Dynamics Of International Strategy - Essay Example

DYNAMICS OF INTERNATIONAL STRATEGY Marketing strategy is a predestined component of firms, companies and organizations, which is highly supportive in respect of enhancement of the volume of business, product and sales of the companies. All the business activities revolve around strategic planning of the organizations and determine the steps taken towards some specific direction that may lead to the growth and development of the company. “All organizations”, Johnson & Scholes maintain, “are faced with the need to manage strategies: some developing from the position of strength; some needing to overcome significant problems.” (1993: p 3) Strategic management not only thrashes out the decision making regarding major issues of grave concern within an organizational structure, but also it focuses on the implementation of the strategy planned in a proper way in order to obtain the appropriate results within appropriate time. “Simply put, strategic planning determines where an organization is going over the next year or more, how its going to get there and how itll know if it got there or not. The focus of a strategic plan is usually on the entire organization, while the focus of a business plan is usually on a particular product, service or programme.” (McNamara, 2006) Corporate organizations, enterprises and companies experience various financial fluctuations, and endure both boom and crisis during the course of time while presenting their products and submitting their services in the market either at global or domestic level. These fluctuations are the outcome of many internal and external factors including changes in technology, alterations in government policies, political, social and cultural changes, introduction and inclusion of new inventions, environmental factors and others. “The corporate strategy of an organization”, according to BNet Business Strategy, “comprises of the systems and processes needed to realize long term goals and objectives of the organization. The marketing strategy of the organization consists of the systems and processes needed for the dissemination of product or service information in the market.” (http://jobfunctions.bnet.com/whitepaper.aspx?docid=84981) The world is fast changing and developing into a global village. The inclusion of WTO in the corporate world has revolutionized the situation and competition seeks its unabated boost everywhere. The countries and their companies have entered the international markets in the 21st century along with their magnificent products encompassing individual, collective, domestic, commercial and industrial needs at global level. The dynamics of international strategy motivate the international companies alter their strategies according to the changes taking place rapidly around them within the framework of business environment. Remaining updated with the fast changing world and adopt immediate policy accordingly is key to success for a company under the present state of perfect competition. The strategies of the multinational companies are far more vivid and colossal than those of local and domestic ones. Multinational companies or enterprises refer to the "organizations consisting of a parent company in a home country that owns relatively autonomous subsidiaries in various host countries. (Ball & McCulloch, 1999: p 643) As the multinational corporations enjoy the status of leader of the global market, so they certainly have to undergo high levelled competition in different markets and cultures. Furthermore, the multinational companies to face industrial targeting too. "Industrial targeting", Balls & McCulloch argue, "is the practice of government assisting selected industries to grow by a variety of means." (1999: p 383) Being the consortium of England, Germany, France and Spain, the four governments had announced relaxations to the Airbus industry in comparison with the other competitive companies. This advantage over Boeing airlines earned great profit for the Airbus as the sale was significantly overwhelming especially in 1997. The business strategy devised by international organizations is not only comprehensive and long-lasting one, but also it is always dynamic and fast changing according to the government policies on the one hand and the strategy of the competitors on the other. The domestic and local companies have to look for limited number of consumers, while multinational companies keep the taste of far wider range of consumers. The companies of international recognition and global worth like Coca Cola beverage industry, Honda automobiles, Hitachi electronic industry, Marlboro tobaccos, Microsoft Corporation and others maintain consumers and customers of their products in all parts of the globe; it is therefore they have to launch their products in different areas and land by drafting their corporate strategies according to the local market situation, socioeconomic condition and the political policies imposed and implemented by the local governments. The same is the case while discussing the Airbus International Airlines. Airbus Industry is a France-based European international airline, which produces nearly half of the worlds jet airliners. It started working as a consortium of European countries in early 1960s to combat American aviation organizations in international markets. It has successfully introduced itself all over Europe and has won the place of most popular airline. The industry experienced ups and downs during the course of time and revised its business strategies time and again to sustain its status of top ranked airline in the market. “At the beginning of 1995”, Burgner (2000: p 14) submits, “Airbus Industry was able for the first time ever to announce more contracts than the Boeing for the past financial year. And for the first time since 1945, the US giant has to confine itself with a second place behind a competitor.” In order to gain more attention of the customers and enhance business capacity, the industry took more steps for the sales of the industry products. It introduced new airplanes with better facilities and more passengers’ capacity. Airbus has been the local company of Europe and by dint of its hard work and superlative services, it surpassed the US based Boeing Airline in respect of sales. The introduction of A380 in 2001 was a commendable step that significantly increased the popularity of the Airbus airplanes. The capacity of the airplane regarding carrying of the passengers was better than its rival company i.e. Boeing 747. There involve particular strategic characteristics in companies decision making plans. Immediate decision making contains imperative significant in the life of international organizations. Right step taken towards right direction at the right time determines the fate of the companies. Timely decision making is imperative for the survival and growth of companies. Unnecessary and unwanted delays may create losses in respect of the reputation on the one hand and decrease in the sales on the other. In addition, the competitor companies can fill the vacuum in the absence of the product of international company. "Those who work in the international environment find that decision making is more complex than it is in a purely domestic environment." (Ball & McCulloch, 1999: p 19) Successful companies keep an eye on the changing market scenario and are always updated with the latest development being made in business environment. “The most meaningful way to differentiate your company from your competitor", Gates argues, “the best way to put distance between you and the crowd, is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or loose.” (1999: p 1) The companies are well aware of the advancements taking place within the business environment and they not only remain updated with the latest information in this regard, but also try to take the maximum advantage out of it in order to satisfy their customers by presenting before them something new and nice. The change and revision of a strategy depends on two basic factors i.e. customer-focus and competitors-focus. The analysis of consumer behaviour is highly supportive for the corporate organizations improve their marketing strategies. “Marketing strategy”, Lamb, Hair and McDaniel, submit, “involves three activities: selecting one or more target markets, setting marketing objectives and developing and maintaining a marketing mix.” (2006: p 14) The Airbus sustains few competitive advantages over its rival Boeing 747. Being the local company of Europe, Airbus strived hard to compete with the rival US air company Boeing and won popularity from all corners. “In 2001”, according to Wikipedia Encyclopaedia, “BAE Systems and EADS formed the Airbus Integrated Company to coincide with the development of the new Airbus A380.” Before the inclusion of A380, Boeing 747 was thought to be the worlds largest jet airplane. The management of the Airbus launched comparatively better product to knock out the rival organization. The customers also welcomed the European airline and the days of Boeing’s monopoly were over as soon as Airbus started its service. The USA aircraft industry enjoys lion’s share in the field of production and sales. “European airlines”, Burgner states, “are operating 25 percent of the global airliner fleet, the European aircraft manufacturers’ share of the global market only amounts to ten percent.” (2000: p 16) Companies devise strategies and revise them as soon as the changes take place in business surroundings. "The companies that have an active and systematic strategy are significantly more successful than companies that remain inactive and non-strategic." (Ernst, 1995: p 227) While analysing the Airbus, it is evident that the airline maintains some advantage over its competitor company. Being the European company, the Airbus enjoys the advantage of home market. It is fact beyond doubt that the consumers support their local organizations in comparison with the foreign company even WTO has created perfect market situation in Europe provided they offer quality service to the people. Even then the Europeans are especially determined to promote their home industry; it is therefore if a local brand offers the same services in comparison with the foreign brand, the people go and invest for the local product. Keeping in view these facts, the administration of the Airbus involved in overhauling of their product to present it before the consumers on the better position than the already existing imported brand i.e. Boeing 747. A companys history, corporate culture and management as well as comparative analysis with the rival brands not only create the true picture of the achievements and drawbacks of the company under study, but also it plays pivotal part for the business promotion of the company. Looking into the history of the Airbus and that of its comparison with the US competitor Boeing, it comes to know that the later maintains better historical background over the former one. Boeing airline is an older airline with operational network in the USA and Europe nearly two decades more than that of the Airbus. With the passage of time, the Europeans felt the need of launching their own joint air manufacturing venture to promote their home industry as well as providing the local population with employment opportunities on the one hand and the easy and affordable air travelling on the other. The presence of two different competitor companies wide opened the dimensions of better service campaign for the consumers. Airbus aimed at carrying the more number of passengers; it is therefore its administration intended to introduce A380 aircrafts for carrying 550 passengers. On the other hand Boeing airlines laid stress upon the distant destination. It concentrated on offering its services for 2,000 extra miles in order to reveal that its service had no match in respect of carrying the passengers to remote areas without changing the flight service. The leadership and managers role is very important for the promotion of a product and enhancement of its business strength. Efficient management always look for information about the changing customers need and the competitor companies prices, products and promotional strategies. In addition, great multinational industries sometimes apply dichotomous policies by applying two different strategies to uphold their business. In addition, they sometimes surrender their previous policies altogether to combat the competitors strategies within corporate environment. Looking into the history of another airline i.e. Air National, it is crystal clear that dynamic leadership has brought revolutionary changes in the sales and promotion of the organizations. The company had undergone many crisis and then the top management of the Air National implemented new competitive strategy, where it divided its services into two parts. On the one hand, AN’s operations department launched a discounted airline quality customer service in comparison with the rival companies. On the other hand, its advertising department laid stress upon value added elements to display that the company was offering its services at even the discounted rate without making any compromise in its quality or services. Keeping an eye on the future developments, the company sold out some of its aircrafts and buildings. The enterprise successfully suspended its unprofitable routs and promoted quality of service in profitable areas. Similarly, the management took the same steps taken in Competitive Strategy while making strategic choice in HR department, where it implemented downsizing in its extra or inefficient labour. The CEO focused on the empowerment and commitment of the efficient staff. The HR department organized the staff on the multi-skilled basis without discrimination of crafts groups and concentration was laid on the performance and dexterity of the staff members under the supervision of a team leader. The motive behind that all was to improve the services in order to enhance business activities and expansion of services for the future years to come. The same is the case while making the comparison between the Airbus and the Boeing. “Managers are”, Johnson & Scholes argue, “usually in a powerful position within organizations to influence the expectations of other stakeholders.” (1993: p 196) The local management of an organization apply their influence for the promotion of some specific product. If the leadership of Boeing airliners appoints local managers in various departments, it will support in respect of the sales of their product even the brand does not belong to local country. Taking the example of strategies devised by the renowned multinational brands, these companies included local public in their management and marketing team to attain some specific goals, which influence the population at large and the brand gained popularity in the country. It is therefore admitted that the management can skilfully enhance the sales even under the state of perfect competition. The strategy of comparative advantage is also applied at global level by the companies. Professionals and decision making authorities offer their products at lower price in comparison with the competitors existing in the international market. It may reduce the volume of their profit, but enhance the range of sales resulting in comparatively better output and larger amount of profit. Furthermore, the countries often change their policies and issue amended ordinances in the state that may affect the local companies in general and the foreign companies in particular. The states also observe dichotomous strategies under which they give specific relief to local brands and augment taxes for the imported brands. It is a type of some subsidiary to keep the local companies alive. External factors play decisive role for the upbringing of the brands and companies. While analysing the Airbus and the Boeing, it appears that the rise in the price of fuel surely affected the both. The leadership of the Boeing steps forward and within shortest period of time it prepared such jets that were economical and consumed lesser fuel quantity. Thus, the company escaped the revision in the fares and the people always preferred economical charges. The Boeing 747 has captured the attention of the customers and consumers in international market and won tremendous popularity in Asia, Europe and America. This all is because of the high quality and affordable price range of the product that has successfully gained the trust of general public at a larger scale. The popularity of Boeing 747 and peoples trust in this world class air service can be stated as the weakness of the local company Airbus. As soon as the Airbus introduced new service by including new jet airplanes, the Boeing 747 planned to introduce its new product under the title Dreamliner, which was a significant rejoinder for the European Airline Airbus. Boeing 747 has introduced new jet planes with 8000 miles non-stop service, which was 2000 miles more than the local Airbus accelerated the reputation of the company. It drastically affected the sales of the Airbus and delay in the introduction of A380 jets proved a setback for the company who has promised to deploy the jets far before today. The efficiency of Boeing 747 management and sound presentation and luxurious facilities strengthened its name and fame and people started preferring it to their home product i.e. Airbus A380. Timely decisions and quick actions are extremely necessary for the survival, growth and development of an industry. Strategies are articulated and implemented for goal attainment. The companies revise their previous strategies and introduce novel ideas in new strategies to achieve targets and maintain reputation in the market scenario. They sometimes adopt dichotomous strategy in this regard. Dichotomy simply means the categorical division into two especially mutually exclusive or contradictory entities. The term, applied in business strategy and exercised in organizations and companies, refers to two opposite policies, nearly pole apart, adopted to get the best of the both e.g. individual-group dichotomy, sequential-simultaneous dichotomy etc. The business strategies of international organizations are devised under cosmic-level situation of perfect competition for the uplift of their product in order to sustain their good name and fame. The strategies of such products are surely different from those of local products; it is therefore they have to make comprehensive planning and revise this planning according to customer-focus and competitor-focus policies. The leadership and senior management of the organizations come forward to determine the ways to bring considerable alterations in strategic plans, which estimate the significant change in business environment and the impact of change in operation. The same is the case with the reputed airlines, including Airbus A380, which experienced financial setback under competitive business environment after the local airlines revised their business strategy at domestic level. The dynamics of international strategy focuses on the strategic accomplishments within the international market environment. Thorough analysis of consumers behaviour helps out the researchers and the companies alike in respect of developing marketing strategies and revising them with the changing scenario of corporate environment. It is of grave concern for the companies to estimate how the consumers take a specific product and what changes they require. The customer-focus strategy analyse customers choice, liking, disliking, tastes and needs. In addition, the customers focus strategy is eager to know the features of a brand that urge the customers choose some specific product or company. Similarly, the significance of the demanding for the domestic brand and preferring it to other brands is also assessed. On the other hand, the competitor-focus strategy looks for the characteristics of the products launched by the rival and competitor companies. This strategy also lays stress on customers, because the presentation of the other products made by the rival companies also signifies the tastes of the customers indirectly. Both strategic analysis and strategic choice are essential parts of strategic management. The former discusses the understanding of the strategic situation of a company or organization, while the latter concentrates on the decisions made regarding the future of the organization according to the external and internal alterations within the market scenario. Strategic choice serves as the nucleus in a corporate strategic management and discusses all the inter-departmental operationalization. As both competitive and HR strategies are the part of strategic choice, it is highly beneficial in understanding the linkage between competitive and HR strategies of an organization. Both these strategies are applied to enhance the efficiency of the workforce including management and labour class, and there always exists an association between the competitive and human resource strategies. The same is the case with the Airbus airline. The top management of the Airbus implemented new competitive strategy, where it divided its services into two parts. On the one hand, Airbus operations department launched a discounted airline quality customer service in comparison with the rival company Boeing 747, which has launched its new light jets finding a vacuum in the market.. On the other hand, its advertising department laid stress upon value added elements to display that the company was offering its services at even the discounted rate without making any compromise in its quality or services. Keeping an eye on the future developments, the company improved its aircrafts and buildings. The enterprise successfully suspended its unprofitable routs and promoted quality of service in profitable areas. Similarly, the management took the same steps taken in Competitive Strategy while making strategic choice in HR department, where it implemented downsizing in its extra or inefficient labour. It is therefore, the timely decisions play dominant role for the promotion of brands and companies. The Airbus could not get full advantage of its home market because of the delay in its decisions. Lack of co-operation between different departments creates such fiasco leading towards the failure of some specific policy. REFERENCES 1. Ball, Donald A. & McCulloch, Wendell H. (1999) International Business: The Challenge of Global Competition. 7th Edition. IRWIN/McGraw Press INC. p 643. 2. Ball, Donald A. & McCulloch, Wendell H. (1999) International Business: The Challenge of Global Competition. 7th Edition. IRWIN/McGraw Press INC. p 383. 3. Boone, Louis E. and Kurtz, David L. 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Strategic Planning (in non-profit or for-profit organizations). Adapted from the Field Guide to Non-profit Strategic Planning and Facilitation. (Quoted in http://www.managementhelp.org/plan_dec/str_plan/str_plan.htm) 12. Industrial Performance Group. http://www.indusperfgrp.com/strategy.htm 13. http://jobfunctions.bnet.com/whitepaper.aspx?docid=84981 Read More