Introduction
Many business organizations experience the challenge of declining markets, hence the need for business expansion, primarily by entering global markets. An organized research strategy about globalization can be significant in enhancing the success of an organization as it enters the global market (Peng, 2021). Before implementing the system, it is essential to consider issues like existing competition and cultural practices. Expansion to new international markets can significantly increase the market share and profits of Furniture Corporation. The principal target in the global market for the Furniture Company is China since it offers a conducive social, political, economic, and cultural environment that facilitates business growth. This report to the advisory board is about why globalization is a good idea for the company’s expansion.
Globalization Move for the Company
Business organizations use global market strategy to expand their markets and become globally competitive. Globalization is a good idea for the Furniture Company since it would enable it to optimize benefits due to significant economies of scale and low-cost advantage. Therefore, a globalization strategy is vital for the success of an organization. The goal of global market expansion is the distribution and development of standardized products across the globe to realize maximum benefits (Peng, 2021). For the Furniture Company, globalization would be helpful to enable optimizing benefits through the issuance of furniture to achieve global standards. The company would benefit from low-cost economic advantages and a lowering of costs due to significant economies of scale. Global standardization strategies are crucial for lowering responsiveness locally and ensuring the company aims at a worldwide approach not limited to local operations (Aaker & Moorman, 2017). In addition, globalization enhances digitalization, thus increasing organizational flexibility. Therefore, globalization is an excellent move for the company.
Rationale for Globalization
A global market expansion strategy is essential because it reflects a formal plan for the growth of business operations. For Furniture Corporation, there are two strategies it can incorporate in its global expansion; partnering strategically with other international related companies in the industry and licensing and exporting its products.
Strategic Considerations
Strategic partnerships are the first strategy Furniture Corporation should employ as one of the company’s global expansion frameworks. Partnering strategically can allow the organization to benefit from the expertise and experience of other established international companies (Peng, 2021). A strategic partnership would also help Furniture Company establish investments worldwide, thus increasing revenues and profits. Using strategic partnerships, Furniture Corporation would benefit from a competitive advantage compared to entering the global market without any form of collaboration. More importantly, it gives the company access to more resources, such as existing infrastructure, financial resources, distribution channels, and advice (Aurifeille et al., 2009). The strategy would also benefit the business by enabling it to enter markets in many countries across the world.
Cultural Considerations
When expanding across the globe, especially to China, it is essential to ensure cultural factors such as language barriers do not adversely impact business operations (Aaker & Moorman, 2017). The management should focus on cross-national aspects regarding the importance of cultural variations. In Furniture Corporation’s case, culture would not affect business operations since the company will enter into the global market using strategic partnerships. Therefore, it will have a blended management constituting of employees from China, their home country, and other countries. The block will help handle business operations, communication, language barriers, and business management.
Competitive Analysis
Furniture Company will rely on the resources available to gain a competitive advantage. Alliances and partnerships offer an excellent opportunity for the company to enjoy a competitive edge over its competitors (Peng, 2021). For instance, a furniture company’s idea of partnering with already established related companies in the industry enables it to benefit from large pools of resources such as infrastructure, marketing, business operations, and taxation. Since countries like China import the majority of their materials and for production, Furniture Company will significantly benefit by exporting products to China (Aaker & Moorman, 2017). In addition, the company can also export furniture raw materials and employ cheap labor locally to manufacture products that can be shipped to other countries.
Balanced Scorecard
The main features of the balanced scorecard are process, financial, customer, and organizational capability perspectives (Peng, 2021). Considering all these perspectives, Furniture Company has a high chance of succeeding in its expansion missions. For instance, considering the financial perspective, Furniture Corporation wants to partner with other related ventures in China and across the globe. Business success will be achieved by producing quality products, using financial resources, and applying modern technology and human capital. Based on the growth and learning perspective, the performances of different employees are to be considered. For instance, the managers will identify strategies for boosting employee satisfaction and productivity.
Geographic Location to Be a Target for Global Expansion
China is the target market for global expansion since the Chinese furniture industry is growing tremendously. China is a significant furniture consumer; thus, targeting it would bring many economic benefits and create more employment opportunities. Furthermore, China is stable politically with no current international or domestic terrorism (Peng, 2021). Lastly, China is growing rapidly in terms of industrialization and the overall economy at large, thus providing the company with an excellent opportunity to expand. Therefore, targeting China will be a good idea for the Furniture Company.
Background Information
China has the largest population globally, and its citizens have high purchasing power. China’s high population is innovative and provides sufficient and qualified labor required for furniture production. China has a population of 1.3 billion and is the world’s second-largest economy and the largest if valued based on purchasing power parity (Aaker & Moorman, 2017). Therefore, there is a ready market for the Furniture Company in China. From the perspective of significant economies of scale, China’s position as a major importer, exporter, and consumer of furniture, is ideal since it would export the products to neighboring countries like Cambodia (Peng, 2021). China’s geographical location is strategic for business expansion. Shanghai and Beijing are the main cities ideal for development and economic growth. Therefore, establishing the company in these two cities would benefit the company since the cities can be central for business expansion and act as the company’s headquarters.
Decision Supporting the Overall Goal of Growth and Expansion
The strategic decision for global market expansion supports the entire goal of development and growth of Furniture Corporation. The main idea is to employ strategic partnerships and exports to enter the global market. To successfully pursue the global market, Furniture Company must adopt multiple strategies (Aurifeille et al., 2009). Multiple strategies would enhance the maintenance of a continuous improvement of the business. Furniture Companies would be able to flexibly shift from one to another when faced with the challenge of competitive advantage.
Conclusion
The globalization strategy benefits Furniture Company since it will enhance growth and expansion and maximize benefits by distributing furniture products in China. The company plans to employ two methods for global market expansion in its strategic framework: strategic partnership and development licensing. Furniture Corporation can become competitive through partnerships and the use of JIT when producing and distributing its products. China is strategically located geographically, making it an appropriate place for the company to expand. Therefore, China provides an excellent opportunity for rapid growth and expansion of the company.
References
Aaker, D. A., & Moorman, C. (2017). Strategic market management. John Wiley & Sons.
Aurifeille, J.-M., Medlin, C., & Tisdell, C. A. (2009). Trust, globalisation and market expansion. Nova Science Publishers Hauppauge NY.
Peng, M. W. (2021). Global strategy. Cengage Learning.