Chapter Eight Homework

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Jomo Kenyatta University of Agriculture and Technology *

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Marketing

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Nov 24, 2024

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Question 1 IBM, a prominent American technology and consulting corporation, is globally recognized for its extensive range of offerings, including analytics, artificial intelligence, cloud computing, software, and hardware services. The company has maintained an unwavering commitment to top-notch quality and efficient management (Kelly & Hamm, 2013), allowing it to expand its operations into numerous countries, including India and Japan. However, IBM's foray into the markets of the Pacific Rim has been marked by significant differences compared to its previous experiences. These markets consist of technologically advanced, fast-growing economies that are receptive to a company of IBM's scale, leading to rapid growth in these regions while emphasizing product quality. The Pacific Rim encompasses a diverse set of countries with unique characteristics and growth trajectories, with China being the standout as the fastest-growing economy. Crafting a universal approach for these diverse markets is challenging, as they offer substantial opportunities and formidable competition. IBM's competition extends beyond the Pacific Rim, with vigorous rivalry from companies in Asian countries that thrive on low production costs and cheap labor, resulting in competitively priced technologically advanced products and services. IBM's emphasis on quality over cost presents challenges in this highly competitive environment, particularly when compared to the US market, where higher prices are often associated with superior quality. Given these challenges, IBM typically establishes local operations when entering a new region, particularly in the Pacific Rim. The bargaining power of suppliers is high due to intense competition, especially in certain countries like Papua New Guinea and the Philippines, where customers demand better customized experiences and favor local businesses. Additionally, the

threat of substitution is high, as new technological startups continually emerge in countries like China, Hong Kong, and South Korea. Question 2 Global integration refers to the set of processes and functions a company employs within a global context to harmonize its operations, utilizing the same rules and regulations across its global activities. Essentially, it involves applying uniform business methods in various countries. Challenges associated with globalization include heightened market competition, as global companies can deliver superior products at lower prices through the utilization of global technology, resulting in increased market share. Globalization also brings about immigration issues, necessitates international recruiting, requires compliance with local government regulations and rules in each country, involves managing tariffs and export duties, entails addressing local labor-related concerns and challenges, and mandates an understanding of the local culture and values. For instance, Amazon, being a global brand, has witnessed a decrease in local market sales and a surge in competition due to globalization. Question 3 Globalization involves the production and distribution of a standardized type and quality of company offerings on a global scale, with a focus on recognizing the opportunities available in the global market. In contrast, national responsiveness entails understanding the variations in consumer preferences and consumption habits within segmented domestic markets. It's observed that as national responsiveness increases, strategies for globalization tend to decrease, and vice versa. Unlike globalization, national responsiveness can limit an organization's expansion

potential at the expense of missing out on significant opportunities. In the pursuit of globalization, there's often a disregard for local consumer preferences. Globalization, as a concept, denotes the unrestricted expansion of all factors of production into the global market, with seamless mobility of these factors. In this scenario, these factors are constantly seeking out regions with more favorable conditions. National responsiveness becomes essential in managing the mobility of these factors, striking a balance between protecting the domestic market and avoiding resource and product scarcity. Therefore, multinational organizations must uphold the principles of globalization while also incorporating measures to safeguard local economies and domestic markets from shortages. Question 4 International strategic management involves the formulation of strategies to achieve organizational goals and compete with global competitors on an international scale. Both retail and manufacturing companies must conduct extensive research and evaluation of various environmental factors ( Naidoo & Gasparatos, 2018) . This includes assessing the potential of their competitors, understanding the relationships between those competitors and customers, and complying with the laws, regulations, and government requirements of the host country. For a retail chain, it's also crucial to examine factors like age, demographics, income levels, consumer behavior, and the cultural context of the region. In the case of a manufacturing company, researching opportunities in the region or country is equally important. In the internal analysis, organizations must evaluate their strengths and weaknesses. For a manufacturing company, this involves assessing the costs associated with establishing a plant, which includes equipment and machinery expenses. For a retail chain, the focus is on the quality

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and cost of products and services, as well as the success of these products in the local market. The key success factors for a manufacturing company often revolve around product uniqueness and quality. On the other hand, for a retail chain, success is often determined by the balance between product cost and quality. Question 5 When AB InBev considers expanding into the Indian market, two crucial areas of focus should be profitability and marketing. Profitability is of paramount importance, as multinational corporations (MNCs) typically seek higher profitability from their international ventures compared to their domestic operations. Expanding abroad entails greater risks and demands significant effort. Marketing strategies, on the other hand, must be tailored to the specific conditions of each country. What works in the United States may not necessarily apply to the Indian market. The implementation of the marketing strategy on the international stage revolves around the well-established "four Ps" of marketing: product, price, promotion, and place. In the case of AB InBev, adapting to the Indian market might involve developing new products, considering that beer consumption is relatively low in India. Additionally, pricing strategies may need adjustment to align with the local economic landscape and consumer preferences. Question 6 In emerging markets, multinational companies (MNCs) can encounter specific challenges that require special strategies. These challenges include the political and legal framework, labor costs, capital availability, competition in product markets, social and cultural values, and the overall economic situation in that market. To tackle these issues, adaptive strategies may be the

most suitable approach. Adaptive strategies help businesses adjust to the unique conditions and circumstances of emerging markets, giving them a competitive edge and enabling them to achieve their revenue targets. For example, a company could identify opportunities in lower- income segments, often referred to as the "base of the pyramid," by offering healthcare or education-related products and services tailored to the needs of this larger population, even if profit margins are lower. This adaptability is vital for not only surviving but thriving in emerging markets. Question 7 Born global companies are unique in that they initially focus on the global market, including their local market, soon after their establishment. Their primary focus is on achieving a global presence, effectively making the entire world their market. The key distinction between born-global companies and other firms is that born-global companies have their roots in international origins. These companies commence exporting to global markets shortly after their inception, effectively marking their presence on a worldwide scale. In today's technologically advanced world, these companies can leverage technology to reduce shipping costs and enhance operational efficiency. Furthermore, born-global companies are known for delivering quality products and services due to their global presence, attracting customers seeking international products of high quality ( Mascherpa, 2012) . The best examples of born-global companies include Amazon, Zara, and Logitech, all of which had international origins. Question 8 Mercedes is making its product strategy more diverse to reach more potential buyers. If Mercedes only focused on the very expensive end of the price range, it would be hard for the

company to grow significantly (Štrach & Everett, 2006). However, by offering vehicles in the $30,000 to $45,000 price range, Mercedes can attract many new buyers. From a marketing perspective, Mercedes can now target a larger group of middle to upper-income customers who can afford a $30,000 to $40,000 vehicle. In the strategy formulation and implementation, there are several approaches to consider Economic Imperative: This involves a global strategy based on cost leadership, differentiation, and segmentation. Often, products sold by multinational corporations (MNCs) include a significant portion of value-added activities across the industry's value chain, such as research and development, manufacturing, and distribution. Political Imperative: This approach focuses on strategy formulation and execution that is responsive to specific country needs and aims to protect local market niches. The success of products or services under this imperative depends on marketing, sales, and service tailored to local preferences. MNCs often use country-focused or multi-domestic strategies in this context.

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References Kelly, J. E., & Hamm, S. (2013). Smart machines: IBM's Watson and the era of cognitive computing . Columbia University Press. Mascherpa, S. (2012). Born global companies as market-driven organizations: an empirical analysis. Naidoo, M., & Gasparatos, A. (2018). Corporate environmental sustainability in the retail sector: Drivers, strategies and performance measurement. Journal of Cleaner Production , 203 , 125-142 Štrach, P., & Everett, A. M. (2006). Brand corrosion: mass‐marketing's threat to luxury automobile brands after merger and acquisition. Journal of Product & Brand Management , 15 (2), 106-120.

Chapter Eight Homework

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