Strategic Management: Analyzing Global Expansion and Diversification Approaches

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Strategic Management: Analyzing Global Expansion and Diversification ApproachesDiscussion 1, Week 4What issues are likely to arise in a developing country when a global giant like Coca-Colabegins operations there? What kinds of advantages doessuch an expansion bring to theglobalizing organization?When a global giant begins operations in a foreign country there are four important factors thatshape a company’s strategic approach to competing in the foreign markets; the degree to whichthere are important cross-country differences in cultural, demographic, and market conditions, wwhether opportunities exist to gain a location-based competitive advantage, the risk of adverseshifts in currency exchange rates, and the extent to which governmental policies affect thebusiness environment (Gamble & Thompson, 2011).The huge difference in operating in the US vs. a foreign like china is the operation cost. In 1997the typical Chinese family earns as little as $100 a month so companies can hire much cheaperlabor (Pechter, 1997). This also makes the company face problems in selling their own productin that country. What is produced may not be affordable, so the question they also face is thecompany established for production or establishment of a new product to a foreign country.When the workers pay scale is so different the product cost less and then there is a bigger profitmargin to be made, but these profits are not as grand as it sounds. With an American companymoving into foreign soil the difference in culture comes into play that adds extra cost and eventhe regulations that governthat country may lead to added training or changes in how thecompany operates their vs. in America. Also, the raw materials that are supplied from foreigncountries are more easily transported to factories established their again add a bigger profitmargin.This is all balanced with the cons of operating there, one is how stable is their economy. Incountries that have an unstable economy the risk may outweigh the gains and the company mayface a huge loss.Reference:Gamble, J., & Thompson, A. (2011).Essentials of Strategic Management: The Quest forCompetitive Advantage(2nd ed.). New York: McGraw-Hill IrwinPechter, K. (1997). Intel wants to be `Nike of computer business' in China.Advertising AgeInternational, I2. Retrieved from EBSCOhost.

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Discussion 2, Week 4Consider how a large diversified organization sets strategy. PepsiCo, for example, hasbeverages (Pepsi, Mountain Dew, Gatorade, Tropicana, Aquafina, Dole, and tea and coffeethrough partnerships with Lipton and Starbucks) and food companies (Frito Lay, Quaker,Sabritas, Gamesa, and Latin Americas Foods). Do you think all the business units shouldhave the same strategy, or should they be independent and set their own strategies?Our text states diversity into new industries always merits strong consideration when ever asingle-business company encounters diminishing market opportunities and stagnating sales in itsprincipal business (Gamble & Thompson, 2011).There is an old saying, never put all your eggs in one basket, and that’s how companies shouldstrategies. While not every company can afford to diversify it when they become large enoughthey should at least some level.The economy is flexible as well as the public’s tastes, so what’spopular now may not be in twenty to thirty years from now.While there are other instances why diversifying should happen this particular one should a maindriving force in my opinion.Reference:Gamble, J., & Thompson, A. (2011).Essentials of Strategic Management: The Quest forCompetitive Advantage(2nd ed.). New York: McGraw-Hill Irwin1.Question :A “think global, act global” approach to strategy-making ispreferable to a “think local, actlocal” approach whenStudent Answer:a big majority of the company’s rivals are pursuing localizedmulticountry strategies.country-to-country differences are small enough to beaccommodated with the framework of a mostly uniform globalstrategy.plants need to be scattered across many countries to avoidhigh shipping costs.

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