“How can MTV make use of their global strategy and corporate governance in order to maintain their competitive advantages in the next three till five years?”
LG1 What is a global strategy and what types do you have? (Pros/Cons + Cultural and Ethical aspects) Source 1: Hill, J. & Jones R. (2010), Theory of Strategic Management, Ch. 8, South- Western: Cengage Learning Source 2: Johnsen, G. Scholes, K. & Whittington, R. (2008), Prentice Hall Exploring Corporate Strategy 8th edition, Ch. 13, Pearson Education Limited : Edingburgh Gate In the mid 1950s almost every national market was being closed to one and another due to significant barriers to international trade and investments. Because of that most companies just focused on their own national markets in which they operated. The treat of global competitors was low. But in the year’s father the 50s that changed rapidly, nowadays barriers almost aren’t there anymore – EU made it very easy – and investments tumbled to going global. Goods, products and services help companies from different nations to enter other national markets, which also meant that rivalry increased tremendously.
For a company there are different kinds of Global strategies, which help to enter foreign markets. Jones and Hill state that companies usually choose among four main strategic strategies when they want to compete globally these are: 1.Global Standardization Strategy
The figure above shows in what kind of conditions which kind of strategy is the most suitable.
1.Global Standardization Strategy
This strategy lays the focus on increasing profitability by reaping the cost reductions that come from economies of scale and location economies. In easier words they focus on standardized products, which are being marketed worldwide like the Big-Mac of McDonalds’, for every country they used the same brand name and same slogan for the Big Mac, this shows that for the Big Mac that the target group is large and similar in different countries and because of that can be targeted globally. The biggest ‘pro’ of this strategy is that this strategy is quit cost saving, in the case of McDonalds they use their cost savings to offer the customers a lower prices, and so they make money with smaller margins spread across a lot of customers. 2.Localization Strategy
This strategy is all about increasing profitability by customizing the company’s goods or services to provide a match to the demands of the national markets. MTV Network is one of the best examples of a company – which already was stated in the module book – that had pursued a localization strategy. If MTV did not changed their strategy, in 1987, from single feed strategy to localisation strategy to match the demands of the customer, and which their competitors – the local copycat stations – their advertising revenues would have fallen, and its profitability would have declined. Even though their intensive research raised costs, the strategy of localization became a strategic phenomenon at MTV. But do not forget even big companies like MTV also have to keep an eye on costs. 3.Transnational Strategy
This strategy is more a balance between a global standardization- and localization strategy. Companies that choose for a transnational strategy try to develop a business model that at the same time achieve low costs, differentiate the product offerings across geographic markets, and foster a flow of skills between different subsidiaries in the companies’ global networks of operations. Con: As attractive as this may sound, the strategy is not an easy one to pursue because it places conflicting demands on a company. Differentiating the product to respond to local demands in different geographic markets raises costs, which runs counter to the goal of reducing costs. International Strategy
If a company sell products that serves universal needs they...