The Strategic Development of an Organization That Operates in the Asian Region - Case Study Example

INTERNATIONAL BUSINESS ………………………………. …………………………………… ……………………… Describe the strategic development of an organization that operates in the Asian region. In doing so relate the development and strategies of the organization to the relevant business tradition in which it has developed.” Organization chosen: Lotte Co Ltd, Korea Company Overview: Lotte Co. Ltd, established by Shin Kyuk-Ho in early 1940s and set in Seoul, has become one of the most successful and top ten leading companies of Asia. The company quickly grew from its marketing of chewing gum to become one of the major international conglomerate, with around 50 different business units and employing more than 38,000 people, worldwide (Rosenberg, 2006). Lotte, including its subsidiary companies, is involved in various sectors and marketing, ranging from food, hotels, entertainment and construction. It produces and markets food and confectionary products including chewing gum, chocolate, ice cream, biscuits and soft drinks in Japan, United States, South Korea and Asian countries. The company is engaged in a number of servicing like public information and managing, leisure facilities, professional base ball clubs etc (Businessweek.com, 2010). Strategic Development of Lotte Co Ltd In today’s highly competitive and most challenging market environment, businesses, especially those companies that went global like Lotte, Nestle, HP and so on, have identified and developed a number of managerial and marketing strategies that in turn helped them gain sustainable competitive advantages and long term profitability. The international business strategy is a strategy through which a business sells its goods and services outside its domestic market in order to grab the potential new opportunities from the global markets. A business normally discovers an innovation in its home market, especially in the case of advanced countries, and then develops it in other countries (Hitt, Ireland and Hoskisson, 2009, p. 213). When it comes to the case of Lotte Co Ltd, its business tradition and strategic vision were basically to provide various products and services to the customers, rather than confining on a single market. Lotte has dual base in Korea and Japan, known as Lotte Confectionary Company in Korea and Lotte Co in Japan. For years, the main market niche was its chewing gum marketing that helped it gain dominance in chewing gum market with relatively better market share of 60% in Japan and almost same in Korea as well. Lotte has been running successful markets in various fields including consumer retailing, petrochemicals, construction, confectionary and beverages etc (Chadwick and Arthur, 2007, p. 395). The company has traditionally been involved in various sectors with its strategy of manufacturing and marketing various ranges of goods and services, and this strong strategic vision is still leading the company to expand its retailing and other sectors to other countries like China, Russia and other Asian countries. Lotte has been successful in its public relation and entertainment industries. With a strategic vision and strong commitment of ‘one stop entertainment centre’, the company has been caring for their customers within a family atmosphere, providing baby seats for children, a free umbrella loan for sudden changes in the climate and wheelchair facilities for the disabled etc (Rosenberg, 2007). From being confining as a mere business, Lotte has extended its service and customer focus by providing a family-like care in the entrainment atmosphere. Lotte has become a major international player in 1990s. The company had set up a subsidiary in the United States in 1978 that in turn helped it expand its sales of chewing gums and supporting systems throughout the US. Lotte has eventually been entering in to various international markets like Taiwan, China, Indonesia, Vietnam, India and so on. Product development, Diversification and Multi-product strategies of Lotte Product development and diversification were its major strategies that helped it gain relatively sustainable competitive advantages in its overseas market. Product development and diversification are some of the highly effective strategies for better marketing. Most of the international companies face fierce competition and therefore they developed a number of effective strategies that can help them meet varying customers’ need. Lotte developed first sugarless chocolate called Chocolate Zero and launched it in 1996. Within in net few years, Lotte launched a new and different type of chewing gum called xylitol which helped it promote its chewing gum market as a cavity-fighting product. Within a single segment, for instance confectionary market, Lotte has again focused on various products like biscuits, chocolate and sweets. This is how Lotte developed its diversification strategy to help gain better competitive advantages in both its home and foreign markets. Lotte has been able to provide various products and services to its international customers and same time to generate relatively greater percentages of revenues from each sub-segments as well. The main strategy that Lotte has been focusing for years was its Multiproduct strategy. Multiproduct strategy is a an action plan that a firm designs and develops various products in order to compete in different product markets. As mentioned earlier, Lotte is a player in various markets like confectionary, entertainment, construction, hotel and food. The Multi product strategy of Lotte was highly useful for it o improve its business performance, because, with this strategy, Lotte was able to learn how to use its core competencies to pursue opportunities in the external environment (Ireland and Hoskisson, Hitt, 2005, p. 138), especially in markets like Taiwan, China and Indonesia. The multiproduct strategy can enable a business to smooth out its revenue and earnings flows and gain increased profitability by using its core competencies in certain additional ways (Ireland and Hoskisson, Hitt, 2005, p. 138). Lotte has been focusing on multiproduct strategy for its both home and international business and this has helped it 1) achieve profitable growth, 2) reduce risks associated with single product line, 3) learn to apply core competencies in other value creating areas, 4) gain exposure to various technologies, 5) develop economies of scale and 6) extend the company brand to additional product lines (Ireland and Hoskisson, Hitt, 2005, p. 138). Lotte’s retailing, especially its department stores in Korea, was highly successful in grabbing the best slice of world’s most demanding shopping opportunity in Korean home market and has recently expanded its retailing to other countries including China. References Businessweek.com, 2010, Industrial Conglomerates, Lotte Co Ltd, Bloomberg Business Week, Retrieved from http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=909279 Chadwick S and Arthur D, 2007, International cases in the business of sport, Illustrated edition, Butterworth-Heinemann Hitt M A, Ireland R D and Hoskisson R E, 2009, Strategic management: competitiveness and globalization : concepts & cases, Eighth Illustrated edition, Cengage Learning Ireland R D, Hoskisson R E and Hitt M A, 2005, Understanding business strategy: concepts and cases, Illustrated edition, Cengage Learning Rosenberg S, 2006, Whole Lotte Love, Film Journal International, Master FILE Premier Retrieved from www. ebscohost.com Rosenberg S, 2007, Lotte Luxury, Film Journal International, Master FILE Premier Retrieved from www. ebscohost.com Read More