Integrative and Analytical Tools

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Business Finance

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Assignment Objectives:

Select and test analytical and integrative tools to perform in-depth analyses of industries, firms, and competitors in both domestic and global markets.

Assignment Details:

Write 600–800 words that respond to the following questions with your thoughts, ideas, and comments. Be substantive and clear, and use examples to reinforce your ideas.

As you close your weekly meeting with Deborah, she says, “There are some very good ideas here. I would like to see you continue with a global marketing plan. We need more concrete analysis and data for the presentation. Get your team to work.”

After your meeting with Deborah, you briefly meet with your team to discuss moving toward a more formal analysis.

“Tiffany and Mike, we need to provide a more detailed analysis,” you explain. “You’ve done a great job so far looking at what resources we need and potential countries, but we need to really dig deeper on this.”

Tiffany nods her head in agreement. “Definitely,” she says. “We need to look at some internal variables as well as political, environmental, sociocultural, and technological environments of the countries that we are considering.”

Mike interjects, “Well, that’s something we should consider, but it’s not the only way to analyze this type of project. This is such a big decision, and we need to give as much information as we can.”

You reply, “Great point, Mike. We should look at this from a couple of different angles.”

The next step in your strategic marketing plan is to determine the tools that are needed to conduct an analysis of the industry and competitors. Complete the following:

  • What are the best tools to use in this situation?
    • Provide a brief summary of at least 2 of these tools.
  • Why do you think these are the best ways to analyze the market?
  • How will you use these tools in your plan?

Company Details and Previous Assignment Attached

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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. Emerging Global Marketplace Introduction A global strategy is the organization’s strategic guide that ensures revenue acquisition is not limited to state borders to influence globalization. The global strategy is required to help the company make more sales by attracting customers and offsetting the domestic downturn (Cuervocazurra 3). Deborah as the CEO of Wal-Mart should support a global strategy to ensure global marketing perspectives are reviewed by Tiffany before global marketing plan is developed. Tiffany should also identify foreign countries where multinational companies have supported a global strategy in its business operations. All research by Tiffany and Deborah should reveal the aspects of global business strategy, which include the adoption of global ambition, global positioning and global business system. Therefore, the paper discusses how business growth has been influenced by the emerging global marketplace. Global Strategy A global strategy determines the ambitions, positioning and business system that a business company use to explore different international markets. Global ambition prioritizes the significance of a region where a business company is established. The global positioning analyzes the customer segments used to determine the volume of purchased commodities. Also, the global business system incorporates HRM to ensure there is an increase in the company’s profitability. According to Mària (6) global strategy and multi-domestic strategy are used by organizations in an attempt to realize full local responsiveness through marketing strategy and product offering customization to align to different national circumstances. Both global strategy and multi-domestic strategy provided ideas and essential elements for the invention of a transactional strategy (Cuervocazurra 5). However, a global strategy when used by a business company in new counties ensures only minor modifications are made to products and services in the market. When the multi-domestic strategy is used, all market business units are changed with products to ensure they are the same with host state. Countries for Globalization Globalization involves the integration of companies, people and governments with the help of technology. Globalization improves communication and develops industries. Nigeria, India and the Democratic Republic of Congo are countries that need globalization. Globalization will improve efficiency in conducting business operations and improve the furniture industry in DRC (Mària 8). India has a variety of hardwood trees used at the furniture industry to attract foreign revenue after furniture products are exported. In addition, Nigeria and DRC have a variety of softwood trees and hardwood trees, which are used as electrical posts and for developing furniture industry. Development of the furniture industry is disadvantageous in countries that need globalization since most of the plants that attracted rainfall have been cut down. A global strategy should not influence environmental degradation through cutting down of trees but regulate exploitative operations of furniture industries. Country to Choose The democratic republic of Congo is the best country where a global strategy can be applied to ensure the furniture industry is revolutionized so that products can increase demand in international market. DRC is in the tropical region and the landscape is covered by plenty of trees. Trees easily grow in Congo and cutting more trees for industrial use is beneficial to the furniture industry (Mària 10). DRC is a country with natural forests and anyone opposing my idea of integrating a global strategy to use excess trees for furniture industry would agree DRC is a forested country that rarely experience drought. Recommendations There is a need to benchmark developed companies like 50 pharmaceutical Company for entrepreneurs to make better preparation regarding global expansion. Entrepreneurs should conduct a benchmark exercise in US governmental agencies that understand the impact of global expansion to business operations (Rynarzewska 5).However, business employees should be committed to their operations to ensure they register remarkable progress in business before undergoing benchmarking. Works Cited Cuervocazurra, Alvaro. "Global strategy and global business environment: the direct and indirect influences of the home country on a firm's global strategy." Global Strategy Journal, vol. 1, no. 3-4, 2011, pp. 2-8. Mària. "Responsible Leaders for Inclusive Globalization: Cases in Nicaragua and the Democratic Republic of the Congo." Journal of Business Ethics, vol. 93, no. S1, 2010, pp. 3-11. Rynarzewska, Ania . "Emerging Markets: Service Quality Versus Value in Russia." The Sustainable Global Marketplace, 2014, pp. 2-7. Worked Case Example: Implementing a Global Strategy When Katie was invited to an operations meeting a few months ago, she was excited. Katie had just found out that she would lead a global strategy to expand her eyewear company into the Asia Pacific region. She remembered her experience from more than a year ago when she was the associate director of operations, opening a new plant in Latin America. Although the plant had been busy, working two shifts daily, sales were sluggish, and the business development team had been researching new global locations for another plant to stabilize and increase company sales in the long-term. The company's headquarters are located in the United States in Minneapolis, MN. It is a 60-year-old manufacturer of contact lenses and eye care products. During the past decade, Katie's company had implemented a global strategy that included some centralized control related to product development, but decentralized control with local decision making in each country’s local market. The overriding advantage of this strategy is cost efficiencies and faster product development. As the meeting to discuss the opening of the new plant began, Katie’s supervisor, Jane, the president of worldwide operations, announced the time line for opening a new plant in Hangzhou, China. Ultimately, it would take about 18 months for operations to begin for the plant in this region. In this brainstorming session, Jane set out the corporate and global objectives at the business level as follows: 1. Operations currently being conducted in the Dallas, TX facility will be moved within the next year to Hangzhou. 2. Employees in Texas will be offered a relocation package to move to China as trainers. 3. U.S. managers from the Operations department in the California and New York offices will be offered a relocation package to begin recruiting local employees from the surrounding towns and in Hangzhou. 4. Effective today, the strategy officially begins. Jane displayed a slide on the screen that recounted the success of the Latin America global strategy implementation and some of the initiatives that she wanted to follow for China, along with some of the failings that needed to be reworked. 1 Worked Case Example: Implementing a Global Strategy The list on the slide was as follows: Proposed Global Implementation Strategy for Implementation Latin America Strategy Implementation Strategies to Keep Preplanning phase U.S. general counsel related to laws, taxes researched and and financial presented legal and implications of doing economic uncontrollable business in Latin variables to board in America advance. On-site management The operations team of plant with local moved from U.S. offices communities and as an advance party 6 government months in advance of groundbreaking. Plant purchasing decisions Human resources decisions The on-site manager had carte-blanche on major purchasing decisions once they were communicated and approved by corporate office and executive management. The human resources department partnered with the team for early prospecting of employee recruitment. Hangzhou, China Plant Latin America Implementation Strategies to Rework Improve understanding of all laws, taxes and financial implications of doing business in Latin America region. Choose a local partner earlier in the process to help the U.S. management team understand the culture, language, and subcultures. Consider delays in purchasing construction materials based on travel time, inventory availability, and worker attitudes based on local culture relative to fulltime work weeks. Implement recruitment marketing earlier in the process. This slide was all-telling because it reminded the team of the overall success of implementing the global expansion strategy in Latin America, but there were several important benchmarks that needed advance attention to make the China plant’s implementation successful. Next, Jane displayed a “Lessons Learned” summary slide, as follows: In summary, the potential for success included the various teams in the United States communicating regularly with the team in Latin America. The 2 Worked Case Example: Implementing a Global Strategy potential for failure is a cause for concern in China based on some of the weak links related to understanding the local culture and adjusting the time line to a more polycentric attitude, meaning that the team adjusts to the uniqueness of the local culture. During the Latin America implementation, some of the U.S. team members displayed an ethnocentric way of doing business, meaning they did not consider the local cultural nuances and proceeded with the plan based on their own domestic culture. Jane moved to the next slide, showing notes on competitive advantage. She asked Katie to update the team on the strengths, weaknesses, opportunities, and threats (SWOT) analysis that was conducted. “The marketing and business development teams have conducted massive research on why our company should move operations into China,” explained Katie. “The primary tool to determine if China is a viable endeavor is a SWOT analysis.” Katie's SWOT analysis is as follows: SWOT Analysis of Hangzhou, China Strengths Weaknesses Few lens and eye care More customers in this providers are directly region wear eyeglasses located in the Asia Pacific over contact lenses. region. Internet shopping allows More customers are customer convenience considering contact lenses. when refilling product. Opportunities There is potential for expansion of eye care product line for both surgery recipients and eyeglass wearers. Expand product offerings through online and partnership channels. Threats There is an emerging trend to consider corrective surgery, eliminating the need for contact lenses More Internet companies eliminate the need for a physical plant. “Surprisingly,” explained Katie, pointing at the slide, “based on the SWOT analysis, we determined that there is potential to start a partnership with over-the-counter drug and eyeglass and eye care companies to promote our products online. We identified this as a growth opportunity that can most 3 Worked Case Example: Implementing a Global Strategy likely yield at least $1 million in revenue during the first two years of opening the plant.” In implementing a global strategy in China, Katie's company was considering economic viability based on its three Es of operations in China, as follows: Economies of scale in producing lens care products for the entire Pacific Region Efficiencies in using China’s resources and labor Extending the product life cycle of older products by recasting them for the Asia Pacific markets for first-mover advantage in these emerging markets Finally, Jane displayed the last slide. Another tool that the company used to test the market was a political, economic, social, and technological (PEST) analysis. A PEST analysis allowed the company to examine the external macroenvironment where the company will be operating, as follows: PEST Analysis of Potential Plant Operations in Hangzhou, China Political Political stability Factors Environmental regulations Trade restrictions and tariffs Economic Factors Potential for growth is excellent Low interest and exchange rates Social Factors Growing population Age of target customers are primarily eyeglass and lens care wearers Locals citizens want to work for the plant Technological Factors Research and development (R&D) activity is robust Automation is innovative and aligned with United States The political factors were examined regarding government policies and legal issues that the company must abide by in all plant operations. Employment laws were defined and addressed by the human resources department. 4 Worked Case Example: Implementing a Global Strategy Currently, the political situation in China is stable, but it will constantly be monitored by the company in China, and U.S. teams will try to anticipate any impacts on business. Economically, China is a good base of operations because of the potential growth and return on investments for stakeholders. Monetary interest and exchange rates are low. Social factors show that the population is growing, so the potential for new customers in the Asia Pacific region is huge. Also, from the population, there is no shortage from the local citizenry who will want to work at the China plant. Technology is innovative in China and aligned with the United States for constant updates and changes to technology for increased production and efficiencies. Combined with the SWOT competitive analysis, the PEST analysis found that China has the potential for success in expanding and implementing the global strategy for the company. In conclusion, Katie realized this was a challenging and rewarding leadership role. She will also design a 5-year vision plan about how the company will benefit from the plant operations in China related to a return on investments of stockholders with new products targeted at eyeglass and lens care wearers in this region and around the globe. The activities in the plant will constantly be monitored, and the business development team will continue to look for new opportunities to fill this focused, niche market. The product development team will also look at trends in eye care and how new products can continue to deliver products the global customer wants and needs. 5
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