Posted at 11.13.2018
Modern global businesses have to satisfy an array of conflicting demands coming from different directions. In a very competitive world, organizations use integrated handles to preserve corporate and business expectations and strategies, which help attain economies of scale. They also make sure impressive decisions that help in sustaining the development of the business enterprise and create competitive border over the other firms on the market. A few of these core decisions is on taking part more actively in the local and global market, while bearing in mind that to use efficiently and effectively on the global platform needs sensitivity to indigenous market situations, adaptability under differing circumstances, and responsiveness to new possibility. Multinational companies increasingly face powerful competition globally. In these appearing situations, companies seek to implement strategies that will improve and support the growth of the business. Because of this, multinational companies are changing just how they structure their businesses, changing their modus operandi in order to conform to today's business environment. For today's business professionals the necessity to understand this tactical drive for change is of utmost importance. For they to be responsive, there must be concern not simply for the now, but also for the company's unforeseen future. This entails planning, arranging, directing, and controlling resources and owning a diverse labour drive in a manner that will be good for all constructions of businesses internationally.
Globacom Limited is a Nigerian multinational telecommunications company headquartered in Lagos, Nigeria, a privately had company and one of Africa's speediest growing telecommunications company. Globacom is the marketplace leading mobile service provider in Nigeria and runs in the neighbouring West African areas (Globacom Limited n. d. ). Regarding to (Globacom Limited n. d. ) it is respected to be one of the fastest growing mobile companies on earth, and aspires to be the largest and best mobile network in Africa. The telecommunication industry in Nigeria specifically and the planet at large seen as a huge ventures in technology and is also exposed to swift fluctuations in the market environment, such as loan consolidation of both telecom providers and network providers. The providers are contending for the limited range of customers, present on the global level. Rivals can be either large multinational companies, such as Vodafone, or small regional companies, such as MTN, Zain etc. The global industry performance is largely dependent on extended expansion in mobile and permanent communication in terms of both number of subscriptions and usage per subscriber. Furthermore, the existing merging of the telecom, data, and multimedia industries changes the conditions where the telecom operators conduct business. Therefore, the competitive environment is changing and novel strategies, addressing the new market conditions, are developed. Now in its bet to meet the organisational aims and objectives, the company wants to learn the possibility of increasing its participation in the local and global market. Thus, this paper seeks to describe the main element issues involved with localisation and globalisation, proper decisions involved and implementation problems with Globacom as reference.
Globalisation is a term that denotes the procedure of strengthening politics, economic, sociable and cultural relationships around the world. Different authors and scholars have attempted to establish or describe globalisation. (Ohabunwa 1999), understands globalisation as a development which is analytically reforming connections among different countries through the elimination of bottlenecks in the regions of communication, commerce, culture. Relating to (Ohiorhenuan 1998), globalisation is the widening and deepening relationships of nationwide economies into a worldwide market for goods and services, especially capital. (David 2009) Sees globalisation as international way of doing business using strategic decisions predicated on global profitability alternatively than local things to consider. Generally, globalisation is the involved and co-ordinated methodology by which market sectors progress from multi-national to global competitive set ups through trade, financial deals, and exchange of information, ideas, technology, and the movement of people. Localisation on the other side is the opposite of globalisation. Localisation includes that multinational companies recognises national economical issues and are locally responsive in achieving local requirements. With this perspective in mind, (Meyer and B. D. Wit 2004) opined that professionals in the international departments of multinational companies, should then be permitted to be attentive to particular local conditions. Arguing an instance for localisation, (Chen Jun 2008), mentioned that companies localise their businesses due to various distinctions and political road blocks between different local markets, and that the price of neglecting or disregarding 'local uniqueness' in preference to that of global setting is too high. The choice of increased involvement in the local and international market has its benefits and drawbacks. The features of global are cost-based, maximizing economies of scale and minimizing repetition of procedures and materials, in so doing realizing efficiency. The benefits of localization are on the other side are revenue-based, promoting deviation to attain all customer positions and customer satisfaction (Buckley & Ghauri, 2004).
Porter, (1989) a proponent of global convergence point of view, argued from a global integration perspective in his article 'The competitive benefit of countries' that the world is becoming internationally integrated but that the competitive benefit of a company is dependent on a blend of both its countrywide circumstance and its own strategy of harnessing it. He further opined that it behoves on the company to seize the ability of competitive benefit existing in its country.
However, a globalisation point of view that is now more globally accepted by both the educational world and decision makers of multinational companies is that of Douglas and Wind flow would you not buy into the main assumptions of the global standardization beliefs. Firstly, they opine that there is absence of evidence about uniformity in global customer preference, as you can find diverse customer behavior and flavor even within the same country. Secondly, Differentiation as against good deal strategy is more profitable and can reduce over competition in the industry. Finally, economies of size of product is not really the only credible reason behind global convergence, research and development, marketing and after sales service sometimes are even more important than creation. There is a consensus that multinational companies should not merely give attention to one part of the divide, but make an effort to adjust the balance between localization and globalization. Multinational companies should offer with the situation differently regarding to different tactical contexts. (Douglas and Breeze n. d. ). Subsequently, from the analysis, it is clear that the analysis of the issue of localization and globalization is approachable from different angles. The magnitude of globalization differs from country to country and there is no one best organizational respond to globalization, every business should balance those factors dynamically and discover the strategy suitable to their company.
For a firm to take part in local and global environment, some underlying internally and externally issues have to be analysed, rationalised and handled according the problem on surface. Meyer highlighted some paradoxes that exist and are instrumental to last proper decisions by multinational companies.
Multinational companies are facing the paradox of globalization and localization in breaking into each emerging market. Generally, there are various ways on how multinational companies organise its global activities: The first according to (Chen Jun 2008) is global convergence point of view, which lays focus on taking advantage of their corporate resources and attaining global connections, while the other is international diversity point of view, which lays targets adapting to local challenges. Regarding to (Tallman and Yipp 2001), the three basic proper issues involved with multinational companies functioning globally are geographic spread, localisation and global integration. The question here is based on whether companies should think about the global market in its entirety or recognise the neighborhood market composition as its main blast of business.
The dichotomy (globalisation and localisation) pushes the companies into understanding their purpose running a business. Different businesses have different visions and quest as observed in their various assertions. Matching to (Meyer and B. D. Wit 2004), a few of their motives is to maximise revenue for the owners (a shareholder value way), or to meet up with the requirements of the general populace (a stakeholders prices procedure). In deciding on increased participation in the market, Globacom will have to make a decision which is more germane to its core values.
From the debate, companies that opt to globalise, or use global strategies will involve some beneficial repercussions such as getting new customers because of their products and services, other advantages are:
According to (Yip, Mintzberg and Quinn 1991), companies can keep your charges down by pooling development or other activities for multiple countries. They further opined that other methods such as exploiting decreases factor cost i. e. moving making activities to countries with low costs, moving development between countries to consider advantage of minimum costs at a specific time, also reduces costs.
Excess capacity and economic dangers can be absorbed through foreign operations (David 2009)
There will be increased competitive gain as companies will act as checks and balances on each other.
With jv programs, companies will learn the culture, technology, and business practises of the variety nation.
Global savings distributed more effectively as countries higher productive convenience of capital e. g. UK, can borrow from countries with unwanted fund.
(David 2009), also mentioned that economies of range can be achieved as 'large range creation and better efficiency allow higher sales amount and cheap offerings. '
Other factors such as economies of scale in development, purchasing, faster deposition of learning from operating worldwide, decrease in transportation and syndication cost, lower cost in product adaptation, and the emergence of a worldwide market segments have encouraged your competition on a global scale.
However, the decision to globalise has some inherent downsides. Obstacles such as governmental guidelines and institutional restrictions, tariff barriers and obligations, transportation cost, variances in customer inclination and demand, are some of the disadvantages enumerated by (Douglas and Wind n. d. ). Seizure of overseas businesses by nationalists as mentioned by (David 2009), is one of the down sides. The financial changes created by globalisation have brought about business displacements and job deficits in many countries, improved the commodity composition of trade and resulted in distortions in local utilization patterns, thereby bringing about relative price changes that local consumers find difficult to modify. Globalisation in addition has led to a situation where financial disturbances emanating in one country quickly spreads like wildfire to other countries with destabilizing effects. (Obadan 2004).
In order to attain an objective, goal or goal, every business will need to have a strategy. There is absolutely no common or solitary definition of strategy as it pertains to and can be applied to many contrasting domains such as marketing, economics, investment, military services, gaming, and as well as commercial global environment. Strategy can however be generalised to signify a plan of action, thought out in advance, aimed at achieving a specific aim, with particular mention of gaining competitive advantages for an business over other businesses in the same industry. (Barney and Hesterly 2010), defines strategy as a theory by a company on how to gain competitive advantages.
(Mintzberg 1988), suggested five meanings of strategy
Plan - A mindful thought out course of action, a guide made in advance before implementation.
Ploy - made with the intentions of outsmarting other competition.
Pattern i. e. a regular and accurate behaviour resulting from the blueprint. This can be realised, unrealised and emergent strategies.
As a position i. e. the way, a firm positions itself on the market in terms of finding particular product brands at particular markets.
Perspective i. e. the fundamental way to do things available and way the managers of the business perceive the entire world from the company's viewpoint.
(Lewis 1999), added a sixth definition, by defining strategy as 'a process of sensing, analysing, choosing and acting. ' Matching to (Johnson and Scholes 2007), "'Strategy is the route and scope of your organisation over the long-term: which achieves gain for the company through its construction of resources in just a challenging environment, to meet the needs of marketplaces and to fulfil stakeholder expectations". In addition they posited that there are different strategies used at different degrees of a small business.
Corporate Strategy - is concerned with the generally purpose and opportunity of the business enterprise to meet consumers' prospects. Investors' interactions available environment, comes with an effect over and is helpful information to strategic decision-making within the business. Corporate Strategy is also area of the mission statement of most firms.
Business Device Strategy - This deals more with what sort of business competitively efficiently a business is at a specific market. It really is about the strategic decisions of preference of products, customer satisfaction, competitive and comparative benefits over competitors, development or creation of novel ideas and opportunities.
Operational Strategy - This handles the issue of how each the part parts of the business is organised in other to provide the organization and business-unit level tactical direction required for progress. Operational strategy therefore targets content of resources, functions, and folks.
Companies can use any or many of these strategies but also have to be aware that there are a few globalisation drivers impacting on the potential use of global strategy. Lewis et al (1999) opined that managers shoul d have the ability to discover when these drivers provide opportunities to use these strategies. In describing thes drivers, Lewis et al (1999) said that Market drivers, are those characterised by homogenous customer needs, global consumers, global channels of syndication and transferability. Cost drivers on the other hands are the drivers that are reliant on the economies of the business and are characterised by economies of scale and scope, learning and experience, sourcing efficiency, favourable logistics and product development costs. Governmental drivers are those reliant on government regulations and an impact over the use of all other global strategies. It consists of favourable trade guidelines, compatible technical requirements and common marketing polices. Finally, they called competitive drivers as those comprising of the interdependency of countries and globalised competitors. Although these drivers are separately powerful, they aren't on their own formulae for sure success. A blend of several can be feasible in an current economic climate. Lewis et al (1999)
Creating a worldwide strategy involves an initial step of environmental examination of political, financial, social, and technological fads that are relevant to working on a global level. (Kotler 1998), claims that this research is useful strategic tool for learning the direction a business is certainly going with reference to its development or deterioration, business position, potentials.
Political factor: These refer to government policies like the degree of intervention throughout the market. Politics decisions can impact many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy. African governments are taking steps in opening their economies to international trade. Most countries have began trade and exchange liberalization process, eliminating multiple exchange rates and nontariff obstacles, and reducing the amount of tariff protection.
Economic factors: Included in these are interest rates, taxation changes, monetary expansion, inflation and exchange rates. , the restructuring of several African economies is getting momentum. Through the entire continent, government treatment in economic activity is on the drop. Administrative price limitations and agricultural marketing has been broadly eased up.
Social factors: Changes in cultural trends make a difference the demand for a firm's products or services and the availableness and passion of the work force.
Technological factors: new systems create new products and new procedures. There may be cost decrease, improvement in quality and creativity through technology. These trends can have a positive effect on consumers as well as organizations concerned.
Environmental factors: this includes weather and climate change. Fluctuations in temp can have a negative on many industries like the telecoms industry. With all the development of global warming, there may be greater environmental awareness and this is now a significant concern for firms to ponder.
Legal factors: the legal setting in which firms operates decides the progress of the business. With ever-stringent regulations in the telecoms industry on provision of services, Globacom must improve on its service provision.
The managers of Globacom need to think about the factors that are likely to change and in what course and which factors will have the greatest influence on them.
According to Michael Porter (1985), for a firm to get for a favourable competitive positioning in any industry, it has to find out how attractive the industry is. To be able to analyse any industry's attractiveness, either domestically or internationally, there are five competitive forces: the threat of new entrants, the bargaining power of suppliers, the bargaining electricity of consumer, the risk of substitutes and the power of rivalry opponents. The five makes is the focal determinant of the industry profitability, as they have tremendous impact on price, costs and income of the product. (De wit & Meyer, 2004: p. 259)
Porter's five makes model
The risk of new entrants: In the telecommunication industry, the threat of new entrant is relatively low as the strict barriers high first cost of start-up and fixed cost from the business is extremely high. This works to the advantage of Globacom among others in the industry.
Bargaining electricity of suppliers: There is a myriad of telecommunication companies worldwide but there limited amount of telecommunication equipment suppliers in the industry. Here, Globacom is disadvantaged as there are limited alternatives.
Bargaining vitality of consumers: bargaining power is high in this industry because of occurrence of many competitors. In Nigeria alone there are about ten telecommunication companies preventing for the same customers. Globacom is only at this time differentiated in cost and customer commitment.
Threat of substitutes: in the telecoms industry, risk of substitution is high as all the telecoms companies sell almost the same product and or services. Globacom should determine the magnitude of customer switchover and try make client satisfaction important. However, other companies in the industry should go into price war, which reduces the profit percentage of the companies involved.
Degree of rivalry: the telecoms industry is an extremely competitive as each company is wanting to outdo the other in other to increase their subscriber base. Here as mentioned before, Globacom should have customer satisfaction as its watchword.
Managers of Globacom should as a matter duty identify the main element aspect or components of each competitive drive that influences the firm, determine how strong and essential each element is ideal for the firm and decide if the blended strong point of the aspect is worth the firm entering or residing in the country.
Globacom has used this model as a technique. Since progress is of key importance to the company, it shows this by moving out different services such as Glo mobile, Glo gateway, Glo 1, and Glo broad access, across West African sub-region (Globacom Small n. d. ). Globacom is using the effectiveness of large customer bottom and name to keep itself in the forefront of the telecoms industry.
Multinational companies are able to achieve competitive gain, mainly through differentiating their products and services through low costs. Companies can broaden their market range or they can concentrate on a refined aim for in the market. Relating to (Porter, 1989), strategies allow companies to gain competiive advantage via three bases : cost control, differentiation and emphasis.
It is critical for companies to work with the cost leadership strategy if they try to become low priced makers in their industry. Globacom costing strategy is among among the best in the industry in the sub-region. The other telecoms companies try hard to meet the price standard establish by Globacom and this helps it be easier for them to locate abroad. N Nigeria, they have the cheapest price tariff coupled with other added services. Globacom is also one of most effective growing companies in the industry it showed huge growth through deal of 600, 000 sim credit cards in its' first ten days and nights of procedure in republic of Benin (Cellular-News 2008), and planned to fully capture 30% of the 11 million readers within a short period of its' commencing business in Ghana (Oruame 2008). Differentiation as used by many organizations cannot in the telecoms industry as virtually all the product and services are similar in characteristics. However, the per-second billing way for telephone calls, has been utilized by Globacom to differentiate its' product and services. Globacom on the other hands is not seeking the focus strategy as it is directing its' work in a particular portion of the industry.
Companies chasing the strategic generic model, have to make a choice between cost authority and differentiation and prevent the stuck in the middle syndrome, which results in poor financial performance (Porter, 1980). Globacom does not pursue either low cost strategies or differentiation. It merges both techniques as its' strategy.
(Lewis 1999), in citing Ansoff (1965), opined that the tool can be used in detecting options available to firms attempting to broaden their competitive advantage, as it helps these businesses determines the strategy they'll utilization in their product and market growth. A few of these options include:
Ansoff's expansion matrix
Market Penetration (Existing product) (New product)
Market penetration: This focuses on increasing market talk about of existing products into existing marketplaces. The objectives of this option are to maintain or increase the market stake of current products through incorporating competitive charges strategies, advertising, and sales advertising, ensure supremacy of expansion markets, increase use by existing customers
Market development: That is a growth strategy where companies want to sell its existing products into new markets through new physical areas, new product sizes or plans, or new circulation channels.
Product development: this is actually the growth strategy where a business creates new products for augmenting existing products in existing market segments.
Diversification: This is actually the development strategy where businesses present services into new markets. However, for a small business to put into action a diversification strategy, therefore, it must have a knowledgeable notion of its benefits and associated risk.
Globacom as an organization uses this strategy extensively as seen in the number of countries it had moved into within a short span of time, the number of products it had launched into these marketplaces and the rate of diversification. However, it requires to keep an eye on the development in customers, demands in other to be attentive to them.
Most products go through for basic stages i. e. launch, development, maturity and decrease. From a tactical perspective, knowledge of the product's life cycle helps a firm to control the introduction of a new product. (Barney and Hesterly 2010), speaking from an international perspective, opines that that the merchandise life cycle of a product or service can be at different stages of its life circuit in several countries. Subsequently, the resources produced by a firm during a particular stage in the life span cycle of the product in the home market to the same level of another product in the international market (Barney and Hesterly 2010). The PLC of a product consists of intro, expansion and maturity, and companies use this to analyse and assess how they consider their product will perform through its PLC and the marketing strategies and marketing blend applied at each stage. (Lewis 1999), warned that organizations that not go after strategies appropriate to the life cycle stage of the product, might lose competitive benefits. Globacom is progressively expanding its range of products to sustain its competitiveness on the market and therefore important that they spend make sure their customers demand are satisfied.
Every tactical model is an tool used for gathering proper information from the international point of view and an activity for perceiving a variety of futures for any organisation. Undeniably, globalization for the telecommunication industry is a continual craze. The international low priced of both materials and labour, the low price of the resources, and the most advanced technological expertise are all required for increasing competitiveness in the industry. Furthermore, for these firms to have the ability to control the intricacies involved in globalization entails including new tools, constructions and proper models added to the methods already in use as the knowledge and program of tactical models is a prerequisite for the success of any business in its industry. Globacom should adhere strictly to the regulations of the relevant strategies and integrate them into the corporate business model to ensure and maintain its leadership role in the telecoms industry. Managers have to choose how to change their products, make changes in their marketing regulations to suit the problem on surface, formulate human resource practices and business ways of deal with nationwide variations in culture, vocabulary, business methods, and government restrictions. In addition, professionals have to decide how best to tackle the danger posed by productive foreign competitors stepping into their home market and how to effectively and effectively enter a international market and generate a positive impact.