Economies of scale:
Companies with global market would be able to gain an advantage in production economies of scale since the level of production is relatively high compare to just targeting a specific market. Buying and negotiation power in everything from raw materials to advertising would also increase due to the higher budget and spending. For companies which do not have a unique advantage on their product, the advantage of economies of scales becomes even more important as the production costs can be lower so as to increase its competitiveness.
Consistency in brand image
Helps to establish relationships outside of the “political arena”
The challenge of global marketing is to capture the benefits of globalization and at the same time without ignoring the responsiveness from the local market. However, global marketing does not only imply opportunities, it also gives challenges to companies. The global market would be difficult to control as there are so many external factors affecting the market.
Underperform in global market
According to an ongoing research study, “foreign investment profitability gap”, conducted by the Templeton Global Performance Index, it shows that many of the world’s biggest multinational companies have suffered continuing declines in profitability, as well as losses in some cases.
The findings also indicates that there are numbers of large multinational corporations find it difficult on implementing the single strategy for the entire global market into a specific country (area), which lead to a diseconomies of scale. According to the research, there were 70 percent of the sample (companies) was below the median in terms of profit performance in foreign markets. The data also indicates that a number of companies closed down the least profitable national units and stopped on international expansion....