV still
have to keep a close eye on costs. Companies pursuing a localization
strategy still need to be efficient to capture some scale economies from
their global reach. By this way, these companies have been able to
localize their products offerings, yet simultaneously capture some scale
economies.

FORD – Globalizational Strategy
FORD has LOW pressure of Local Responsiveness and HIGH pressure
for cost reduction.


Pressure for Cost Reduction & Local Adapting:

On 01/04/1994 Ford announced that 01/01/1995 the company will
officially change the strategy of national business strategy in multimarket strategy of global strategy.
Ford executives recognize that there is no way Ford can compete
effectively on the vast emerging markets of China and India unless ford
speeds up global production to create low cost car. The result led to the
one ford strategy, a strategy that created some common ground that Ford
could use anywhere in the world.

VODAFONE – Globalizational Strategy
Vodafone has LOW pressure of Local Responsiveness and HIGH
pressure for cost reduction.


Pressure for Cost Reduction & Local Adapting:

Vodafone has paid too much attention to building a global brand and
ignoring market conditions in Japan. The vision of vodafone is to
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provide consumers in different countries with the same kind of
technology so that customers carry their personalized phone when they
travel through different countries. In addition, vodafone wants to take
advantage of the scale to offset the cost of aspiring to build a global
brand.

AVON – Transnational Strategy
AVON has HIGH pressure of Local Responsiveness and HIGH
pressure for cost reduction.
AVON's Current Initiatives: After selling off ~80% of its
underperforming North American business to Cerberus Capital and
receiving a total investment of $650 million from them, Avon has started
implementing strategies to streamline operations and cut costs.


Local Adapting Pressure:

AVON becomes the 5th largest beauty company and 2nd largest direct
selling enterprise in the world. It has a strong direct marketing program.
AVON supports 6 million representatives worldwide. Avon is good at
personalized sales experience. Avon’s market share has been up to
11.6% in 2010, and keep in top 5 global direct sale market. The main
revenue is from its foreign market. Avon had 4 divisions in the worldUS, Latin America, Asia Pacific, and European, Russia, Middle East.
Avon’s reorganization in 2013 caused a disruption of its sales
representatives.
AVON’s International Strategy from 2010 to now is the transnational
strategy. The reasons why Avon faced problems in 2010 and 2011 are
complicated. First, the competitors in emerging markets started to do a
retail price strategy. Second, the economy persists with the slow growth
in developed markets. Third, many operational mistakes had been found,
as bad information system performance which make AVON lose money.
Moreover, Avon got suspicious of being violating the Foreign Corrupt
Practices Act when they revealed that executives in China gave bribe to
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local government officials. The Foreign Corrupt Practices Act in China.
Avon was accused it gave bribe to local government officials. Compete
with strong competitions like Mary Kay, L'Oreal, and Revlon. Be aware
of competitive advertising and distribution network of competitors.


Pressure for Cost Reduction:

AVON should keep following continuous improvement and in this path
maintain the actual transnational strategy would be good choice, as far
as Avon keeps an eye on the challenges of having this strategy. It is
difficult to at the same time have high local responsiveness and high cost
control. Continue focus on profit growth, trying to reduce cost and pay
attention to manufacturing opportunities of cost control can increase the
value of Avon´s products. The corruption needs to have rules World
Wide to make sure all countries are aligned and following with ethic
company strategy. Implement system controls as ERP and other to
manage the operation globally would be a new focus creating a project
management area to guarantee this process will be efficiently operated
and the company will not waste money with unsuccessful IS
implementations.

THE END
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