Chapter 12, Problem 1TAI1

Summary Introduction

To Explain:

Reason as to why these companies may have gone wrong in their analyses.

Introduction:

The globalization has completely changed the way businesses were being conducted throughout the world. Globalization comes with lots of advantages and obviously with some disadvantages as well. In the hurry of expansion, companies do some mistakes in their analysis. The analytical mistakes affected the companies badly.

Explanation of Solution

After globalization, international businesses flourished. Many Western Companies flooded into China. It allowed them to compete for market share in all sorts of businesses. After this, several small and local companies scaled back their operation or left China completely.

It is true some countries have cultural similarities despite differences in language, attitude toward business, religion, traditions, customs and many other factors. The successful product in one market is sold to other markets without or less modification. But many products should undergo extensive adaptation to suit the local tastes like books, magazines, ready-to-eat meals, and others.

Let’s see Coca-Cola’s example in China. Many people use traditional medicine as cough syrup during flu. The taste of the syrup is not appealing for people there and its taste is similar to Coca-Cola. Since Coca-Cola has a policy of one taste worldwide, the company had to face aversion to taste among Chinese people and the company lost its market there. So, the cultural elements can affect site decisions.

The company might choose to set up production facilities in the target market. The above loss for Coca-Cola Company can be minimized by flexible manufacturing methods. The productive operations can be strengthened by a strong work ethic among the local workforce. An adequate level of education in locals is very important for planned business activities. These are crucial for site consideration in a different county.