A domestic company may extend its products to foreign markets by exporting, licensing and franchising. Initially, the exporting is indirect. It may develop a more serious attitude towards foreign business and move to the next stage of development. International company is normally the second stage in the development of a company towards transnational corporation. The orientation of the company is basically ethnocentric and the marketing strategy is extension. The marketing mix developed for the home market is extended into the foreign markets when a company decides to respond to market differences, it involves into the stage there multinational that pursues a multidomestic strategy. Multinational company’s each foreign subsidiary is managed as if it were an independent city stage. The subsidiaries are part of an area structure in which each country is part of a regional organization that reports to world headquarters. The transnational corporation is much more than a company with sales, investments, and operations in many countries. Such a company is increasingly dominating markets and industries around the world are an integrated world enterprise that links global resources with global markets at a profit.
Most of the companies initially start as a domestic firm and transforms into an international company at the later stage. It also goes on adding new products to its portfolio and adding new countries to the existing portfolio. The company finds that the existing mission statement would not be sufficient and therefore it has to modify it, if necessary. It also changes its goals depending upon the changes in environment. The global company’s organization includes subsidiaries throughout the world or export departments in different countries. However, in case of transitional, each subsidiary is independent and autonomous. They can formulate strategies on their own. However, the headquarters co-ordinate the strategies of the subsidiaries.
The analysis of organization structure of a global company includes flat or tall organization, team structure or individual based structure, strategic business unit structure or geographical structure. The analysis requires identification of strengths and weakness of the company with regard to the structure. The marketing analysis includes the analysis of product, price, promotion and place. The global company analyses each of these factors in detail and identifies its strengths and weaknesses in each of the aspect of 4ps. The strategist of the company analysis each of the areas of production. These areas are sources of material, location of plants, logistic spread, plant layouts, human resources, quality considerations, cost considerations, inventory levels etc. The strategist has to analyze each of these factors and identify the strengths and weaknesses of each of these factors.
The strategies have also to identify the strength and weaknesses for each of the finance factors such as sources of finance, capital structure and earning per share. The global company should also analyze each of the human resource factors such as sources of manpower, skill of employees, cultural compatibility of the employees with the culture of various countries and cost of employee. Finally, there is a need for analyzing the international environment in order to find out the opportunities provided and the threats posed by the environment.
Credit: International Business Basics-MGU MBA