global companies
International competition between global companies takes a lot of hard work from a managerial point of view. Companies have to be careful but at the same time they must be aggressive enough to be able to face competition. A global organization must mobilize all its resources against competitors. Several actions can be taken to compete successfully: lower prices or studying each country's market position. Economies of scale and R&D play a major role in determining whether a company can successfully compete globally, besides companies must be willing to take the risk of going global.Caterpillar became against all odds a world leader in the construction equipment business. One of Caterpillar's competitive advantage is that it adopted from its early days a global distribution system that increased revenues, it also built plants in its major international markets to eliminate high transportation costs. One major threat that Cat has to face is Komatsu, its Japanese rival. To keep world leadership, Cat uses a global strategy that always keeps Komatsu one step behind, it relies heavily on economies of scale, it also invests heavily and in 1963 it formed a joint venture with Komatsu's rival in Japan: Mitsubishi, which decreased Komats
Honda revolutionized the motorcycle industry, which was divided into two markets: Asia where it was quite popular and Europe and America where production was limited. Timing plays a major role in determining the degree of success of a global competitor. It provided excellent customer service, which combined with its advertising campaign led to a huge success, translated by increased market share, high brand loyalty and higher profits. The main problem a global strategy has to face is organization. Ericsson's modular technology suited both local product differences and governments' use of local suppliers, Honda achieved economies of scale and turned into a global company by offering similar products in each major market. It must also have a strong relationship with its customers to minimize the risk of seeing competitors generating any sales at the companies' expense. BSR applied this strategy against the Japanese in the 1970's, and it proved to be quite effective. One solution would be to come up with different organizational reporting lines from country to country. By focusing on technology, Ericsson was able to become a global competitor. First it dealt with its own home market (Sweden), then it expanded focusing on countries that used switching systems that were similar to Sweden's. Economies of scale also played a major role. A global strategy doesn't take into consideration the conventional ways for capital allocation, instead it relies on a less mechanical approach to project evaluation. To respond to this threat, Ericsson developed new modular software packages at reasonable costs, these packages fit any telephone systems and made Ericsson a global competitor in small systems. All these factors combined led to Honda's move into automobiles. It used it to encourage people to buy its motorcycles, therefore increasing demand and achieving economies of scale.
Common topics in this essay:
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Japan Mitsubishi,
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reporting lines,
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major role determining,
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Acceptance Essays
