How Can Mtv Maintain Their Global Success Through Their Global Strategy and Corporate Governance?

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Problem statement: How can MTV maintain their global success through their global strategy and corporate governance?

Learning goals:

1. Define global strategy and explain different types. Give examples and pro’s and cons. (Do not only explain the 4 strategies but also look in to the axes)

A global strategy is a strategy that can be used when a company decides to expand their operations abroad to achieve competitive advantage and superior profitability. It defines a company's strategic guide to globalization. A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Global strategies require companies to tightly coordinate their product and pricing strategies across international markets and locations.

A company can decide to choose one of the four basic strategies. Global standardization strategy, localization strategy (multidomestic), transnational strategy, and international strategy.

Global standardization strategy - Companies that are pursuing a global standardization strategy focus on increasing profitability by lowering the costs that come from economies of scale and location economies. They want to market a standardized product worldwide, so they can gain maximum benefits from economies of scale. If there is strong pressure for cost reduction, and demand for local responsiveness is minimal, then a global standardized strategy is the best strategy to pick. These conditions prevail in many industrial goods industries, whose products often serve universal needs.

Localization strategy - This strategy focuses on increasing profitability by customizing the company's products so that they provide a good match to tastes and preferences in different national markets. This strategy works if there is low pressure for cost reduction and if there is a high pressure for local responsiveness. By customizing the product offering to local demands, the company increases the value of that product in the local market. On the downside costs tend to be higher, since a company needs to change their product for several markets. MTV is a good example of a company that has had to pursue a localization strategy. Otherwise MTV would have lost market share to local competitors, advertising revenues would have fallen and its probability would have declined.

Transnational strategy - This strategy was created by Bartlett and Ghoshal, two researchers who were researching on this subject. Companies that choose for a transnational strategy are trying to develop business models that simultaneously 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.

International strategy - Some companies have the chance to be confronted by low cost pressures and low pressures for local responsiveness. These companies are selling a product that serves universal needs, but they do not face significant competitors, so they don't have pressure to lower their cost structure.

Sources:
Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

2. What is corporate governance?

Corporate governance is the system by which companies are directed and controlled. Sometimes people use the term to determine how good, efficient and responsible a company must be led. A good corporate governance policy translates the interests of the stakeholders towards the policy and the outcomes and the future expectations are reported to the board of directors and the shareholders. With a good and clear policy it is possible to prevent fraud.

Sources:
Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

3. What different entry modes/strategies are there?

There are five different entry modes possible for a...
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