A business entity mainly has three reasons behind to go global: to expand sales, to diversify resources or to minimize competitive risk. Corporate strategic decision making is involved in selecting the mode and type of globalization strategy in the pursuit of company’s objectives. The selection of location, region and expansion pattern is totally aligned with the objectives of the firm. Therefore the firm who has the core objective to expand sales will adopt a different mode as compared to the firm which is looking to minimize competitive risk. Two major modes of globalization are Globalization of Markets and Globalization of Production.
The Hard-Wood is a furniture manufacturing company based in Pakistan. The company is the pioneer in furniture industry. It has the lion’s share in the local market, although the sales targets are being met on annual basis and company is expanding well. But the recent globalization shift has resulted in more competitive environment in the local market. Quick availability of raw materials at economical prices and cheaper human resource is making the existing market players more and more price competitive. On the other end ever changing needs and preferences of the local customers, demand more sophisticated and quality products.
The issue is that the Hard-Wood is facing tough time by the newly emerged local competition and the higher management is in search of cost effective and quality production facilities to safeguard its competitiveness and retain market share.
You have been approached as a management consultant to resolve the current issues of the company. You need to answer the following questions in this context.
1. Does the company have any reason(s) to go global in this scenario? (3 Marks)
2. Name the mode of globalization which the company must adopt to resolve the issue? (2 Marks)
3. Explain in detail that how the selected mode will help to resolve the issue? (10 Marks)