Strategic Management for Global and Local Companies - Assignment Example

E-Bay Case Study and Management Questions Student name Institution Question One What do you see as the major differences in Global Strategic Management for a global company (or one with significant businesses in many countries) compared to strategic management for companies that only operate businesses in one country? Discuss these differences and why they are important for global/Multi-country businesses. There are major differences in global or international strategic management especially of multinational companies compared to companies operation in one state. First off, the global strategic management is based on the fact that there are different borders and thus customers compared to the one state strategic management that is localized. This means that when formulating the strategic plans, the wider consumer base is of consideration in global companies whereas in local companies the focus is only on the local consumers. The concept of broad customer base is very essential when talking of multi country business being that different countries will have different cultures that would shape consumer behaviours. So factoring in this in the strategic planning processes will enable to make the business expand and grow altogether. The second difference is the extent to which the coordination and involvement from the centre. Coordination in this context refers to how decisions to adopt a given strategy both at local or global level is made and implemented. The coordination of strategic activities and plans in global strategies for global companies requires more of coordination of activities from a centralized position as well as in subsidiaries. On the other hand, the strategic management in one company that operates in one state does not require a centralized coordination as there is ease of control and link up between different places in the nation’s market. This is important in ensuring that there is proper functioning and integration of the practices as well as rolling out plans and executing them independently. The third difference is the degree of product standardization and responsiveness to local markets. Product standardization refers to the extent to which the products, services and operations are tailor made for a specific country. The strategic management for a local based company will come up with more standardized goods for a given market being that the company has a strong grip and understanding of the market niches as well as the target markets. On the other hand, when multinational companies are rolling out their global strategy, there is an assumption that the centre has taken account of standardization that is to work well with the many and different local market niches and target customers which is not the case. Product standardization improves customer loyalty and also the awareness of the product in the market since it is tailored to meet the demands of the customers. Subsidiaries and joint ventures in the global strategies might offer a chance for the multinational corporations to standardize the goods but it usually takes more time and resources compared to companies based in one nation. The other major difference in global strategic management and the local strategic management is the manner in which there is integration and competitive moves. Integration and competitive move may refer to the extent to which the firm in question has independent sources competitive advantages that are interlinked. In the local strategic management in the firms in one country, the level of strategy integration and competitive moves are independent and solely based on the local rival’s competitive moves as well. On the other hand, for the global based companies spread across different countries, the strategy is formulated based on the analysis of both local and international firms. This means that the global strategies are more based on the rivals in more than one market. This means that global companies take a localized or stand-alone form of approach whereas the global companies take the global strategy that is more of an integrated approach that applies across different countries. Global strategic management means there are more risks to deal with. The risks include differences in language, currencies, regulations and financial instruments at disposal of the company compared to the strategic management of a single company operational in one country. This is significant in shaping the global strategy to come up with the best ways to counter unfavourable risks that are widespread and different along different countries. On the other hand, for local countries the risk is not widespread and thus the company’s strategic management will only deal with one form of risk. The risks are important in shaping the global as well as national strategic managements since, the more the risks the more different the managements of different companies are able to strategically plan in order to meet the conditions that counter the risks. The company that is based in one country also have little threats to entry and barriers of entry when considering Porter’s five forces compared to the global based companies that will have the five forces being maximum. This is to mean that formulation of global strategies is more complex being that the external environment itself is very complicated. On the other hand, the external environment that is considered by the local companies in coming up with a strategy is not complicated being that there are less competitors and their analysis is basically easier. The external markets shape both local and global strategies that are used by the companies to achieve their missions and goals. It is worth noting that the multinational companies or businesses will take a different approach in formulation of their strategies that are usually taking into account the globalized economy. On the other hand the strategic management by one company that is operational in one country will be based on a single economy. The plans that are made by the two companies will be much different. To some extent, global strategies work well for single-nation based companies when they are expanding. On the other hand, the strategies by the local company may only be applicable to the multinational companies when they are entering a new country that they previously never had any contact. Question Two How E-Bay Pursued International Growth The intensification of online auction forced eBay to expand its international presence so as to leverage on the global online market platform. eBay established localized sites in various countries within the Asian Pacific, Europe, and North America. eBay ensured that in its international websites there was provision of local language as well as currency. The strategy used by the company included acquisitions and partnerships with the local companies. A good example of such is the acquisition of Xiu.com when entering Chinese market. With this the company was in a better position to understand the local market based on the culture and thus meet specific local needs. The company also considered mergers and joint ventures that ensured that it shared the tangible and intangible resources as well as achieving diversification in a better way. The company also set standards in terms of ensuring that there was a secure and faster means of making payments in the online platform. It acquired PayPal in 2002. PayPal is considered one of the best and actually a global leader in online payments. The company also announced international cooperation with Google the largest search engine in the year 2006. This increased international traffic to the site. To facilitate information exchange between the international consumers and thus enhance customer experience the company acquired Skype and a variety of other social sites to enable the consumers to discuss their transactions. eBay’s platform also offered distinct services that targeted various niches thus a large customer base spread all over the world. In sum the company leveraged on the internet for its international expansion and thus growth. Apart from the internet, the company also has a peculiar business model that enabled it lure over 221 million registered users. The company has an elaborate multilevel e-commerce system that is rolled out at local, national and international levels through a number of websites most of which were acquired. The websites include Shopping.com, eBay Style, Pay-Pal and Rent.Com among others. Additionally, the range of products offered by the company suit the needs of various customers such as students, corporation and government among others. What source of competitive advantage does eBay have? And is that position supported by its resources and assets? Does eBay deal effectively with its external environment in Asia (China is a good example)? Despite the competition brought by Yahoo, Amazon and Gmarket among others, eBay has continued to perform better as an online auction platform. The company has a plethora of sources of competitive advantage compared to its peers. First off, it has a variety of products that target different niches. There are over 5000 brands of the company in international websites that are multilevel in nature. The range of products create customer options that are unique from its competitors. The company also has a good reputation and longevity compared to the competitors especially in provision of value to the customers. The sites are also tailored for different localities through the incorporation of local currencies and languages thus a good value proposition through the differentiation strategy. The company also has a good communication system facilitated through Skype that ensures the customers discuss their transactions. eBay also has Pay-Pal an online payment system that is easy, safe, and convenient to use. The company has a well-developed e-commerce system that has representation. In terms of resources and assets eBay is capable of sustaining its competitive advantage. The company has an organized centralized decision making model that works well except in Asia. The company is also assumed to very strong given its strong and unique business model. The commitment and loyalty of Meg Whitman and John Donahoe is also an added resource to this. The company also has innovation as its core business and has a very competent and dedicated human resources. The company also have invested in social networks all over different parts of the world. eBay is not successful as such in dealing with its external environment in the in China being that it is faced with a number of competitors. The company is also in ability to roll out in the local market due to failure to meet the local needs of the Chinese customers. However, partly the company has been able to achieve much in the external environment through acquisition of China Union Pay that is a more local representation and it countered Alipay by Alibaba. How successful do you expect eBay to be going forward? What recommendations would you make to eBay’s management to maintain and improve its competitive position in the global markets in which it competes? eBay is bound to be successful in the near future based on the achievements it has had since its inception up until now. The company has a strong reputation that will further make it well embraced by most customers. There is also the growing awareness of consumers of online auctioning making the future of the company brighter. eBay also has diversified products and targets variety of niches thus distinguishing and staying ahead of the competitors. The company has market leading brands and thus peculiar value proposition to capture the customer’s attention and thus market share in early stages. There is a higher likelihood of the company expanding its product base as well as services. However, despite doing very well there are few additional recommendations for the management. first off, the management should add sites in foreign countries especially the developing nations where there are a lot of internet users as well as popular and customary online auctions. Secondly, the management should also increase its regional and local auctions so as to facilitate the transfer of goods and services to the consumers. This additionally comes with low expansion costs as well as establishing loyalty of the customers. The company’s management should also consider adding bigger ticket item auctions. For example, the management should include both used and new products such as home based goods and vehicles as well as motor vehicles among others. This will in generate of fees that will expand its revenue and thus market share. The management should also embrace the use of competent programmers available all over the world to tailor make the sites so that they are easily accessible and to guard against any form of security breach. This will go a long way in further increasing its reputation. The management should also consider entry into alliances with portal sites and corporate sites, which would generate a lot of traffic to the various sites as well as increase the level of awareness about the services and the good reputation. Lastly, the company should consider partnering with its rivals especially in well established markets such as China. Read More