Professional Documents
Culture Documents
Environment
MTV Networks has been a symbol of globalization. Although its international foray
got off to a weak start, MTV realized its folly in providing the same content to a
global audience and adopted a localization strategy.
For e.g. ClearVision realized that eye glasses could be manufactured at low cost in
Hong Kong, so it moved its production facility there and later removed to China as
Hong Kong grew costlier. It also set up investments in France and Italy in order to
gain advantage from the presence of design expertise there for its status eye
division.
I am covering only transnational here because it seems the most difficult to self-
guess.
The need to compete with low-cost competitors like Komatsu of Japan forced
Caterpillar to look for greater cost economies. However, variations in construction
practices etc meant they also had to be locally responsive. Caterpillar redesigned
its products to use many similar components and invested in a few large scale
component manufacturing facilities, sited at global locations to realize scale
economies. At the same time, it augmented the centralized manufacturing of
components with assembly plants in major markets to add local product features.
The choice of market to enter must be based on an assessment of their long term
profit potential. The attractiveness of a country as a potential market for
international business depends on costs and benefits, whose analysis must be done.
One other factor of importance is the value that a company’s business model can
create in foreign market. This depends on the suitability of its business model to
that market and the nature of the population.
Look at the table in Page 294 for a brief summary of the entry modes
available to a firm and their advantages and disadvantages.
Disadvantages:
1. Firms can piggyback on your successes while offering few benefits to you.