Global Strategic Planning
Managing the Global Enterprise
Managing the Global Enterprise: Component 4: Phase 3
There are a plethora of reasons that a company should be familiar with the global economy and if that company is thinking about expanding outside of its country; it should make sure to have a globalization strategy ready and understood. This is no different for any company including Lottafizz Corp. The thing that is different for each company is devising that globalization strategy. While this may not seem like much of a task for a company that is already doing very well in its own market, it is actually quite a challenge and if not done properly and with a good amount of research the foreign expansion could very well fail and cost the company thousands if not millions of dollars. This can be seen in both eBay’s and Best Buy’s try at globalization that failed within a few years of launch due to the lack of research (International Business Guide. 2013).
In order to create and establish a good globalization strategy, a company must be able to look at several aspects of their company and the economy. The aspect that most people get confused on is the ability to look at your business and see how it needs to be different per each region or country, but also learn to look at your business as one operation and not several different, unrelated parts of the company. What people get confused about is that the company needs to know how their products in different countries or regions are different, but still realize that the products are all from the same base brand.
Another factor that most people overlook is the ability to differentiate between the different sides or markets of “globalization”. A company has several different actual strategies to expand “globally” into foreign markets. These are the international strategy that is expanding into a foreign market that is essentially the same as the home country. The multinational strategy is for several foreign markets that need or use a slightly different variation of the same product. Then there is the true actual global strategy that is a company that has products in almost all markets and all the products are essentially the same with very few alterations to the products (Richard Lynch. 2014).
Once the company has decided how they want to enter a market, with what products, and the knowledge of how transportation will happen; the company will need to establish its brand name (Business Case Studies. 2014). The goal of your company and every other company is to establish a powerful brand name that the world knows. That is why so many actors or artists have changed their names to something that is catchier so that it sticks with people and everyone will recognize and know their names (Marianne Bickle. 2011). That is why a company needs to treat even their slightly different offshore and international products as the same brand. This treatment will help to create an even more powerful brand name that everyone will know.
Globalization can provide a company with a huge reward that can include not only money, but reputation, new knowledge, and new ideas. The new knowledge and ideas will help to let your business not only better their current products, but also create a new line of product or services. The gained reputation will create a stronger loyalty towards your brand and help further the brand’s sales. On the opposite side of the spectrum a company could also be looking at several costs. There is naturally the cost of implementing the strategy that includes transportation, building facilities, producing new or altered products, and marketing; however, there are also potential costs that can occur if the global strategy is not fully thought out. If the company was to fail it could not only have to eat the entire costs of trying to enter the new market, but it could also deal with the loss of reputation or upsetting of a country or region. This could be done as easily as trying to sell alcohol in a country that does not drink and find it offensive. In Afghanistan it is actually illegal for spirits to be purchased and Brunei has been known to flog people that were caught drinking (The Daily Meal. 2014). Once a company has received a bad reputation in a region; it has a very little chance of getting back into that market and if it does it will struggle trying to get a foothold within the market.
Companies will have a challenge learning to balance their local home country’s product with the foreign markets. To balance the product or service it is important that the company keep the true nature and purpose of the product, while altering it to fit the need of the host country. This change has been done countless times like when fast food corporations change their menus by removing pork as it is offensive to the people or soda companies changing their flavors to better suit the host countries tastes (Cezary Jan Strusiewicz. 2009). Lottafizz’s value proposition will need to be adapted to the foreign markets if they are any sort of different from the host country in order to balance their original product with the foreign market’s needs and desires. Equipment, packaging, containers, licenses, and marketing will all need to updated to help better sell the product or service in the foreign market (Bellevue Library Catalog. 2010).
In order for Lottafizz to flourish in one or several new markets, I would suggest the international strategy that way not a lot of the product will actually have to be changed. Markets like Europe and Latin America will have some slight differences, but are very similar to the American market. Also, as far as soda drinking goes the Latin America and Europe markets are right behind the United States, so we can be sure that there is the want of soda in those areas unlike countries like India and Indonesia that drink less than one percent compared to Americans (Check. D, Dodson. M, Kirk. C. 2012). The company can also look at entering the Caribbean, Europe, and Canadian market with their spirits as both of these locations consume more spirits per person then Americans (World Health Organization. 2014). This will not only allow your company to enter these foreign markets without having to invest an enormous amount of money into producing new products, but will allow you to build your brand into something that more and more people know and want. Once Lottafizz’s reputation has grown and profits have added additional money, I would then suggest looking at a multinational strategy to help gain access and sales into the other foreign markets. Markets like Japan and India would need to be carefully researched as lifestyles and tastes are extremely different from most Americans. Fruity flavored sodas are common in Japan, but there are also flavors that include chili, ginseng, and teriyaki (Asian Food Grocer. 2014). India on the other hand look for more sodas that are actually spiced like cumin (YCharts. 2014).
The most important thing to remember is that almost every region and country has something that sets it apart. This can range from taste, lifestyle, and desire for a product, so it is very wise to be cautious when entering a market and do the research to know what you are entering and what that consumer base wants. As this will be Lottafizz’s first foreign move it will be important to find countries and markets that are similar to America’s to help reduce the risk of failure. If a company does not recognize the above reasons and their importance to entering foreign markets; there is a very good chance that the launch will fail and that company will be out millions if not more.
Asian Food Grocer. Ramune Soda. 2014. Retrieved from http://www.asianfoodgrocer.com/category/ramune-soda
Bellevue Library Catalog. Globalizing the Value Proposition. (2010). Retrieved from http://search.credoreference.com.ezproxy.bellevue.edu/content/entry/bepsmfund/globalizing_the_value_proposition/0
Business Case Studies. Strategy theory. 2014 Retrieved from http://businesscasestudies.co.uk/business-theory/strategy/developing-a-global-strategy.html#axzz2RDi2teif
Cezary Jan Strusiewicz. Yogurt Pepsi: 14 Horrifying Soft Drinks Around the World. 2009. Retrieved from http://www.cracked.com/article_17174_yogurt-pepsi-14-horrifying-soft-drinks-around-world.html
Check. D, Dodson. M, Kirk. C. Americans Drink More Soda Than Anyone Else. 2012. Retrieved from http://www.slate.com/articles/health_and_science/map_of_the_week/2012/07/map_of_soda_consumption_americans_drink_more_than_anyone_else_.html
International Business Guide. 10 Successful American Businesses That Have Failed Overseas. 2013. Retrieved from http://www.internationalbusinessguide.org/10-successful-american-businesses-that-have-failed-overseas/
Marianne Bickle. The Power of a Name: Branding Your Company for the Future. 2011. Retrieved from http://www.forbes.com/sites/prospernow/2011/01/10/the-power-of-a-name-branding-your-company-for-the-future/
Richard Lynch. What is global strategy? And why is it important? 2014. Retrieved from http://www.global-strategy.net/what-is-global-strategy/
The Daily Meal. Countries where alcohol is illegal. 2014. Retrieved from http://www.foxnews.com/leisure/2014/04/04/countries-where-alcohol-is-illegal/
World Health Organization. Global status report on alcohol and health 2014. 2014. Retrieved from http://www.who.int/substance_abuse/publications/global_alcohol_report/msb_gsr_2014_1.pdf?ua=1
YCharts. Coke Wants to Double Revenues, Will Cumin-Flavored Soda Help? 2014. Retrieved from http://www.forbes.com/sites/ycharts/2012/10/01/coke-wants-to-double-revenues-will-cumin-flavored-soda-help/2/