International-Business-Dr-R-Chandran-E-book

Stage # 5
Stage # 6
through
production
Review all the
pitfalls and gear
up to other regions
Emerging as
global enterprise
nearby countries and build
brand name
Analyse the potential in
various regions. Evaluate
the partners, investment
climate and Socio-
Cultural background
Produce, distribute, invest
and build corporate image
and face competition
SPEED OF GLOBAL EXPANSION
148
International Business- Dr. R. Chandran
The network members
become patrons.
Comparing and selection
of right locations, right
partners and right markets
Global production
Global investments
Global brand name
Status of global company
Having begun the journey towards globalization, a company must still
address the question as to how fast it should expand globally.
Rapid globalization enables a firm to grow aggressively but it can also
spread managerial, organizational and financial resources quickly. The
absence of one of these resources can jeopardize a company’s ability to
perform.
Faster global expansion is more appropriate under the following
condition:
A. It is easy for competitors to replicate a firm’s recipe for success. This
possibility is obvious for fast food and retailing companies such as
Kentucky Fried Chicken and Starbucks. Once the concept has been
created in a market, competitors can come in and easily replicate it with
relatively low investment.
B. The scale of economies is extremely important. Mass production through
cost reduction leads to rapid success. Firms which come in later may lose
out in a specific sector. This is the reason why tyre manufacturers such as
Goodyear, Michelin and Bridgestone, which went global at rapid rate
now have considerable advantage over other firms such as Pirelli and
Continental, which were slower in entering the global market.
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