International Business: Strategy and the Multinational Company - Assignment Example

Multinational Business QUESTION Home Depot is a home improvement retailer and one of the world’s largest. In offering its construction and home improvement services and products, the company applies the Do It Yourself (DIY), Buy It Yourself business model. The company’s headquarters are in Atlanta, Georgia. It was established in 1978 and over the years, the company has grown into an international company. Through the application of its favorable business model, Home Depot has become the largest home improvement retail store in America, in terms of sales revenue (Roush 23). The company’s business model has been described as the first and best applied of its kind within the home improvement industry. Through this model, the shopping experience of the clients for home improvement services and products has been enhanced significantly. The positioning Home Depot Company within the home improvement market is favorable due to its competitive advantage. The simple and yet effective business mode of the company and its brand name which is already well known are attributed to the favorable market positioning it enjoys. Moreover, the company has an ability of growing into the international market (Roush 27). Home depot offers extensive line of products and services for home improvement which makes it the preferred retailer in this business. The company targets professional consumers of their products ho prefer do improve their homes by themselves. In addition to the DIY model of selling to their clients, the company targets buyers or customers who would like to buy the products (BIY) and hire someone to install the products for them. Through their business model, the company has been able to attract a large number of buyers. There is significant shortage of housing in Saudi Arabia. This means that for the Home Deport to have business success within Saudi Arabia, it has to make some adjustment t its business model. This is due to the fact that home owners in Saudi Arabia focus on extending their homes so that they would fit the increasing number of family members. In this regard, the business model of Home Depot must focus on contactors, plumbers, electricians and landscapers is it has to achieve business success in Saudi Arabia. Extension of buildings requires a lot of construction and thus Saudi Arabians are not likely to comply with the BIY, DIY business model which Home Depot applies in its home country. It is however important to note that the alteration of the business model of the company is just an extension of the previous model. Home owners within Saudi Arabia usually contract professionals to make extensions of their houses. Therefore it can be concluded that changing the business model of Home Depot once in Saudi Arabia to target constructors, landscapers, electricians and plumbers would not affect the effectiveness of its business model. Moreover, minor renovations of houses would be accommodated by the BIY, DIY business model which has already achieved significant success in the US. This demonstrates the company’s flexibility in adjusting its business model to meet the needs of its new buyers or customers. In this regard Home Depot will achieve business success in Saudi Arabia. QUESTION 2 Investment in an unfamiliar market is always challenging. By examining and analyzing First Solar’s multinational business context, we are able to assess an American company that has successful expanded into the foreign market. Just as First Solar, Home Depot is a multinational company. First solar which specializes in the production of photovoltaic module solar panels has achieved significant success in multinational business. This is attributed to its business strategy of gaining competitive advantage in world economies through application of appropriate marketing approaches and modern technology in its international business. As of 2010, First Solar was ranked as the second-largest manufacturer of PV modules in the world (Cullen and Praveen 15). Home base refers to carrying out of the major business operations from the central headquarters. The company may carry out the administrative responsibilities in the main offices, and supervise production activities from elsewhere. First Solar has its headquarters in Tempe, Arizona, and has its production facilities in Ohio, Malaysia and Germany. The company has maintained a home base system of operation since its inception. The decline in competitor prices has however crippled operation in recent times that has led to the abandonment of the home base system, in favor of the portfolio system. This demonstrates that a portfolio system would be an effective approach for Home Depot’s business activities within Saudi Arabia. The application of the portfolio approach in the management of Home Depot’s business operations within Saudi Arabia is determines by the five major forces of competition. These are suppliers, rivals, buyers, substitutes and new entrants. For the Home Depot to reduce the costs associated with the supply of home improvement products from America, it would be suitable for the application of a portfolio approach of international business management. Moreover, local products for home improvement within Saudi Arabia are preferred by buyers in addition to being relatively cheap. It is thus recommended that for the Home Depot to survive local competition in the home improvement industry, a portfolio approach should be adopted within its management system Business rivals in the retail of home improvement products and services are likely to operate within Saudi Arabia. In this sense a portfolio approach is more effective for the business success of Home Depot within Saudi Arabia. In this case, the company will be able to beat the business rivals through application of information and communication technology in its business operations and in the marketing of its products and services. Through a portfolio approach, Home Depot will be able to find substitutes for its suppliers, raw materials and business processes with an aim of reducing costs, increasing efficiency and achieving maximum customer satisfaction. Furthermore, the company will be able to favorably compete with new entrants into the home improvement industry. This would be achieved by increasing its market share and thus attain a competitive edge above rivals. The justification of a portfolio approach to international business for the Home Depot is demonstrated by the logistical barriers in management which are likely to be faced by a home based system. QUESTION 3 A value chain is the progression of activities within a specific industry or company including the primary activities of a company such as manufacturing and logistics of business operations. A value chain also includes activities within a company such as the services offered, sales and marketing. The provision of home improvement service to its clients is the core of the Home Depot’s operations and value chain. A multidimensional value chain such as that of Honda Motors has been described as the most appropriate value chain for a multinational company. The multidimensional value chain is appropriate and effective because it integrates all business processes of a company and thus ensures that they are integrated within its value chain (Roush 32). it is therefore recommended that Home Depot would apply a multidimensional value chain within its operations so that it would successfully compete and success in its Saudi Arabian business operations. Ability to grow, market and provide extensive range of services and products are the key competencies of Home Depot. Through the application of a multidimensional value chain, the production of home improvement products, marketing, sale and maintenance of the customers’ homes are activities which will be integrated. This will enable the company to efficiently meet its core goals. Moreover, a multidimensional value chain would promote communication among its business units so that they would be more effective, productive and customer centered. This is unlike the traditional value chain which is more linear and assumes that inputs and operations are directly related. The advantage of the multidimensional supply chain for Home Depot is that it will facilitate management of business units and thus ensure that their interrelationship enhance the achievement of business goals. The marketing competency of Home Depot will be promoted through the application of a multidimensional supply chain because it would help the coordination of marketing, sales, accounting and human resource functional areas for the success of the promotional activities of the home improvement services. Moreover the marketing function and the management team of the organization will be linked. This is so because marketing cannot be successful without the support of managerial decisions. in addition, the finance department plays as role in funding the marketing communication strategies. The interrelationship between functional units of the company which affect its marketing functions are far from linear and thus the justification of the multidimensional supply chain. The application of information and communication technology within the business operations of Home Depot is one of the competencies which are propelling its success in the home improvement services. The adoption and implementation of information system enhances communication and interaction of the business areas of the company considering that they are interrelated and rarely linear (Datamonitor 1). This reveals why a multidimensional value chain would be the most appropriate approach to value chain management for Home Depot. Through the application of a multidimensional supply chain and technology, the consumers of the company’s services are enabled to effectively communicate and place orders and payments. Rapid growth is a characteristic of Home Depot which demonstrates its competence in providing buyers with high quality home improvement services. This is exemplified by the company’s expansion into the international market including Saudi Arabia. With expansion of the company, its management becomes more complex. This therefore requires a multinational approach of the value chain which will help the management to monitor closely all operations of the company including input of raw materials, production, sale, maintenance and customer focused home improvement services. Through a multinational supply chain the management will be able to ensure that production of home improvement products are in line with the services ordered by the customers. The sharing of information within Home Depot value chain will be enhanced through the application of a multidimensional approach. For example the marketing and sales department requires information on the marketing financing form the finance department. The communication and hence sharing of information will thus help the company to operate in line with the objectives of the organization. Moreover, project teams in the various units of the company can interact effectively and thus ensure that the value chain meets the demand of the market. This can be achieved through ensuring the production team and maintenance teams collaborate so that they would be able to meet the needs of the customers in accordance to the number of orders made. Home Depot has many branches across the world because it is a multinational company. This means that the management of its value chain would be very complex. The adoption of the portfolio model of multinational business management means that the company is more decentralized and thus less linear. In this case, a multidimensional supply chain is recommended for the company as a sure way of managing its home improvement services. Multidimensional value chins sometimes involve outsourcing some services for a company from an external entity (Prajogo, Peggy and Mark 42). This has some disadvantages such as provision of poor quality services to customers which would tarnish the name of the company. Additionally, Outsourced services may not be in line with the objectives of a company. Therefore, in the provision of home improvement services, it is recommended that Home Depot apply its own services to ensure that the business is not affected by the disadvantages of outsourcing its services. It is through a multinational value chain that the success of Home Depot within Saudi Arabia and other parts of the world where it operates can be facilitated and improved. The analysis of Home Depot illustrates that it is well positioned to achieve business success within Saudi Arabia. This is attributed to its favorable business model which has caused it to have a competitive edge. Moreover, application of appropriate marketing strategies and provision of high quality services and products will enable the company achieve significant success in Saudi Arabia. The application of information and computing technology in addition to the use of a multidimensional supply chain strategy, it is expected that the company will achieve its goals. The competitive strength and ability to grow and provide a wide variety of home improvement services and products will also promote the attainment of the company’s objectives and goals of venturing into the Saudi Arabian market. Works Cited Cullen, John B., and Praveen, Parboteeah. International Business: Strategy and the Multinational Company. Routledge, 2009. eBook Collection (EBSCOhost). Web. 21 Mar. 2012. Datamonitor. The Home Depot, Inc." Home Depot SWOT Analysis, 2011. Business Source Complete. Web. 21 Mar. 2012. Prajogo, Daniel I., Peggy McDermott, and Mark Goh. "Impact of Value Chain Activities on Quality and Innovation." International Journal of Operations & Production Management, 2008, 28.7 Roush, Chris. Inside Home Depot: how one company revolutionized an industry through the relentless pursuit of growth. New York: Mcgraw-Hill professional, 1999. Print. Read More