Global Marketing Strategy- Planning Complete, Next Steps Ahead

Global Marketing Strategy- Planning Complete, Next Steps Ahead

Based on previous analyses, globalization is a good strategy for the company. A global environment offers the company more opportunities to explore, overcome challenges, and expand the business. The balanced scorecard, SWOT, and strategic analyses show that a globalization strategy suits the company’s future expansion plans. As a furniture business, an expanded clientele base and flexible regulation in a global environment are crucial in ensuring business success.

Rationale for Global Expansion

Strategic Reasons

As identified earlier in the strategic analyses, one of the reasons for global expansion is to leverage an expanded market base for growth. Twarowska and Kakol (2013) aver that businesses adopt a globalization strategy so that they do not have to rely on local and national markets. When there is a downturn in local and national markets, the global market will come in handy and offset the shortcomings at home. Besides, global expansion presents a potential for more profits, such that even if the business continues operating with the current product portfolio, the growth opportunities remain high. Globalization is also a good move for the company since it will help it leverage unexploited markets before a rival comes in.

Overseas operations are attractive since they help executives reduce budgets to bolster profits. For instance, by moving operations to a country with a deflated currency and a lower cost of living, the company will likely incur lower overhead costs, translating into higher profits (Twarowska & Kakol, 2013). In the same breath, a US-based business moving to a country with free trade agreements with the US means that it will incur fewer costs in terms of labor. One of the crucial resources for a company adopting a global strategy is the human resource. As the furniture company moves to a new country, it will leverage the low cost of living in the host nation to hire and compensate employees at a lower cost. The globalization strategy is so popular that potentially failing companies have adopted it and reformulated their budgets to allow globalization as a last-resort measure.

According to Deng et al., (2018), another reason to globalize is due to an appealing regulatory environment. As stated in the balanced scorecard, one of the objectives of the furniture business is to replace 50% of non-performing staff annually. Attaining the objective may be an uphill task in a country like the US with stringent labor rules. However, some countries, like China, have flexible labor laws that allow companies to hire and fire employees. The flexibility enables companies to streamline their operations, including implementing cost-cutting strategies that will go a long way to help the company survive hard economic times when consumption power goes down.

Geographic Location for Global Expansion

The best geographic location for the expansion strategy is China. China, an emerging economy with a significant consumer base, offers the ideal conditions for growth. The country’s long history of manufacturing means that it has an established supply chain network for various supplies, including furniture products. China is also endowed with significant raw materials such that furniture companies will not have to import supplies, saving on logistical costs.

Background Information

One of the reasons why China is a suitable location for the furniture business is due to its expanding domestic market. Influenced by external developments, the Chinese people are increasingly adopting the culture of buying local furniture products. Xiong et al. (2017) aver that the Chinese furniture business has expanded so much that 72% of the sales in the industry are domestic. That means that once the furniture company moves operations, it will benefit from the readily available domestic market.

Another positive feature of the Chinese furniture industry that makes it a suitable geographic location for the business is the state of technology and equipment in the furniture industry. Since 2008, technological advancements have penetrated the industry, leading to the manufacture of quality and advanced products (Xiong et al., 2017). The equipment used in the industry is imported from Germany, Italy, Japan, and France, implying that the final products are recognized since they originate from well-known sources. With quality products comes elevated productivity levels; hence, it will be viable to invest in the country in business terms.

Aggressive research and development are also at the epicenter of the Chinese furniture industry’s fortunes. Through research and development, China has moved places from a position of comparative disadvantage to a position of comparative advantage (Cao & Hansen, n.d.). Most of the research and development efforts in the furniture industry are spearheaded by the China Furniture Association. Although the country still lags in quality and unit price relative to traditional competitors such as Germany and Italy, China has made great strides. For instance, in 2012, under the guidance of the China Furniture Association, Chinese furniture enterprises took original designs to a Milan exhibition as a marketing strategy for Chinese furniture (Xiong et al., 2017). At the core of the efforts by the China Furniture Association is a resolve to encourage local furniture manufacturers to embrace their original designs. Based on the institutional dynamism to support local furniture manufacturing, the furniture company will benefit significantly as it moves its operations to China.

How the Decision Supports Overall Growth and Expansion

The decision to move operations to China supports the overall growth and expansion strategy of the furniture business. One of the notable benefits of expanding to China is supply chain optimization. As noted, China has a significant raw materials endowment, and the company will incur limited transport costs and reduce lead times, two critical factors towards customer satisfaction. Also, China offers cost efficiency in labor and manufacturing. As the furniture adopts a globalization strategy, one of the key objectives is to cut costs and enhance profits. Since the company has access to skilled and inexpensive labor, the chances of making more profits are high. In addition, as a technology and innovation hub, firms in China access cutting-edge technology and research facilities that play a crucial role in helping them manufacture products that can compete at a global level.

Conclusion

Based on the findings above, globalization is the best strategy for the furniture company. Strategically, globalization offers the business access to an expanded market since new customers in the new location and globally will develop an interest in the business’s products. Culturally, China offers a flexible regulatory compliance framework that will allow the company to adjust its operations based on market conditions. In terms of competitive analysis, the new environment allows the furniture business to access and leverage unique technologies and expertise to improve its products’ quality and drive sales. Finally, based on the balanced scorecard’s learning and growth perspective, the new environment provides an atmosphere that facilitates inexpensive employee continuous learning and development.

References

Cao, X., & Hansen, E. (n.d.). China’s Furniture Industry Today. Retrieved February 3, 2024, from https://owic.oregonstate.edu/sites/default/files/pubs/Chinafurniture.pdf

Deng, P., Liu, Y., Gallagher, V. C., & Wu, X. (2018). International strategies of emerging market multinationals: A dynamic capabilities perspective. Journal of Management & Organization, 26(4), 1–18. https://doi.org/10.1017/jmo.2017.76

Katarzyna Twarowska, & Kakol, M. (2013). International Business Strategy: Reasons and Forms of Expansion Into ForeignMarkets. RePEc: Research Papers in Economics, 1005–1011.

Xiong, X., Guo, W., Fang, L., Zhang, M., Wu, Z., Lu, R., & Miyakoshi, T. (2017). Current state and development trend of the Chinese furniture industry. Journal of Wood Science, 63(5), 433–444. https://doi.org/10.1007/s10086-017-1643-2

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Description – 4-6 Pages
Your work on your strategic global marketing plan is complete. You now have a plan that will implement, manage, and support a global strategy, but it is far from organized. You e-mail Deborah to inform her that you are almost ready and that the initial planning is complete. A little while later, the phone rings and you see Deborah’s name on the caller ID.

Global Marketing Strategy- Planning Complete, Next Steps Ahead

“Hi, Deborah. What’s up?” you ask.

“I’d like you to present to the advisory board next week,” Deborah says. “They are very curious about your findings and would like to know if globalization is a good opportunity for the company. The board wants to finalize their strategic plan, and this may be a key part of it.”

After you hang up, you begin thinking through the different items that you will need to cover.

As you finalize the marketing plan, complete the following:

Is globalization a good move for the company?
What is your rationale behind this decision? Synthesize analysis conducted in previous units, including strategic considerations, cultural considerations, competitive analysis and balanced scorecard.
What geographic location should be a target for global expansion?
What background information can you provide to support this decision?
How will this decision support the overall goal of growth and expansion?
Please submit your assignment.

For assistance with your assignment, please use your textbook, all course resources, and any external research and resources you have gathered.