Company Biography In January of 2002, John Ferrer and his wife Deborah started their own corporation, a large custom furniture manufacturer located in Boston, MA. Their initial accounts were in the Northeastern region of the United States, and they annually observed a constant profit increase. By March of 2006, they were able to grow the company enough to go from five distribution and manufacturing plants to 10 to allow shipping to 48 states. Although they have two retail stores, one located in Phoenix and one in Boston, their primary source of revenue is online catalog sales. They have 10 manufacturing plants and distribution centers throughout the country. John and Deborah’s corporation is known throughout the industry for its exceptional customer service and superior quality. The contemporary designs lend themselves to a younger market, and the customer base is predominantly upper-middle class because it is one of the highest priced furniture companies in the market. Part of the appeal of John and Deborah’s brand is their consistent involvement with the local communities to create green gardens. They have also been a major contributor to organizations that build houses for people in need. One of their primary strengths is their vertical integration. They have a team of in-house designers saving the company design costs and allowing the flexibility to rapidly change designs as the market changes. Their products have been featured on several prominent home design and gardening shows and have been endorsed by several well-known designers. Because of the recent housing market sales decline (8% from 2005–2006), home renovations have slowed significantly. This has impacted the amount of furniture and fixture sales and continues to impact revenue. Furniture sales in the United States have decreased significantly, and John and Deborah have recently been discussing the possibility of global expansion. Another potential threat to their company is that many higher-end brands have been marketing aggressively and creating lines for popular retail stores. These allow the lower-income consumers to have access to high-end brands at a much lower price point. So far, these lines have been incredibly successful and have significantly increased profits for competitors. Many of these competitors have also had great success in the global marketplace with these lower cost replicas. John and Deborah know that it is time to seriously consider expanding their business. They want to be able to make it through the economic crisis and rely on other ways to increase sales and business. They are open to looking into the global market, but they want to be sure that it is the right move for the business. They have requested an advisory board meeting next month in which you will present the global marketing strategy. As the market strategist, you will play a key role in helping the board decide if this is the right move for the company. The Problem You are sitting in Deborah Ferrer’s office. After the customary small talk, Deborah sits forward and states, “I am very impressed with the work that you have done as the strategic marketing manager. Since John and I started this company in Boston, we have seen continuous growth, but nothing like what we have seen since you started. However, the housing market is really starting to impact our profits. This last quarter’s numbers were not looking good.” You reply, “The crisis has really hit us hard. We have some stiff competition, too, with the other brands creating retail knock-offs.” She counters, “We’ve had great success with your strategies in the domestic markets, but we do need to think of a new approach and strategy. I have complete faith in your abilities to take this company exactly where it needs to go. I must say that we are really counting on you, and I know that you will follow through.” “I will make sure that we do well. Do you have any new projects for me?” you ask. Deborah smiles and says, “You know me well. I do have a new project for you. I sent you an e-mail just before our meeting. I’m curious if expanding in a global market would be a good move for our company. I would like you to look into this for me.” “Our team is definitely up for the challenge,” you say with enthusiasm. Deborah shakes hands with you warmly, and you make your way out of the meeting. As you drive out of the parking garage, you think about your success with the company. You cannot wait to get started. Running head: GLOBAL STRATEGIES Development of Global Strategies Michael Ramsay Colorado Technical University 1 GLOBAL STRATEGIES 2 Development of Global Strategies In the modern competitive business environment, successful companies dare to explore and invest in potential international markets. It is worth noting that most successful organizations have ventured into the global market. John and Debora's mission to venture in to the worldwide market is a strategic move to grow and increase sales for their business. However, for their company to be successful, John and Deborah need to consider factors like resource capability and business laws like taxes to avoid conflict with the government. Resources Concern Resources are essential assets that determine an organization’s success. Any organization with the ability to accumulate required resources to partake its intended duties is likely to acquire a competitive advantage over the rival companies in the same sector. Resources like enough capital to support various organizational activities, able and supportive management, which understands the key areas that need to be prioritized to improve production and lure potential customers into buying the products, and use advanced technology to automate various operations meet the market demands. Adequate funds are essential for an organization to partake in its various duties to succeed in the global market. Therefore, there is a need for a firm to allocate enough funds for development, extensive marketing, and acquisition of new equipment to facilitate production. Equally, each country taxes each international company differently. Therefore, some funds will also be required to register and pay for their operations in foreign countries. Some other funds can be used to cater for operational expenses before break-evening into the global market. Moreover, any successful organization must have able and supportive management who understand the company’s international strategy. For instance, before setting their operations in GLOBAL STRATEGIES 3 any country with a potential market like Canada, they will apply various managerial decisions to make any decision like the reduction of their products’ cost while maintaining their high quality to lure as many consumers as possible. Through the management, the firm can identify a qualified and experienced team in the potential market to assess and determine the weaknesses of the various organizations in the same market and prioritize them. The team’s suggestions will decide if the organization will set up subsidiaries in the potential markets or partner with other stakeholders. Further, technology is an area of concern in the modern-day business world. Technology will automate some operations to reduce operational costs and wages paid to employees. For instance, John and Deborah’s furniture business can be significantly impacted by innovation to succeed in the global market. Resources of Concern in Canada Canada is among the best furniture potential markets, and high-end Furniture Company should make priorities to invest in it. Like the United States, Canada’s middle and lower-class members of society are more than 80%. This population has a lust for high-end products, which has increased over the past few years. For instance, by 2018, the Canadian furniture market grew by 12 %, which shows if John and Deborah ventures into the market, their profitability can tremendously increase, provided that they embrace quality and culturally sensitive furniture products. Managerial capability is another essential resource that will ensure that the company thrives well in the Canadian market through the managerial tactics and decisions made. For instance, when venturing into Canada’s potential population, three types of consumers should be closely monitored; luxurious customers, average wage-earning customers, and avid customers. The middle of the average income earners should be prioritized in each aspect because they GLOBAL STRATEGIES 4 make up the majority of furniture consumers in the market. Equally, the wealthy members of the society should also be located who do not consider the cost of a product before buying it instead of prioritizing quality. Canadian classical furniture styles can get a ready market from wealthy members. Impact of the Decision Able and supportive management directly impacts an organization's performance even in the overseas markets where their subsidiaries are footed. In the Canadian market, there is a high competition concerning the high-end furniture products, which requires the management to swiftly act to acquire a competitive advantage over the other companies in the same production field. Due to the fact that the company does not have any business connections and interactions in Canada, John and Deborah should consider partnering with small furniture developers in the Canadian market because they might be aware of the local customer demands better. After growing within the Canadian market, the management can then decide to open a subsidiary after acquiring the necessary skills to thrive in the Canadian market. Impact on the Company’s Competitive Strategy Since Canada is among the countries with the highest population in the world with a fastgrowing economy, the company should choose an appropriate strategy that can help it fairly compete with other companies on the international scale. The strategy to penetrate the Canadian market will be essential not only to grow the company but also to increase its sales for profitability. To attract customers, the company should first acquire a small furniture firm in the Canadian market, which is aware of customer demands and priorities. This will make John and Debora’s business to grow tremendously and attract as many furniture consumers as possible. GLOBAL STRATEGIES The other advantage of acquiring a Canadian small furniture firm is that it has developed customer contacts and brand loyalty to some; thus, it can be easier to reach out to them. 5 As an established and successful company, a global strategy can definitely help to improve presence and revenues for the company across the world. With technology to assist with communication, it is easier to facilitate a broader view on growth outside of the host country for the company. The definition of a global strategy is one that a company takes when it wants to compete and expand in the global market. In other words, a strategy businesses pursue when they wish to expand internationally. A global strategy refers to the plans an organization has developed to target growth beyond its borders. Specifically, it aims to increase the sales of goods or services abroad (Market, 2020). Global strategy covers three different strategies: international, multinational, and global (Market, 2020). An international company is one that imports and exports. In other words, it sells to customers abroad and has foreign suppliers. However, this type of company does not have any investments (Market, 2020). A multinational company, unlike an international one, has investments in other countries. It has business, staff, and premises in more than one country. However, it does not have coordinated product offerings. A multinational company focuses more on adapting its products and services to individual local markets (Market, 2020). A global company has investments and is present in several countries. It markets its goods or services through the use of an identical coordinated image/brand in every market. In most cases, there is one corporate office that is responsible for worldwide strategy. There is also a strong emphasis on cost management, efficiency, and volume (Market, 2020). Three possible countries for globalization are China, Canada and Germany. All three countries are major importers and/or exporters of the worlds furniture. China's exported furniture revenue reached about $93.4 Billion USD in 2014. Chinese furniture has been in demand due to its top class products. Reliability is another plus, and a factor that has attracted many foreign customers (Wee, 2017). Canada had achieved a total revenue of $4.9 Billion USD in furniture exports in the year 2014 (Wee, 2017) and had 2.9 billion USD in imports in 2017 which was 3.6% of the worlds imports (World, 2020). Germany’s annual furniture export revenues in 2014, amounted to $18.2 Billion USD. As the largest EU country in the furniture export business, it has export destinations which include Asia, North America, and the Middle East (Wee, 2017). It also had 5.7 billion USD in imports in 2017 which was 7.1% of the worlds imports (World, 2020). I would choose Canada as it serves as a good median. With good export and import track records, and obvious proximity to the United States it would serve as a good first step before expanding elsewhere. There is also lots of shared culture and little to no language barrier. And with decent tariffs and regulations, it would be easier moving product to and from Canada and back and forth across the border with the United States. A good argument would be that it would be unwise, since sales are down and negatively affecting the company, to try and expand. Expanding/growing internationally, is very expensive and time consuming along with coming with new varied risks that might further hinder the company. Benchmarking the business by measuring it against competitors is an important tool for any business and is becoming increasingly popular as a way to understand an organization's position in the marketplace (Different, 2020). Peer and collaborative benchmarking would work best, in my opinion. With peer benchmarking companies look at their closest competitors and establish whether their products or services are in-line with what else is being offered in the marketplace (Different, 2020). A competitor like IKEA, is an obvious choice as they have an expansive international presence within the market. With collaborative benchmarking, some industries have trade bodies or consumer groups associated with them and these are an example of how collaborative benchmarking can work. These associations collect and publish data from all their members, allowing them to identify industry-wide trends and enabling effective reviews of best practice (Different, 2020). References Market Business News. (2020.) Global strategy – definition and meaning. Retrieved from https://marketbusinessnews.com/financial-glossary/global-strategy/ Wee, Rolando Y. (2017, April.) Top Furniture Exporting Countries. WorldAtlas. Retrieved from https://www.worldatlas.com/articles/top-furniture-exporting-countries-2014.html World’s Richest Countries. (2020.) Retrieved from http://www.worldsrichestcountries.com/topfurniture-importers.html Different types of benchmarking examples. (2020, February). Retrieved from https://www.indeed.com/career-advice/career-development/benchmarking-examples Running head: STRATEGY COMPOSITION Strategy Composition Michael Ramsay Colorado Technical University 1 STRATEGY COMPOSITION 2 Strategy Composition Deborah has brought the idea of a balanced scorecard as a tool or framework that could be used as part of the global expansion strategy. A balanced scorecard would be one of the best tools that could be used to offer a sense of direction in the implementation of the strategy. A balanced scorecard is an important tool because it has four distinct perspectives that are critical for such an internationalization strategy. One of the perspectives is based on customers and other stakeholders. These are groups of people who determine the success of the organization (Bourne, 2019). Through improved relationships and ties with customers and stakeholders, the success of the organization in the global market could be guaranteed. Harnessing the elements of the perspective can also lead to improved customer and stakeholder satisfaction. When this happens, the company can experience great success in the global market. The second perspective of the balanced scorecard is the financial element. The perspective looks to improve the fiduciary elements of the organization. Finances are critical in the success of any for-profit business. The third perspective is the internal process element (Bourne, 2019). The aim of the perspective is to improve the performance of various internal elements such as workforce by improving the productivity of each individual. The fourth perspective is known as an organizational capacity. The aim of the perspective is to expand its capacity by improving learning and growth. Learning brings about many benefits to the company, which may help improve efficiency and effectiveness across various facets. Another tool, in addition to the balanced scorecard that could be used for global expansion is the use of strategic benchmarking. Benchmarking is a management framework that is used to compare the business processes and activities with the best metrics from the industry (Boxwell, 2017). In this case, benchmarking would involve comparing the business processes of STRATEGY COMPOSITION 3 the company with others within the same industry which have observed success in the global market. By understanding the best practices of other companies, the firm can improve all its processes at the organizational level. Another tool that could be used is strategic planning. Strategic planning when expanding into the global market is critical since it helps establish a sense of direction for the business which can be used to help maintain a clear sense of direction. It ensures that all the activities of an organization are in line with its vision, mission, and values in the long-term. When coming up with or pursuing a global expansion strategy, it is critical that a firm uses a wide array of tools and strategies. The aim of using many strategies is that it helps reduce the resultant risk that the firm may be exposed to once it has entered the global market. One strategy may offer a different perspective from another one. When this happens, management has the opportunity to assess the strategy that would suit the operations of the business or its interests. The use of several strategies also helps expand the number of perspectives that can be used to analyze the global market. When only ne strategy is being used, there is a great risk that many omissions may take place. The global market is not one where a firm should take chances due to the initial outlay that is required in setting up operations or expanding into the global market. These strategies can thereby be said to be appropriate tools is decreasing risk exposure of the business. STRATEGY COMPOSITION 4 References Bourne, P. (2019). Balanced scorecard. London: Hodder Arnold. Boxwell, R. J. (2017). Benchmarking for competitive advantage. New York: McGraw-Hill. Running head: INTEGRATIVE & ANALYTICAL TOOLS Integrative and Analytical Tools Michael Ramsay Colorado Technical University 1 INTEGRATIVE & ANALYTICAL TOOLS 2 Integrative and Analytical Tools The project team has discussed some of the tools that they feel would be appropriate for the analysis of competitors and the whole industry in general. Some of the tools that they have come up with include SWOT and PESTEL analysis. I believe these tools if properly used, will work for a global strategy. There is a notion that they can only be applied in the domestic realm; however, I believe they could prove to be critical in assessing the best strategy to be adopted. My assertion is based on the premise that they consider all the factors that may affect the business at the global level. The global market comes with enormous political and legal issues that may affect a business (Damasceno, & Abreu, 2018). These concerns are included in the PESTEL analysis, and thereby the strategy would be carefully scrutinized with these threats in mind. The SWOT analysis is also as vital since it may offer insights on how to address potential risks in the global market. The evidence I have to support the decision is based on the fact that other multinational corporations have consistently applied SWOT and PESTEL analysis in their global strategies. An example is Apple Inc. Apple Inc. is an American firm that has operations across the globe. It specializes in producing, marketing, and selling computers, mobile phones, and their supporting software. Apple Inc. has always applied these tools in its global strategy. An example is its decision to move its production operations to China. There were several suitable locations. However, through the use of PESTEL and SWOT analysis, it was able to find an appropriate place for the same. The example is an excellent piece of evidence on the importance of these tools and the benefits that the global strategy could deduce from the application of the same. I would refute people who choose other tools over the two by offering examples of how comprehensive they are in addressing any issues in the global strategy. First, they provide both INTEGRATIVE & ANALYTICAL TOOLS 3 internal and external analysis of factors that could affect the plan. Other tools that are available only delve into either the internal or the external business realm. It is an indication that they are not as comprehensive as these tools. Secondly, other tools are not widely recognized. Using a recognized tool is better since it is easy since one can compare what has been produced by other firms in the global market that have applied the same tools. Thirdly, additional mechanisms would mean more work for the team that has been tasked to assess the comprehensive strategy. More work for the team is not desired since the two tools that have been suggested can already play the said roles in an amicable manner. Based on SWOT and PESTEL analysis, one can conduct a brief summary of the chosen market. Based on the SWOT analysis, strengths include huge market and niche market growth. Weaknesses include fluctuation of the Canadian currency and intense competition. Opportunities include a growing middle class and emerging market. A considerable threat in the market is intense competition and rivalry. Based on PESTEL, the Canadian market is one that is highly attractive (Market Business News. 2020). It has experienced great political stability, and this means that the company would have an easy time operating. The legal and political framework is also welcoming for foreign companies meaning that there would be very few bottlenecks to start operations. The economic environment is one that is also attractive due to friendly policies. The technological environment is also progressive, and this is in line with the goals of the company. INTEGRATIVE & ANALYTICAL TOOLS References Damasceno, V. S., & Abreu, Y. V. D. (2018). Evaluation of businesses using SWOT and PESTEL analysis. Interações (Campo Grande), 19(3), 503-514. Market Business News. (2020). Global strategy – definition and meaning. Retrieved from https://marketbusinessnews.com/financial-glossary/global-strategy/ 4
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