Question:
Discuss About The Global Strategy And International Business?
It is a very common fact for any and every business enterprise to have a proper marketing strategy. This marketing strategy involves the formulation of several plans and policies that would help to achieve the goals and objectives of the company. There are different kinds of goals that the company needs to attain, both in the long term and in the short term as well. This paper will mainly deal with two of the important strategies that are required in each and every business organization. These two strategies are target market strategy and global market strategy[1]. The aim of this paper will be to analyze and see the impacts or the usefulness of these two kinds of strategies in two industrial sectors that are the car industry of Australia and the airlines industry of Australia. The two companies that have been selected from both the two organizations are Toyota and Holden and Air Link and the Airlines of Tasmania respectively. Through this paper, attempt will be made to see how the target market strategy and the global market strategies have come into these two organizations and what kind of impacts these strategies are having on the overall working of the said industries
Every business organization works on the fundamentals of a business model. It is a commonly used phrase that refers to the process by which a business enterprise operates on a daily basis so as to achieve the aims and objectives set by the company. Two factors that impact the building and analysis of a business model are pricing and cost. Business model explains the day to day operations of a business unit in a visual and analytical way sometimes the business model are also not explicitly articulated. It is basically a conceptual framework that summarizes how a business enterprise produces, conveys, and gain monetary value in exchange for the products or services it has to offer to the target market[2].
One of the objectives that all small or big business organizations have is to create a global presence and to expand the company so that business can grow. In order to do this it must reconsider the business model the company was following and mould it in accordance to the impact of global expansion, this change should reflect in every aspect of the business model. Global strategies of company change with the expansion and the country it is expanding in to as a lot of external business environment changes in the industry and the market when the country of operation changes[3].
One of the important aspects of the business strategy is to determine what Holden offers to provide to its customers. It mainly aims at providing quality vehicles to its customers. Holden takes very much care about the fact that there should not remain any loopholes on their part in providing full satisfaction to the customer satisfaction. It takes care of the fact that the quality of the raw materials used for developing the final vehicles are of superior quality. It is also evident from the business networking model that there exists a very strong connect ion between the suppliers and the purchasing unit[4].
Holden mainly aims at the new generation of Australia that is the youth. As this particular sector of customers are always in search of the most innovative and modern car designs. Holden brings them just what they look for.
To attract a global target market emerging leaders of business suggest cultivating and harnessing the endless possibilities of social media. Social media has to be a part of the business model that the company was traditionally using as it can attract people from diverse location towards the Products or services that the company is offering. Being farsighted by the company is a good approach to understand and analyze the global market. For a company like Holden whose target market is the youth of Australia should consider the segmentation if they were to lunch in India. As driving or owning a car in India by the youth is a low possibility[5].
Price and cost are two important aspects in a business model, while expanding in to other nation states a company should understand the economic environment and the market environment of the country while setting the price limit. The competitors already present in the market are also a point of price determination.
Small airlines companies merged to form the Airlink now it is a member of The International Air Transport Association. The company is committed to the optimization of regional air transportation by offering high performance As a part of expansion strategy in the business model the company has come together with government of Switzerland to launch Switzerland Airlink. Keeping mind the population of Switzerland and the market environment of the airline business the price is set to a reasonable standard. There are several facilities that are customized according to the target market of the company in Switzerland[6]. The company has several agreements with interline agreements that provide the flyers with services in Africa, South Africa and also the rest of the world. The company has a reputation and goodwill of punctuality and accountability which has been adopted in the expansion strategy as well. Goodwill not only impacts the business form the consumer end but also from the business to business aspect as other partners of the company always wants someone they can rely on. The partnership strategies in airline business models, have full association or have supportive agreement, have proven to become an influential instrument for expanding networks, maximizing the revenue, improving the services provided and reduction of the price quality of service to the flyers. Over the years the company has gathered goodwill in term of safety and precautions; punctuality dependability through the quality of professionalism exhibited by every dedicated employee as well as improved productivity. For the stakeholders, the company is committed to deliver high performance in order to increase the profitability of the venture[7].
In terms of business model the company offers quality service at reasonable price, there are several offers for regular flyers and the price of the flights are keeping in mind to be used by people from the middle income group of people to high income group of people. The company doo not promise business class services but they do promise to deliver in time and high quality.[8]
The target market selected by car company Toyota and airline industry Airlines of Tasmania are analyzed in the report. There are four factors which measure the attractiveness of the target market. These factors are the size of the market and the growth rate, institutional contexts of a particular country and the competitive environment of that country. The target market selection is of paramount importance for a business organization and the different modes of entry are exporting, strategic alliance and joint ventures, licensing and foreign direct investment.
In the year 1937, the Toyota Motor Corporation was established in Japan. The Japanese car-maker have highest market share in Australia and in 2008, the Japanese car maker was the top car manufacturer and seller in the entire world. Toyota has adopted different strategies for target market and this strategy changed from time to time to increase sales of the company.
Initially Toyota manufactured subcompact cars which were targeted to the middle-class and upper middle class sections of society. These cars were economical were preferred by consumers who required small cars for transportation. However, the strategy preferred by Toyota is Adjacent Segment Strategy and thus the company started manufacturing large sedan cars for sections of society who crave for luxury and have good purchasing power.
Toyota uses Differentiation Strategy and thus the company adopts multi-segment target strategy by offering different prices for cars targeted for different sections of the society.
The target market of Toyota also includes sections of society who are looking for premium sports car like Land Cruiser, Sequoia, Rav4, 4Runner. The cars are priced differently. Thus Toyota adopts multi-segment target market approach by targeting different sections of society in countries like the United States, Australia and Japan by manufacturing tailor-made cars and customizing the price for each target market.
The company started its operation in Russia where domestic market was growing and established 8 factories in UK, France and other parts of Europe. The company targeted Europe to become the leading player in global market. In Australia Toyota manufactures hybrid cars powered by gas and electricity so that it can address concerns like increase in price of fuels.
Toyota has a Joint Venture with GAC Toyota Motors Company headquartered in China, recently the company has established a joint venture with Mazda to develop electric vehicles in the United States. Toyota has also acquired ownerships in manufacturers like Central Motors Co, Kanto Auto Works Ltd.[9]
The airline of Tasmania targets the regional market and is based in Hobart, Tasmania.
The target market of the airline company is the regional market of Launceston, Tasmania and Cape Barren Island. The company provides services for business, leisure and scenic flights in Tasmania. Thus the target market of the airline is tourists and locals for sightseeing and the company provides only chartered flights. The target market of the company is also the section of the society who seeks training for flying. The company also provides services to New South Wales and targets domestic passengers in the country.
The mode of entry of the Australian airline is joint venture with Par Avion. The company received tourism award from Tasmanian Tourism hall of fame for proving services related to tourism. The joint venture helps the company to serve the tourism demands of the Launceston Airport and Cape Barren Island. The company has also started partnership with Sharp Airlines. A new service was introduced by airline of Tasmania from Hobart to King Island via Wynyard. Partnership with University of Tasmania for the study of training and has a registered training organization.[10]
Conclusion
The choice of business model is important for an organization to achieve its sales goals and profits. Company also aims to expand and the business model in the home country may not be suitable in foreign markets. The proper selection of business model helps a company to achieve the customer base in foreign market and plays pivotal role in revenue generation. Proper choice of business model can increase the operational efficiency of an organization. The target market selection is also important for an organization. At first the market needs to be segmented on basis of variables like the demographics, geography and psychographic variables and the target market of the company is selected after market segmentation. The attractiveness of the market is analyzed before the target market is selected by a company. Some companies follow targets a multi-segment market for greater penetration in the market. The choice of mode of entry is also important for a company. There are several modes of entry like export, import, Joint Venture, Licensing, Franchise model and Market Acquisition. The choice of proper mode of entry is of paramount importance for expansion in the global market. Company often acquires competitors in the same industry which helps them to secure their position in the market.
References
Aghdaie, Mohammad Hasan, and Maryam Alimardani. “Target market selection based on market segment evaluation: a multiple attribute decision making approach.” International Journal of Operational Research 24.3 (2015): 262-278.
Andersen, Torben Juul, and Ulf Andersson. “Multinational Corporate Strategy-Making: Integrating International Business and Strategic Management.” The Responsive Global Organization: New Insights from Global Strategy and International Business. Emerald Publishing Limited, 2017. 13-34.
Casadesus?Masanell, Ramon, and Feng Zhu. “Business model innovation and competitive imitation: The case of sponsor?based business models.” Strategic management journal 34.4 (2013): 464-482.
Frynas, Jedrzej George, and Kamel Mellahi. Global strategic management. Oxford University Press, USA, 2015.
Mudambi, Ram, Lucia Piscitello, and Larissa Rabbiosi. “Reverse knowledge transfer in MNEs: subsidiary innovativeness and entry modes.” Long Range Planning 47.1 (2014): 49-63.
Timmer, Marcel P., et al. “An illustrated user guide to the world input–output database: the case of global automotive production.” Review of International Economics 23.3 (2015): 575-605
[1] Frynas, Jedrzej George, and Kamel Mellahi. Global strategic management. Oxford University Press, USA, 2015.
[2] Bocken, N. M. P., et al. “A literature and practice review to develop sustainable business model archetypes.” Journal of cleaner production 65 (2014): 42-56.
[3] Andersen, Torben Juul, and Ulf Andersson. “Multinational Corporate Strategy-Making: Integrating International Business and Strategic Management.” The Responsive Global Organization: New Insights from Global Strategy and International Business. Emerald Publishing Limited, 2017. 13-34.
[4] Timmer, Marcel P., et al. “An illustrated user guide to the world input–output database: the case of global automotive production.” Review of International Economics 23.3 (2015): 575-605.
[5] DaSilva, Carlos M., and Peter Trkman. “Business model: what it is and what it is not.” Long range planning 47.6 (2014): 379-389.
[6] Borenstein, Severin, and Nancy L. Rose. “How airline markets work… or do they? Regulatory reform in the airline industry.” Economic Regulation and Its Reform: What Have We Learned?. University of Chicago Press, 2014. 63-135.
[7] Grant, Robert M. Contemporary Strategy Analysis Text Only. John Wiley & Sons, 2016.
[8] Casadesus?Masanell, Ramon, and Feng Zhu. “Business model innovation and competitive imitation: The case of sponsor?based business models.” Strategic management journal 34.4 (2013): 464-482.
[9] Aghdaie, Mohammad Hasan, and Maryam Alimardani. “Target market selection based on market segment evaluation: a multiple attribute decision making approach.” International Journal of Operational Research 24.3 (2015): 262-278.
[10] Mudambi, Ram, Lucia Piscitello, and Larissa Rabbiosi. “Reverse knowledge transfer in MNEs: subsidiary innovativeness and entry modes.” Long Range Planning 47.1 (2014): 49-63.
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