Seeking a Good Location to Expand on its Products or Services - the Taiwanese Companies - Case Study Example

Name Course Institution Instructor Date Introduction Going global is the process of extending a company’s business activities from a domestic level to an international level. Every company expands its business ventures with the aim of generating more income (Linderberg and Bryant 2001). This can be done by opening new outlets in one or more countries that will embrace the mission and vision of the parent company. The process will involve increase in infrastructure and personnel. However, many of the companies do not succeed in globalizing their businesses. This paper will look into the challenges faced by these companies and how they can be addressed. Companies have two main challenges when deciding to go global, establishing the perfect location to expand the business and knowing what can be globalised. The location is decided in terms of the product market in the given geographical niche, developing or the developed world. Identifying what to be globalised is a major management decision, the manufacturing process or sales (Sassen, 1998). The following are some of the challenges faced by a company seeking a good location to expand on its products or services, data scarcity, absence of the local intelligence and lack of analytical resources. Data scarcity Developed nations have a more elaborate readily available data compared to the developing nations. This gives limits on the amount of information available for analysis. A company seeking to expand will not predict the market demands, identify with the established competitors or understand a given regions market demands (Sassen, 1998). The company will rely on the analysis available on the media to establish this figures and further understanding. New companies fail to adopt the basics of a new business. The best approach when investing the global market is adopting “simple is best” approach. There are policies that might have worked well in the parent company; they should be adopted (Linderberg and Bryant 2001). This includes simple activities like establishing and marketing a brand in the urban areas. A high population guarantees a huge product – market ratio. This will be a good platform to accumulate profits. The process of gathering data to carry out a feasibility study can be outsourced to experts in the field. Globalization involves moving to a new terrain, different to the domestic ones. Hiring services of the locals is fast and effective way of obtaining reliable data. The data collected will enable the management to settle on the best location with untapped or unexploited customer base for a given product or service. The process should be carried out even after the establishment process. This keeps the organization updated on the market insights. The company will make informed and strategic decisions when they want to expand further. Absence of a local intelligence A local intelligence team has information not readily available by the general public. The team should contain experts in all the fields and stages of the venture. The experts handle recurring and emerging problems with ease, resulting from the experience gained over the years in their various fields. An expert in law, a lawyer, will easily maneuver between the legal aspects that the company will encounter. A marketing expert will be able to identify and relate to marketing trends and reflect on the customer needs. A successful manager will ensure the company’s interests are catered for at all times. A company can integrate the intelligence gathered to form a strong marketing strategy. The marketing strategy changes with the market trends which are dictated by the competition present and the market demands. The expert’s views should be adopted when giving a detailed marketing strategy. The strategy should address the entire key customer base and the requirements (Salisbury et al., 2009). The intelligence should enable a company to validate data obtained from different locations towards making accurate decisions. A company seeking to go global should gather updated customer data. This is a daily monitoring activity by a company to know the customer behavior in a given location. The closer the customer relationship is the great the success that a company can experience. Getting the numbers as early as the first day makes the management fully understand the posed market target. Lack of analytical resources Domestic companies grow organically in their own market through mastering the in and out of the market over a long period. When companies go global there is limited time to make impact. The stakeholders monitor the company’s progress to see if the goals have been met and the short term goals. The management will give a report for analysis depending on the company’s tradition, yearly returns or quarter – yearly. This pressure does not give the company the much needed breathing space to grow naturally like in the domestic market. In the domestic market failure was tolerated, based on the company being new in the business, now there are no reasons for failure. The stakeholders assume the management is in control during the whole globalization site selection process. The company should employ a spatial expert. Location planning is a tedious and involving undertaking at a new international level. There are readily available location analyst experts. Their services should be used to obtain the best location. They are familiar with the market strategy and coordination in the company. The expert focuses of establishing structural infrastructure and adopts the best business practices. The knowledge provided should be utilized for current and future use. The company might consider signing a contract with a spatial expert for continuous consultation with the management. A company can also consider outsourcing the location science. A single company cannot have all these resources tied under one organization. There are many business companies that handle data management and analysis of various locations. Their main aim is to collect data from different regions, analyze by drawing graphs and charts to determine the market trends. These companies have readily available tools of gathering information if not at their disposal. There are more experienced companies that take into sophisticated responsibilities like even establishing physical structures and business ventures in a given location when give a go head, by the contracting company. Models Adopted by Companies Going Global Companies going global have strategies that are implemented on taking the new territory. The strategies adopt a given model that the company’s sees it is fit to take off. The business variables to be globalized decide on the given model to be adopted by a company. Here are some of the models adopted by companies in the modern globalization trends, organic growth, strategic alliance and adopting global talents (Barlett and Ghoshal, 2000). Organic Growth This model aims at reciprocating achievements gained from other business ventures related to the new venture. This is done by doing all the globalizing activities solely (Phimister, 1999). Huawei and ZTE are some of the global companies that have adopted this model. The model relies on achieving small goals from time to time depending on the adopted timetable. This makes the organization grow steadily without depleting the resources available. This method gives the management team time to analyze on progress made during the globalization process. Changes are easily incorporated from the interpretation made by the management. The process incorporates in cultural resources from a given geographical region. The model has a low risk level in its implementation. Resources are sequentially put into the system after monitoring the advances made. The organization mandates a team to elaborately divide the processes to be involved when going global. The steps to be taken incorporate the organization’s mission and vision. They have different objectives and short term goals. The stakeholders analyze the short term goals and give varied feedbacks to terminate or extend on their activities. Positive feedbacks will guarantee the companies support, by the stakeholders. While negative return will not convince them to take into the venture. The process is a slow one (Jameson and Miyoshi, 1998). The company takes on one new country at a time. This is a risky activity. The company applies random strategies that might workout with the new country. Strategic Alliance The Taiwanese companies are famous for adopting this model. The strategy involves getting into a new market and attracting a huge customer base. A company seeking to expand in the global arena forms a team to go and navigate the market from another country. The company might not necessarily engage in the same products manufactured and sold in the native country. The aim of going global is studying market trends and engaging in the best ventures that will attract customers. Identifying with the culture dictates hiring human labor in all development processes. The team engages in selecting individuals to occupy certain management level in the company. Some of these levels are the ones that interact with the public. They carry the company’s image out to the public. The top management is run by individuals from the expanding company. They easily identify with the company’s manifesto. They invest wholly into establishing a new company. The risk is undertaken after careful consideration in the given venture, assessing the risks involved and the anticipated returns over a given period. Then localize infrastructure and the resources used (MacKinnon and Manathunga, 2003). The built structures will embrace the cultural designs in the given countries. An example of adopting this strategy is the Acer’s president, he is Italian. This has enabled the company establish itself in Europe and northern American markets. The customers easily identify with the adopted market trends adopted by the leader. Adopting Global Talents Most companies exploit the talents available on the global arena. There are global organizations that have branches in many countries. The regional management taps in the best talents at the regional level. It is not advisable to get all the managers in top position held by individuals from the native region or country. There are experts’ indifferent regions and countries (Phimister, 1999). This is a costly strategy but it guarantees positive returns. The stakeholders are fully convinced of going global, resulting from the success experienced in other countries. The strategy is aimed at acquiring the services of the best talents available in the given field. This hinders the organization from cultural shock. Some regions have very committed and hardworking personnel compared to others. An example is the Chinese and French managers. A Chinese manager’s phone will be on and readily available around the clock (Boudreau et al., 1998). A French manager on the other hand will have the phone on during the working hours only. These are two completely different individuals raised in different cultures. The culture aspect will contribute to the success made from the company (Jameson and Miyoshi, 1998). A Chinese manager will bring more returns compared to a French manager in a manufacturing and sales company. The Chinese culture is not accustomed to fancy lifestyles rather it is developed of economizing and handwork. The manager will cut down on the surplus expenses from activities that do not present direct positive impact to the future of the organization. Conclusion The resources and reasons available to a company affect the strategy to be adopted when going global. Having a great financial will guarantee that thorough research and conclusions are made. Many of the information gathering and analysis resources can be outsourced to business companies with expertise in the given fields. Cultural barrier is the main challenge faced by companies willing to expand into the international level. Cultural studies are made to understand the market trends and variables involved. Companies with moderate financials adopt organic growth and strategic alliance models. The two models are more risky than adopting international talent. The process of identifying a geographical location and extensively develop it to the company’s expectation is a rigorous task, to be handled by the experts. Their extensive knowledge makes the process easy to accomplish. References Bartlett, C. A., & Ghoshal, S. (2000). Going global: lessons from late movers. Harvard business review, 78, 3. Boudreau, M. C., Loch, K. D., Robey, D., & Straud, D. (1998). Going global: Using information technology to advance the competitiveness of the virtual transnational organization. The Academy of Management Executive, 12(4), 120-128. Jameson, F., & Miyoshi, M. (Eds.). (1998). The cultures of globalization (p. xiii). Durham, NC: Duke University Press. Lindenberg, M., & Bryant, C. (2001). Going global: Transforming relief and development NGOs (p. 220). Bloomfield, CT: Kumarian Press. MacKinnon, D., & Manathunga, C. (2003). Going Global with Assessment: What to do when the dominant culture's literacy drives assessment. Higher Education Research and Development, 22(2), 131-144. Phimister, B. (1999). Going global. nature genetics, 21, 1-1. Salisbury, M. H., Umbach, P. D., Paulsen, M. B., & Pascarella, E. T. (2009). Going global: Understanding the choice process of the intent to study abroad. Research in higher education, 50(2), 119-143. Sassen, S. (1998). Globalization and its discontents:[essays on the new mobility of people and money] (p. xxxvi). New York: New Press. Read More