KFCs Radical Approach to China - Literature review Example

INTERNATIONAL BUSINESS STRATEGY Part B. Self Reflection Report Globalisation Many businesses across the world are fast modifying their strategies in order to increase their presence in markets beyond those in their local markets. However, this process is not always very easy, businesses are often supposed to ensure that the make a careful analysis of the markets that they want to join in order to establish the best and most effective approaches to globalisation and related business concepts (Wibbeke 2008, p. 21). In general, a successful globalisation process is an important competitive advantage to businesses that manage it. Currently, we have strong evidence that seems to support the fact that numerous markets across the world are now becoming global in very many different respects. This is an approach to globalisation strategy that aims at concentrating on the process of costs and standardizing as approaches that represent an effective oversimplification of the entire situation (McManus & White 2008, p. 51; Hill 2008, p. 21). It is important to realize that the world’s global environment has become increasingly complex, prompting the need for highly sophisticated approaches towards strategies that can assure an effective globalisation process. Across the world, huge differences exist in terms of the needs and preferences of consumers locally, regional and the larger global platform. Additionally, consumers across the globe are fast becoming sophisticated, demanding goods and services that are highly standard and differentiated (Aregbeshola 2011, p. 23). Thus, in as much as markets seem to be global, the sophistication in terms of the needs and wants of customers largely dictates the kind of strategy to be adopted, which is supposed to be highly responsive and flexible in order to tackle the dynamics being witnessed in these markets. This paper makes a self reflection about some of the international business strategies being adopted by companies in the process of going global to exploit the fast emerging opportunities in external markets. Strategies adopted in industry development In my understanding of globalisation, so far there are not clearly defined strategies that need to be used by companies in their bid to have an effective globalisation process. Mostly, companies are supposed to figure out which strategy best suits their particular needs and follow it. Some industries are often faced with a need to adopt divergent and converging business strategies. In the above approach, convergent globalisation business strategies describe the processes in which business models, which firms in certain industries employ start to appear very similar. In most cases, this scenario happens whenever firms considered being weak in their growth and development approaches begin to adapt some of the dominant designs used by other stronger and successful businesses on the global market. Some of these businesses tend to develop these strategies in the process of managing extreme competition in the market. However, they often fail to implement these approaches in good time, making them to be copied by other businesses. This approach is often successful to the weaker firms since they don’t often spend a lot in the research and design and of these approaches yet they benefit from them (Umer 2012, p. 43). To the businesses that had originally developed these strategies, they may end up losing on their competitiveness, which is critical for their survival in the highly competitive global market. Alternatively, we have some companies that tend to use divergent business strategies. These strategies and approaches are the contrast of convergent strategies. In this approach, businesses in particular industries tend to develop and adopt strategies that seem to be different from each other. Businesses often spend on market research activities in order to understand the different market trends and how they can effectively fit in the changing patterns (Shenkar & Luo 2008, p. 27). By developing different models, businesses are motivated by the need to be unique and present different approaches in the manufacture and distribution of their goods to attract and retain a substantive market share (Choate 2005, p. 59). In most cases, these approaches are common with new entrants on the global stage, who want t be identified with their unique designs in the manufacture of products (Bordo 2003, p. 56). I have learnt that as far as globalisation is concerned, both the divergent and convergent business strategies exist in many of the different industries represented in the local, regional and global business platforms. However, the degree of their application and resulting success differs from one industry to another and from business to business (Lanza & Quint 2001, p. 99). For this reason, businesses are supposed to realize that thorough planning and critical analysis of their internal business environment needs to be done before any of the approaches can be adopted in their case. The need for strategy analysis One of the most important preparations that companies going global are supposed to consider is the level of success that certain strategies they want to adopt can be applied. Even for the highly successful businesses (Shenkar & Luo 2008, p. 31), the strategies they adopted in the growth and success may differ considerably from one country to another. While one strategy may seem to have brought a lot of success to the company in one country, the results may not necessarily the same in another country (Rugman & Collinson 2009, p. 76). For this reason, it is imperative that companies carry out an effective strategy analysis before their application. One of the reasons why it is necessary to undertake strategy analysis is to determine the particular elements that can be said to cause shifts in the industry. Strategies that can give the business the needed competitive advantage in the industry are supposed to be adopted (Rao 2001, p. 36). The business needs to consider the costs needed in their application and devise ways of using them (Daniels & Radebaugh 2000, p. 37). Additionally, analysis is important in the process of determining the necessary paths that can be effectively distinguished in the different dimensions available. Conclusion In conclusion, it is important to appreciate the globalisation presents many opportunities to business that take a step to venture in markets beyond their borders. Businesses that exist in external markets seem to offer products that may be different from those of the business deciding to go global. Alternatively, even when the products may seem similar, there may be striking differences in many ways (French 2000, p. 19), which the business going global can use as important opportunities to present themselves in the new markets. In this case, the businesses has a responsibility to make adequate research about the markets in the new environments before going global knowing that effective strategies leads to success and growth. Appendix 1. First Briefing Paper KFC’s Radical Approach to China Companies going global are expected to develop and implement strategies that can enable them create and consolidate their presence in the new markets. In most cases, these companies tend to first use the strategies that have worked in their local markets in order to find out if they can also work in the new markets. Later, as the company progress, they examine the things that affect their performance and make improvements on it. In essence this is the best approach to take considering the fact that some strategies can sometimes be effective in the new markets (Shuman 2006, p. 45). I have learnt a few important items as far as international business strategies is concerned. KFC is a very successful brand in the United States, the need to increase their market share and market position saw the company launch into the Chinese market in order to try and establish itself (Bordo 2003, p. 65). One of the interesting things about this development was the strategy that was adopted by KFC in gaining market acceptance in the Chinese market. In the first place, KFC seems to have developed a definite goal that was the chief driver of its activities in the Chinese market. KFC, in its entry to the Chinese market targeted at establishing a new restaurant every day in the hope of making it with about 15, 000 outlets in the Chinese market alone. Has the strategy been successful for the company? In as much as KFC has been successful in establishing itself as one of the most successful foreign company in the Chinese market, much of its success can be attributed to the fact that it changed its business strategy, abandoning the one that had been dominant towards its success in the United States. This strategy involved a very limited menu that has extremely low prices with much emphasis being kept on takeout. In general, it is important to notice that in as much as a certain business strategy can be successful in one locality, it may not have t same effect in another market, prompting the need for increased creativity in identifying the best strategy that can work in a new market (Boudreaux 2008, p. 77). At the moment, the success that KFC has established in the Chinese market gives significant lessons to other global executives who may wish to establish and grow their business in the same industry or others (Bell & Shelman 2011, 67). It is always important for global executives to understand what can work in their favor and what won’t work, thereafter, they need to make a careful selection of the approaches that can ensure the create and consolidate on their market share. In this analysis, the most interesting thing is the zeal and commitment that KFC kept in understanding the Chinese market and development effective measures and approaches that have seen it emerge as the giant in food industry in the Chinese market just as it is in the United States where it has its headquarters. In this case (Bell & Shelman 2011, 68), KFC can be described as the pace setter in terms of international and global business growth strategies not in the Chinese market, but also in other markets across the globe. Appendix 2. Second briefing paper Tomorrow’s Global Giants, Not the Usual Suspects The current business environment is characterized by new businesses that are fats emerging in order to take advantage of the opportunities that seem to be plentiful in many emerging markets like China and Brazil among others. In their view, Ghemawat & Hout have observed that in this condition, the prevailing change in demand and supply, new strategies and business models are becoming the chief drivers of changes that are bound to be witnessed in the coming future. What I find most interesting in this paper is the fact that from the current trends being witnessed in the current wave of globalisation, we are bound to meet new business giants, those that understand the prevailing trends and are doing their best in developing strategies that they can use in exploiting the emerging opportunities in new markets. In fact, most of the western companies have been showing increased interests in most of the emerging markets especially India and China (Yeung 2011, p. 67). Some of the western companies that are not taking any chances for the new opportunities include Unilever, which is known to produce most household goods and IBM, a company that deals in the manufacture of computers and related accessories. These companies have been exhibiting great expansion strategies that have seen them create and expand their presence in the United States. Other new newcomers like Orbea, which is currently valued at about $100 million, a manufacturer of ultra light bikes that have carbon fibers. This company, which originates from Spain is also on the front line in creating outlets in these emerging markets, with plans to become the greatest players in the industry. Ghemawat & Hout have noted with great interest the influence being made by other developing countries, which seem to be in great competition with multinational companies that are fast pushing outwards from their particular homes bases to effectively establish themselves on the global stage. In this scenario, it remains interesting to see what will later emerge in this kind of competition (Shenkar & Luo 2008, p. 38; Condon 2002, 67). It is this kind of scenario that brings to light the fact that the business giants on the global platform are going to be the usual suspects that have ruled the international and global market for a long time. What I find interesting in this briefing paper is the fact that multinational companies are placing themselves in some kind of natural selection (Rugman & Collinson 2009, p. 77). In such a situation, only those companies that will emerge with the best approaches that can create international presence and consolidate their performances are going to be the greatest beneficiaries (Umer 2012, p. 91). So far a great evidence has been established, which indicates that the characteristics emerging in the market will be instrumental in sorting out the eventual winners from losers. In the Chinese market for instance, some of the better established multinationals have continued to dominate the brand and knowledge-intensive businesses (Suryadinata 2006, p. 67). The difference that Chinese companies have over their foreign counterparts is that they seem to have an upper hand where logistics and production seem to matter most (McKnight 2001, p. 45). In such a case, they have been moving successfully outside their home bases to find new opportunities outside China. Appendix 3. Third Briefing Paper Globalisation and Transnational Business In modern times, the international business environment seems to have rapidly expanded, having a lot of technological innovations and advancements that have expanded the scope of businesses across the world (Wibbeke 2008, p. 56). In such a dimension, many multinational companies have been enjoying growth and expansion into new markets, which seem to posse great advantages in terms of business growth and expansions. Stonehouse et al (2004), point to the fact that globalisation has perhaps become the single force at the driving wheel in the contemporary business, society, economics and in aspects of management. This presents a case of strategic management happening in a global context, which forms the main agenda in their book. The authors of this book have taken an a analysis of how businesses are struggling in their process of establishing the market position on the global stage. It is interesting to note that globalization is itself is quite a very complex phenomenon (Suryadinata 2006, p. 78). Many business managers are trying to understand the best approaches towards successful globalisation and gaining acceptance in new markets. Stonehouse et al (2004), have written this boon in order to provide important insight about the process of globalisation, so that business managers and executives that wish to go global can use, they have highlighted the advantages of making this move as well as the some of the potential problems and challenges that they can face. What I find interesting in this book is the fact that businesses are expected to have a different perspective on the concept of globalisation. In this perspective, the interest in globalisation seems to centre on two main facets; first is the issue of markets globalisation, where by globalization aims at increasing market opportunities for businesses establishing their presence in other emerging markets. The second aspect relates to globalisation that concentrates on the production of From the perspective of business, interest in globalization centers on effective supply chain management and production activities. According to the authors of this book, markets globalisation refers to technological changes, political, economic and social developments that are happening in the global business environment. These aspects of globalisation has in the past been a dominant force, driving the business world towards a “converging personality” or “global village,” which is a unified and homogenized global market when it comes product preferences and consumer tastes (Umer 2012, p. 98). It is interesting to realize that some of the major beneficiaries of this form of convergence are the global organizations that concentrate with manufacturing standardized products that are accepted globally in the process of achieving global economies of scale (Wibbeke 2008, p. 98). These businesses can effectively reduce the prices of their products because of the economies of scale due to the increased competition (Suryadinata 2006, p. 102). It is important to realize as far as globalisation is concerned, effective and successful global business strategies are supposed to be based on products standardization, advertising as well as branding. Businesses that manage to achieve these objectives often end up creating large market shares and create businesses that are unrivaled for a long time across the globe. Bibliography Aregbeshola, A. 2011. Global business: Environments and strategies (4th ed.). Oxford University Press Southern Africa, Cape Town. Bell D & Shelman M. 2011. KFC’s Radical Approach to China Bordo, M. 2003. Globalization in historical perspective. University of Chicago Press, Chicago. Boudreaux, D. 2008. Globalization. Greenwood Press, Westport, Conn. Choate, P. 2005. Hot property: The stealing of ideas in an age of globalization. Knopf, New York. Condon, B. 2002. NAFTA, WTO, and global business strategy how AIDs, trade, and terrorism affect our economic future. Quorum Books, Westport, Conn. Daniels, J., & Radebaugh, T. 2000. Global business: Environments and strategies : Managing for global competitive advantage. Oxford University Press, Oxford. 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