Plot the position of the following firms on Figure 12.8: PG, Coca Cola, MTV, Ford, Vodaphone, Avon. In each case, justify your answer

Hence, pressure from high local adaptation and low cost cutting pressure.. COCA COLA – Transnational StrategyCoca cola has HIGH pressure of Local Responsiveness and HIGH pressure for co

GROUP ASSIGNMENT

Task: Plot the position of the following firms on Figure 12.8 (sách Kinh Doanh Quốc Tế hiện đại, page 494): P&G, Coca Cola, MTV, Ford, Vodaphone, Avon In each case, justify your answer.

INTERNATIONAL BUSINESS

MANAGEMENT

Lecturer : Trương Thị Minh Lý

Group Members: Nguyễn Trần Nhật Huy

Trịnh Hà Lam Anh Đổng Minh Vũ

Tạ Thụy Tố Quyên

Nguyễn Hồng Diễm Châu

PROCTER & GAMBLE (P&G)

Stage 1: International Strategy

In the early years when P&G's establishment grew quite rapidly The Company relies on its focus on product development at its parent company and its subsidiaries to operate under the strategic direction of its parent company Subsidiaries are established in other countries primarily to expand the market in order to seek profits and sales to be transferred to the host country As a result, the pressure to cut costs and meet local needs is low

Stage 2: Localization strategy

After the Second World War, as consumer demand and the world economy changed, as barriers to trade emerged P&G now pays attention

to the needs of consumers in different countries around the world Hence, pressure from high local adaptation and low cost cutting pressure

Stage 3: Transnational strategy

However, in 1990, a sharp decline in sales and profits (negative) throughout the quarter immediately, because:

- The cost of marketing, product research, is too big

- In an economic downturn, P&G is still focused on developing higher quality and higher priced products

- Failure to accurately determine the needs of the market

In the following years, P&G focused on controlling the cost structure and grasping the demand of the market

P&G’s strategies:

COCA COLA – Transnational Strategy

Coca cola has HIGH pressure of Local Responsiveness and HIGH

pressure for cost reduction

• Local Adapting Pressure:

Coca cola focuses on the improvement on local flavors For examples, Coca cola made an impression in vegetable & fruit juices market in Asia

in 1999 by replacing Hi-C brand in Japan with Qoo brand, which was a drink maintaining 20% real juices riched in canxi & vitamin Then this brand headed forward China market in 2001 At China and Pacific Asia, the definition of the customers about the freshness and health linked to the usage of real fruit juices Coca cola introduced the Minute Maid Pulpy that contained real fruits, therefore provided a products which was not popular in North America but was favored in these areas The rise

of local brands and familiar flavors in developing countries is a trend that global manufacturers can not afford to despise Therefore, Coca Cola’s pressure on local requirements is also very high

• Pressure for Cost Reduction:

Coca cola is suitable for the Transnational Strategy Downward pressure

on costs can be concentrated in the consumer product industry, where the significance of the differences is not so great and prices are competitive The beverage market is an example: part of the Coca-Cola market has fallen into the hands of competitors In the context of competition between the brands in the beverage market today, especially the development and acquisition of competing market share like Pepsico, Coca-Cola’s pressure to reduce costs is very high to maintain sales and market share Moreover, beverage products do not differ much between the products of different brands and the cost of Coca-Cola's marketing and production and R&D activities is very high From all the above factors, Coca-Cola's cost-cutting pressure is relatively high, and it

is also important for Coca-Cola to survive in the marketplace

MTV – Localizational Strategy

MTV Networks has HIGH pressure of Local Responsiveness and

HIGH pressure for cost reduction

• Local Adapting Pressure:

As the US has seen the launch of more TV stations and advertising begin

to slow MTV has been seeking growth from its international interests

By 2005, MTV Intemational accounted for 80 % of viewers but only 15

% of revenues There are significant difference in consumer tastes and preferences between markets, when differences in infrastructure and traditional practices require customization, and when host government demands require local adaptation

MTV is a good example of a company that has had to pursue a localization strategy MTV has varied its programming to match the demands of viewers in different nations If it had not done this, it would have lost market share to local competitors its advertising revenues would have fallen, and its profitability would have declined.Thus, even

though it raised costs, localization became a strategic imperative at MTV

• Pressure for Cost Reduction:

At the same time, it is important to realize that companies like MTV still have to keep a close eye on costs Companies pursuing a localization strategy still need to be efficient to capture some scale economies from their global reach By this way, these companies have been able to localize their products offerings, yet simultaneously capture some scale economies

FORD – Globalizational Strategy

FORD has LOW pressure of Local Responsiveness and HIGH pressure for cost reduction

• Pressure for Cost Reduction & Local Adapting:

On 01/04/1994 Ford announced that 01/01/1995 the company will officially change the strategy of national business strategy in multi-market strategy of global strategy

Ford executives recognize that there is no way Ford can compete effectively on the vast emerging markets of China and India unless ford speeds up global production to create low cost car The result led to the one ford strategy, a strategy that created some common ground that Ford could use anywhere in the world

VODAFONE – Globalizational Strategy

Vodafone has LOW pressure of Local Responsiveness and HIGH

pressure for cost reduction

• Pressure for Cost Reduction & Local Adapting:

Vodafone has paid too much attention to building a global brand and ignoring market conditions in Japan The vision of vodafone is to

provide consumers in different countries with the same kind of technology so that customers carry their personalized phone when they travel through different countries In addition, vodafone wants to take advantage of the scale to offset the cost of aspiring to build a global brand

AVON – Transnational Strategy

AVON has HIGH pressure of Local Responsiveness and HIGH

pressure for cost reduction

AVON's Current Initiatives: After selling off ~80% of its underperforming North American business to Cerberus Capital and receiving a total investment of $650 million from them, Avon has started implementing strategies to streamline operations and cut costs

• Local Adapting Pressure:

AVON becomes the 5th largest beauty company and 2nd largest direct selling enterprise in the world It has a strong direct marketing program AVON supports 6 million representatives worldwide Avon is good at personalized sales experience Avon’s market share has been up to 11.6% in 2010, and keep in top 5 global direct sale market The main revenue is from its foreign market Avon had 4 divisions in the

world-US, Latin America, Asia Pacific, and European, Russia, Middle East Avon’s reorganization in 2013 caused a disruption of its sales representatives

AVON’s International Strategy from 2010 to now is the transnational strategy The reasons why Avon faced problems in 2010 and 2011 are complicated First, the competitors in emerging markets started to do a retail price strategy Second, the economy persists with the slow growth

in developed markets Third, many operational mistakes had been found,

as bad information system performance which make AVON lose money Moreover, Avon got suspicious of being violating the Foreign Corrupt Practices Act when they revealed that executives in China gave bribe to

local government officials The Foreign Corrupt Practices Act in China Avon was accused it gave bribe to local government officials Compete with strong competitions like Mary Kay, L'Oreal, and Revlon Be aware

of competitive advertising and distribution network of competitors

• Pressure for Cost Reduction:

AVON should keep following continuous improvement and in this path maintain the actual transnational strategy would be good choice, as far

as Avon keeps an eye on the challenges of having this strategy It is difficult to at the same time have high local responsiveness and high cost control Continue focus on profit growth, trying to reduce cost and pay attention to manufacturing opportunities of cost control can increase the value of Avon´s products The corruption needs to have rules World Wide to make sure all countries are aligned and following with ethic company strategy Implement system controls as ERP and other to manage the operation globally would be a new focus creating a project management area to guarantee this process will be efficiently operated and the company will not waste money with unsuccessful IS implementations

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