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International markets pose numerous benefits and challenges to multi-business corporations around the world. Consequently, different organizations develop unique strategies to facilitate their penetration into emerging markets. The process of developing suitable strategies considers factors such as issues and benefits arising from globalization and the structure of an organization concerning diversification and globalization. Because of variations in organizational structure and the impacts of globalization, an evaluation of international markets and multi-business corporations is crucial since it reveals techniques utilized in developing organizational strategies.
Issues Arising with Globalization
According to Hitt, Hoskisson, and Ireland (2013) globalization opened new markets for multi-business corporations. Therefore, many multi-business corporations have ventured into markets located in developing economies. The process of penetrating new markets has resulted in several issues. These issues include price and quality competition, the introduction of product diversity, and concerns on social and corporate responsibilities. Moreover, these issues result from the type of organizational strategies employed by multi-business corporations (Harrison and St John, 2008). For instance, if Coca-Cola Company ventures into the beverage industry of a developing country, the company may employ strategic pricing and quality control strategies to attract consumers. These strategies may trigger price wars in the beverage industry, thus causing a decline in product prices.
Further, expanding organizations derive some benefits from their expansion activities. These benefits include expanded markets and cheaper resources for the company. These benefits enable expanding companies to tap into a nation’s comparative advantage thus increasing their ability to produce high-quality goods and services (Baum and Lampel, 2010).
Strategy Formulation in Multi-Business Corporations
Harrison and St, John (2008) contend that multi-business corporations develop their strategies based on the prevailing market situations. Further, strategy- influencing situations, in business, are categorized into two groups. These groups include well-defined and poorly defined organizational problems. Additionally, the process strategy formulation, in different multi-business corporations, depends on the type of structure and type of products sold in the market (Hitt, Hoskisson, and Ireland, 2013).
Baum and Lampel (2010) argue that the process of developing strategies within multi-business corporations involves competitive analysis and competitive intelligence tools. These tools perform different roles during the formulating business strategies; therefore, an evaluation of each tool is important. First, competitive analysis tools facilitate strategic planning by evaluating the impacts of cultural diversity on the company. Secondly, competitive intelligence tools forecast the type of actions taken by different companies when they are faced with different cultural situations.
Moreover, multi-business corporations set parallel organizational frameworks to supplement the formal organization. These parallel organizations utilize the norms of inquiry, therefore, enabling managers at multi-business corporations to utilize thorough analysis techniques. This organizational structure enables the organization to develop unique goals while venturing into markets within the developing world (Harrison and St.J, 2008). Further; multi-business corporations should customize the parallel organizational framework to suit their needs. This will enhance the ability of different companies to penetrate emerging markets around the world (Ireland, Hoskisson, and, Hitt, 2011).
Globalization enables multi-business organizations to access markets in different parts of the world. This accessibility introduces several business-related issues in the new markets. These issues include price and quality competition, the introduction of product diversity, and concerns on social and corporate responsibilities. Moreover, accessibility to developing markets enables multi-business organizations to accrue benefits such as expanded markets and cheaper production resources. These benefits enable organizations to enhance their competitive abilities in different markets.
Baum, J. A. C., & Lampel, J. (2010). The globalization of strategy research. Bingley: Emerald.
Harrison, J. S., & St, J. C. H. (2008). Foundations in strategic management. Mason, OH: Thomson/South-Western.
Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (2013). Strategic management: Competitiveness & globalization : cases. Mason, OH: South-Western, Cengage Learning.
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2011). The management of strategy: Cases. Mason, Ohio?: South-Western Cengage Learning.