Earlier a country’s economic development was based either on the degree of specialization or diversification of a country’s production and trade structure. Based on Adam Smith’s concept towards the division of labor and specialization for economic growth and development to Heckscher-Ohlin Samuelson (HOS) model of international trade, countries should specialize in producing and specializing in the goods in which they have a comparative advantage. However, after the Second World War, the idea was that economic growth and development may be achieved by export diversification (not specialization). There were active efforts by the government to promote industrialization and economic growth. Export diversification is often the primary objective of many developed countries. Export diversification is also equally important for many developing countries. Some of the developing countries are dependent on a relatively small range of products, generally agricultural commodities. In other words, primary products constitute a large percentage of their overall export Continue reading
International Business Strategies
Case Study: Frequent Restructuring at Sony Corporation
Sony Corporation is a multinational conglomerate based in Japan. The organisation’s core business is in Electronics and Entertainments. It has grow from barely 20 employees with about ¥190,000 as its capital in 1946 to today with about 150,000 employees worldwide and worth about $15 billion dollars on the share market as of May 2012. Sony has always put innovation as its main business focus. Due to its innovative business model Sony was able to bring us the very innovative products such as Walkman, Playstation, CD player and Camcorders and others. In the way all these products made Sony become a premium brand in the world, it can command the premium prices for its products. But later on Sony became so big, within there are many different divisions. The goal of Sony was to improve the financial performance and competitiveness of the company. Therefore, from the year 1994, Sony had gone Continue reading
Foreign Market Entry Modes – Five Modes of Foreign Market Entry
Changes in the internal and external business environment have meant that more and more firms are expanding their operations across country borders. External factors such as: the removal of trade barriers, free trade agreements between countries, and an emerging middle class has made the idea of going global more attractive to organisations across the world. Internal factors such as: increasing profits, increasing market share and becoming a global brand are more drivers for organisations to globalize. Whilst there are a lot of drivers of internationalization, and hence potential advantages to internationalize. Types of Foreign Market Entry Modes An organisation has a number of different entry modes to choose from when it internationalizes its operations. All organisations will have different reasons for going global, which will have an influence on which entry mode is best suited to them. An organisation will need to determine their desired level of commitment, flexibility, control, Continue reading
Case Study: Starbucks Growth Strategy
In 1971, three academics, English Teacher Jerry Baldwin, History Teacher Zel Siegel and writer Gordon Bowker opened Starbucks Coffee, Tea and Spice in Touristy Pikes Place Market in Seattle. The three were inspired by entrepreneur Alfred Peet (whom they knew personally) to sell high-quality coffee beans and equipment. The store did not offer fresh brewed coffee by the cup, but tasting samples were sometimes available. Siegel will wore a grocers apron, scooped out beans for customers while the other two kept their day jobs but came by at lunch or after work to help out. The store was an immediate success, with sales exceeding expectations, partly because of interest stirred by the favorable article in Seattle Times. Starbucks ordered its coffee-bean from Alfred Peet but later on the three partners bought their own used roaster setting up roasting operations in a nearby ramshackle building and developed their own blends and Continue reading
Structural Design of Multinational Enterprises(MNEs)
Organizational structure gives the framework or lines of communication, authority, responsibility and accountability. Organizational structure specifies the firm’s reporting relationships, procedures, controls and authority and decision processes. It is a critical component of effective strategy implementation process. Organizational structure provides for specialization and interfaces among specializations for collaborative synergism and competitive dynamism. For Multinational Enterprises(MNEs) deciding the organization structure is very important because it cannot be the same for all units and at the same time cannot be just one design for all. Whatever the design, it must be organic enough to adapt to situations. The structure must have stability to facilitate day to day activities to go on consistently and flexibility to facilitate taking advantage of opportunities that environment throws up. While it is becoming true that form must follow function, there are some traditional/ classical organizational structures that are followed; besides new structures are experimented with. Multinational Enterprises(MNEs) Continue reading
Case Study of Eastman Kodak: Secret of Success in Business
Kodak is one of the oldest companies on the photography market, established more than 100 years ago. This was the iconic, American organization, always on the position of the leader. Its cameras and films have become know all over the world for its innovations. Kodak’s strength was it brand — one of the most recognizable and resources, that enabled creating new technologies. Kodak is not just selling their still image films, Kodak have quite number of product lines and service to offer (Product diversification), such as digital images, printer cartridges, paper kits and innovative big sign boards, which Kodak sells globally. Further, Kodak’s quality goal and overall objective is to achieve Total Customer Satisfaction. This is accomplished by utilizing appropriate process improvement techniques (e.g. Zero Defects, Supplier Certification, Lean, Six Sigma, etc.) in a manner that delivers improved productivity and the optimal deployment of resources. Kodak achieves their objective through Continue reading