Individual Term Paper

Course Name: International Business

Course Code: ITB301
Section:05

Prepared for
Mr. Saiful Islam (SILM)
Adjunct Faculty
East West University

Prepared by
Tanveer Alam Farabi
ID: 2022-3-10-203

Date of Submission:26-05-2024
 Table of Content

Case 1: Dell’s Globalization of Business ...................................................................................2

Case 2: Wal-Mart’s Foreign Expansion ...................................................................................5
Case 3: India’s Transformation ................................................................................................8
Case 4: Why Did Global Food Prices Rise? ........................................................................................ 11
Case 5: Coca-Cola ............................................................................................................................... 13
 Case 1: Dell’s Globalization of Business

(a) How Dell configures the concept of Globalization of Production for itself?

Answer: Dell uses a technique known as "build-to-order" to customize the idea of globalization
in production for itself. This technique states that Dell uses innovation to its advantage while
entering global markets. Several essential components of Dell's manufacturing and delivery
procedure include:

1. Just-in-Time Inventories: By offering just-in-time inventory services, Dell lowers its

inventory expenditure. They gather every component of a product to help at the point of
sale.
2. Online-Based Ordering System: Dell operates entirely online, allowing clients to
purchase the items they want and make payments online.
3. International Suppliers: Dell collaborates with manufacturers all over the world to
produce items at lower costs while maintaining a better standard of quality.

Through the effective combination of various technologies, Dell is able to save expenses and
establish global relationships with clients. Due to its global sourcing strategy, Dell has the ability
to obtain products and services at a lower cost and make better use of labor, capital, and other
factors of production.

(b) What are the technologies that help Dell to capture the Globalization of Production?

Answer: Dell employs a creative marketing approach that incorporates a number of technologies,
such as:

1. Microprocessors and Telecommunications: Dell optimizes manufacturing time by

utilizing modern microprocessors. Dell is able to successfully manage its worldwide
logistics and customer support procedures considering its advanced telecommunications
infrastructure, which enables them to reach various nations.
2. Air Transportation: Dell delivers a product from its manufacturing plant to its retail
location by Aircraft. Their ability to provide goods on time is an outcome of their ability
to decrease time.
 3. Containerization: Dell utilizes this technology to increase productivity and lower
shipping costs. Dell may transport a lot of products at once through containerization, which
boosts their sales overseas and makes it easier for them to reach their consumers.
4. The Internet and World Wide Web: Consumers place product orders with Dell online,
utilizing an online payment method as well. Hence, from any location on the globe, a
consumer can order any computer, laptop, or other electronic equipment from Dell.

Dell assures the high standards of their products while cutting expenditures at the same time
through the use of these modern technologies.

(c) How could you match the concept of Globalization of Market for Dell?

Answer: The combination of traditionally diverse and independent national marketplaces into a
single, large global marketplace is known as "globalization of markets." By using its online sales
platform to offer its products to clients worldwide, Dell aligns with the idea of the globalization of
markets. Dell applies a variety of technologies, including telecommunications and the internet, to
manufacture its goods in many regions and use globalization to its advantage. Customers may use
it to browse Dell's product offerings and make purchases. Commercial jet aircraft and
containerization enhance Dell's efficiency and cost-effective global product shipping. Despite
where a customer lives, he or she will always receive what he or she ordered on schedule because
of its operational strategy. Without having physical shops in all countries, Dell has successfully
promoted its products to an extensive consumer base by building an effective digital presence
while making sure that its website is available from anywhere in the world. They may reduce costs
and enhance the standard of their final product by using this method. Given that it operates
physically in every market, Dell may be considered a global enterprise.

In short, Dell is integrating its business strategy with the idea of market globalization by
manufacturing its products across many countries and offering them for sale in diverse markets.
(d) What are the different benefits of Dell for using different technologies in its production
and Market?

Answer: Dell uses a lot of technologies in its marketing and production processes as well. These
advantages consist of:

1. Reduction of Cost: Dell made a significant investment in the “build-to-order” approach

to lower the costs of holding inventory. Additionally, Dell can also outsource its customer
care to a cheaper geography, like India.
2. Real-Time Order Processing: Customers receive immediate and accurate confirmations
of orders placed.
3. Designed for Automatic Manufacturing: Automated manufacturing processes can
reduce labor costs and increase efficiency with microprocessors.
4. Dynamic Manufacture: Due to recent manufacturing technology, Dell can dynamically
develop production based on real-time order data, changing its flexibility and
responsiveness too.
5. Enhanced Productivity: Dell can send orders to their suppliers in real time via the
internet, where they have a lot of time to adjust their manufacturing procedure. This will
significantly enhance productivity. The delivery times get faster as well, and the response
to customer demand is improved.
6. Global Service: Dell can reach customers anywhere in the world through commercial
airlines, telecommunications, and the internet. For this reason, Dell does online product
selection and order-taking and uses cheaper containerized shipping to get products to
consumers.

Now that it’s all said and done, Dell uses technology to be a small but powerful international
company that sells custom-made products to mass markets at competitive prices.
 Case 2: Wal-Mart’s Foreign Expansion

1. Do you think Wal-Mart could translate its merchandising strategy wholesale to another
country and succeed? If not, why not?

Answer: I don't believe Wal-Mart could successfully transfer its merchandising approach to
another nation. The causes are as follows:
1. Cultural Disparities: The cultures of various nations fluctuate, which could greatly vary
consumer preferences, purchasing patterns, and cultural conventions. An effective
method in one nation might not be successful in another. For example, Wal-Mart must
recognize the fact that fresh food is preferred in Mexico.
2. Local rivalry: Local merchants are more familiar with the surrounding markets than Wal-
Mart. Hence, they could face strong rivalry that more effectively satisfies regional tastes.
Wal-Mart found it difficult to compete with regional stores that were more closely suited
to customer tastes in Germany and South Korea.
3. Expectations of Quality: In certain nations, customers value quality more highly than
affordability. These customers may not be able to afford Wal-Mart's preference for low
prices, as illustrated by Germany and South Korea, where higher-quality goods are
chosen.
4. Economic Situation and Regulatory Environment: The government of every nation has
its own set of laws and regulations, and these factors can have a big influence on business
operations. Therefore, Wal-Mart must prioritize these elements in order to succeed.
5. Core Brand Perception: Various locations have different views on the Wal-Mart brand.
Although it might be seen favorably in some areas, in others it can be linked to bad
aspects like low-quality goods or unethical labor approaches.
2. Why do you think Wal-Mart was successful in Mexico?

Answer: Wal-Mart has been successful in Mexico for a number of reasons, such as:

1. Variability: By hiring local managers with a better understanding of Mexican

consumers' preferences and habits, Wal-Mart has been able to create merchandising
strategies that are more suitable for the area.
2. Customization: One way the company responded to local tastes was by offering fresh
veggies along with local staples like pan dulce, meat, and tortillas.
3. Effective Operations: Wal-Mart's wide distribution networks engage local customers,
which allowed it to reduce costs by cutting product prices. Consequently, because
Mexico has a price-sensitive market, this strategy has worked there.
4. The Absence of Strong Local Rivals: Wal-Mart can enter and grow its market share in
Mexico since it has little competition in the country.

To sum up, Wal-Mart can effectively enter and operate in Mexico due to its significant competitive
advantage.
3. Why do you think Wal-Mart failed in South Korea and Germany? What are the
differences between these countries and Mexico?

Answer:

 Causes of Germany's and South Korea's failures:

1. Powerful Local Rivals: Local retail chains with a solid customer base and a
tradition of satisfying local preferences were present in both Germany and South
Korea. In terms of pricing and product selection, these competitors could
successfully fight with Wal-Mart.
2. Customer Preferences: German and South Korean customers favor higher-quality
goods over those with lower pricing. The low-price strategy utilized by Wal-Mart
did not correspond well with the mindset of the local consumers, who placed a
higher importance on good quality and brand reputation.
3. Cultural Variations: South Korea and Germany have quite distinct buying habits.
Supermarkets, which are already well-established in Germany and South Korea,
are one of the innovative ideas that Wal-Mart might introduce to Mexico. Hence,
Wal Mart has found it difficult to fit into such nations' shopping cultures.
4. Economic and Regulatory Obstacles: Wal-Mart faces additional difficulties due
to the complicated regulatory frameworks in Germany and South Korea. Wal Mart's
attempts to build an efficient operation have been hampered by both rules and local
market structures.

 Differences between Mexico and Germany/South Korea:

1. less Successful Local Rivals: Wal-Mart clearly benefited from Mexico's lack of
strong domestic merchants.
2. Price Sensitivity: Wal-Mart's low pricing matches Mexican consumers' preference
for lower prices over quality. However, the situations in Germany and South Korea
were very different.
3. Flexibility: By providing more fresh products, recruiting local managers, and
establishing smaller stores, Wal-Mart was able to modify its strategy in Mexico and
better meet local tastes.
 Case 3: India’s Transformation

1. What kind of economic system did India operate under during 1947 to 1990? What kind
of system is it moving toward today? Define both economic systems.

Answer: From 1947 to 1990, India followed a mixed economy. The economy that has some
percentage ownership of private but significant ownership of government is known as a mixed
economy. This system involves:

 State-owned enterprises: The government owned and controlled a significant portion of

businesses.
 Centralized planning: The government planned and directed economic activity through
five-year plans.
 Subsidies: The government provided financial support to certain industries and consumers.
 Limited Private Sector: Government permission and regulations restricted private
businesses.

Post-1990, India started to follow a market economy. When all the business is done by private
companies and production is decided by the market intervention of supply and demand, this is
called the market economy. According to this system,

 Privatization: The state-owned system had changed to private organizations.

 Less Power in the Regulatory Framework: Governments have reduced controls over
firms and started to give licenses to businesses.
 Foreign Direct Investment (FDI): After 1990, the Indian government encouraged
investment from foreign companies. So, the government has relaxed the rules and
regulations.
 Freedom: Reducing import restrictions and taxes to open up the market to international
trade.
 Tax Reforms: Lowering corporate and income taxes to establish new investment.
2. How would privatization, deregulation, and the removal of barriers to foreign direct
investment affect the efficiency of business, new business formation, and the rate of
economic growth in India during the post-1990 time period?

Answer: India's economic formations and their impact

 Privatization:

 Because of the privatization Since 1990, sales have significantly expanded, and
existing Indian enterprises have made greater investments.
 Privatization could be beneficial because it gives a new business complete control
over operations. India has seen the establishment of many new organizations since
1990 because a company owns all its assets.
 India’s economy has expanded substantially quicker after privatization. The
economy rapidly grew from $150 million to $36.7 billion.

 Deregulation:

 India's existing businesses now face fewer operating barriers and more operational
freedom because to the easing of bureaucratic rules.
 Less regulation from the Indian government is encouraging new businesses.
 India’s economy has grown significantly because of deregulation.

 Foreign Direct Investment (FDI):

 Established international enterprises are attracted to the Indian market because of

its higher facilities and expansion possibilities.
 India tends to attract more new international investment than other locations since
it has greater facilities.
 Considering the level of FDI, India's economy has expanded dramatically.
3. Contrast the before 90’s and after 90’s features of economic environment of India.

Answer:
Before the 1990s Situation (1947–1990):
 Government Control: Before 1990, the Indian government had large control over
different businesses, which meant a higher percentage of ownership was owned by the
government.
 Limited Private Sector: As many firms are under the state government, there are minimal
private firms in India.
 Centralized Planning: All the planning is done centrally, which means the government
takes most of the decisions.
 High Regulation: There were tight guidelines and regulations imposed by the government
before 1990.
 Limited Foreign Investment: Foreign companies were not very attracted to investing in
India.
 Slow Economic Growth: The economic growth of India was not that visible before 1990.

After the 1990s Situation:

 More Market Freedom: Before 1990, the market became free for Indian companies,
which resulted in more economic growth.
 Expanding the private sector: As government intervention was low, more private
companies invested. So the privatization has seen it expand in the Indian market.
 More Decentralized Decisions: The decisions were taken decentralized, which enhances
the efficiency level.
 Increased FDI: More foreign investors have invested, which helps India receive more
FDI.
 Faster Economic Growth: The economy of India has seen a boom since the 1990s as
government rules and regulations have relaxed and more investment has been received.
 Case 4: Why Did Global Food Prices Rise?

(a) Who benefits from government policies to (a) promote production of ethanol and (b) place
tariff barriers on imports of sugar cane? Who suffers as a result of these policies?

Answer:

Benefits of government:

(a) Policies to promote the production of ethanol:

Government policies are typically created to support local producers. Here, the governments of the
US and Europe tried to assist the local farmers in cultivating corn and soy beans. In response, the
government aids local farmers. The main objective of the benefit, which is provided by the
governments of the US and Europe, is to reduce global warming. For every liter of ethanol, the EU
provides a $1 subsidy, but the US government subsidizes ethanol at a rate of $0.29 to $0.36. This
will give the local farmers encouragement, and they may grow more corn and soy beans.

(b) Place tariff barriers on imports of sugar cane:

The tariffs placed by the US and EU will primarily benefit local sugarcane producers. The EU
imposed a 50 percent duty on sugarcane from Brazil, while the US charged a 25 percent tariff. As
a result, there is less rivalry, which gives region producers an advantage in supplying sugarcane
demand. So, the local farmers have increased their production and earned a profit.

Suffers as a result of these policies:

International businesses and consumers are the actual sufferers because of these rules. These
government policies push foreign enterprises operating in the US and Europe to either close or pay
higher expenses. Brazil, the world's most efficient producer of sugar cane, faces several challenges,
along with farmers of corn and soy beans. This is going to lead to inefficiencies. Consumers who
had previously been able to afford and get better products were now forced to either pay more or
get cheaper alternatives.
(b) One estimate suggests that if food prices rise by one-third, they will reduce living
standards in rich countries by about 3 percent, but in very poor ones by about 20 percent.
According to the International Food Policy Research Institute, unless policies change, cereal
prices will rise by 10 to 20 percent by 2015, and the expansion of bio-fuel production could
reduce calorie intake by 2 to 8 percent by 2020 in many of the world’s poorest nations. Should
rich countries do anything about this potential problem? If so, what?

Answer: The effects of rising food costs are far more significant in developing nations than in
underdeveloped ones. While a 20 percent increase in grain costs would only result in a 3 percent reduction
in living standards in wealthy countries, it may cause calorie intake in poor nations to drop by 2 to 8 percent.
This is caused by the fact that much more of the money earned by the poor is spent on food. Thus, wealthy
nations should take action regarding the possible issue of growing food prices, as this presents a significant
obstacle for developing nations.

Here are a few potential determiners:

 Decrease the subsidies for the development of biofuels: Wealthy nations such as the US
and European countries encourage local agricultural production in order to help local
farmers. A remarkable 85 million tons of grain were converted to ethanol in 2007. It
indicates that there is a significant subsidy given by these countries. Reducing the subsidy
will allow the poorer countries to boost the production of corn and soy beans, which will
raise their calorie intake.
 Reduced tariffs on biofuels: Tariffs on imports of biofuel generate a lot of problems for
developing nations like Brazil. Their capacity to produce more sugarcane will allow them
to raise the level of consumption if the tariff is decreased.
 Enhance aid for poor nations: Developed nations, such as the US and countries in
Europe, need to provide some assistance to developing nations in order to enable their
populations to consume the recommended number of calories.
Rich nations have a moral duty to support developing nations in adjusting to growing food prices.
They can achieve this by decreasing tariffs on alternative biofuels, decreasing subsidies for the
development of biofuels, and providing aid to poor nations.
 Case 5: Coca-Cola

(a) Why do you think that Roberto Goizueta switched from a strategy that emphasized
localization towards one that emphasized global standardization. What were the benefits of
such a strategy?

Answer: A company adopts an approach to profitability and profit growth in order to enter the
global market. A company attempts to raise prices and cut costs in order to become more profitable.
On the other hand, a company seeks to sell goods in large quantities and frequently enters new
markets to boost profit growth.
Under Goizueta's direction, Coca-Cola launched globalization plans in the 1980s and 1990s. Prior
to it, the corporation emphasized localization, but Goizueta discovered that there is tremendous
potential for expansion beyond the United States. So, he made the decision to go worldwide. He
shifted from the localization approach to the globalization plan due to:
1. Economies of Scale: The concept states that an organization's cost of goods sold will
decrease if it produces a significant amount of commodities. Coca-Cola was able to cut
prices drastically through mass manufacturing, modern operations, and consistent
marketing efforts through globalization.
2. Boost Brand Penetration: Coca-Cola's equity and brand recognition were raised by
establishing and promoting its key advantages around the world. Coca-Cola enhanced its
revenue by using this method, which also led to a rise in sales and brand value. Efficient
utilization of resources: standardization of manufacturing procedures and advertising
initiatives decrease costs per unit while rising profitability.
3. Centralized Management Policy: Coca-Cola's capacity to make decisions was improved
by being able to centrally handle all of the bottling facilities around the entire world. Coke
avoided the difficulties and potential disadvantages of regional promotions by making sure
that its basic identities and messages remained the same everywhere.

Advantages of globalization:
 Greater understanding of the brand
 Simplifying operations
 Consistent brand image
(b) What were the limitations of Goizueta’s strategy that persuaded his successor, Daft, to
shift away from it? What was Daft trying to achieve? Daft’s strategy also did not produce
the desired results. Why do you think this was the case?

Answer: Goizueta has used a centralized strategy to establish the globalization approach for Coca-
Cola. However, it was not without constraints.

 Restrictions on Goizueta's Approach:

1. Cultural Variations: Goizueta neglected regional preferences and opinions, which

caused an imbalance between offerings and customer needs in a number of
locations.
2. Local Competition: Due to their greater familiarity with the local market, local
companies were able to beat globalized goods and marketing techniques. Coca-
Cola thus found it difficult to satisfy consumer demand.
3. Market Saturation: Coke's capacity for creativity and to adjust to fluctuating
market trends and needs was hampered by the universal strategy.

 Daft's Goals:

1. Modification: Daft attempted to satisfy consumer demands by merging Coke with

regional preferences and tastes in goods, promotion, and tactics. This increased
Coca-Cola's competitiveness in a variety of locations.
2. Decentralized Systems: He supported allowing local managers the freedom to
determine which approach best fits their own marketplace circumstances.
3. Enhanced Flexibility: Through decentralization, Coke was able to react to trends
and advancements in the local market quicker.

 Issues that Daft's plan failed to work out include:

1. Inconsistency: Due to decentralization, there were regional variations in standards

of quality and marketing messages, which resulted in a reduction of Coca-Cola in
some locations.
2. Expenditure Rises: The localization of promotions and merchandise offerings led
to higher operating expenses.
3. Worldwide Coordination: It became challenging to share locally effective ideas
throughout the world.
(c) How would you characterize the strategy Coke is now pursuing? What is the enterprise
trying to do? How is this different from the strategies of both Goizueta and Daft? What are
the benefits? What are the potential costs and risk?

Answer: Coca-Cola's current approach, driven by Neville Isdell, can be defined as a mix of
centralization and decentralization. He maintains a balance between Daft's and Goizueta's
methods.

 Current Strategy:

1. Strengthened Regional Managers The whole system is not fully centralized, but
some power has been given to the country managers. For instance, vending
machines in Japan provided Georgia coffee.
2. Versatile Global Advertising: Atlanta offers direction for product development
and marketing while offering improvisation. Local producers can thus plan their
strategies based on the tastes and tendencies of that area.

 Differences between Daft and Goizueta Strategies:

1. Goizueta's Strategy: The main objective of Goizueta was an integrated

globalization strategy. The priority was on core brands, and the objective was to
use economies of scale to maintain level standards around the globe.
2. Daft’s Strategy: Daft highlighted a major turn toward localization by empowering
local managers to produce goods and customize marketing tactics based on regional
preferences. He stopped worldwide ads for the sake of local consumers, and he
decentralized decision-making.

 Benefits:

1. Worldwide Access: Coca-Cola is now able to reach a variety of areas, which

increases revenue and builds global brand loyalty.
2. Innovation: Considering that tastes vary by location, Coca-Cola develops
beverages that suit local tastes. One example of this is the George Coffee vending
machine in Japan.
3. Cost Efficiency: Coca-Cola has traditionally emphasized cost optimization as a
means of finding a balance between centralized and decentralized operations. They
have a large number of plants in different areas, which helps them lower the cost of
factors of production such as land, labor, capital, etc.

 Possible expenses and risks:

1. Managing Local and Worldwide Demands: Strong cooperation and

communication are essential for managing local and global markets.
 2. Maintaining Brand Consistency: It may be challenging for Coca-Cola to achieve
a balance between local variations and the basic brand identity, which can
occasionally mislead consumers about the company.
3. Effective Resource Allocation: Allocating resources between regional areas in an
effective manner can be challenging, resulting in miscommunication, and
misleading various suppliers.

(d) What does the evolution of Coke’s strategy tell you about the convergence of consumer
tastes and preference in today’s global economy?

Answer: The evolution of Coca-Cola's strategy doesn't necessarily tell us about the global
strategies of consumer tastes and preferences. On the contrary, it emphasizes the significance of
accommodating local tastes.

This is the way the case demonstrates it:

 Early localization (before the 1980s): Coke gave local businesses a lot of advantages to
adjust to a particular market.
 Goizueta's one-size-fits-all method (1980s–1990s): This centralized approach created
challenges since it believed in uniform customer preferences across every sector.
 The decentralization of Daft (2000): Daft gave country managers the authority to customize
plans because they recognized the importance of local relevance.
 Isdell's balanced approach (from 2004 to the present): This technique considers market
changes and balances global management with local flexibility.

The success of Coca-Cola came not only from its broad distribution channel but also from its
recognition of the need to satisfy an extensive variety of tastes. Georgia Coffee, a popular non-
carbonated beverage in Japan, is a prime example of this. Thus, Coke's storyline indicates regional
preferences are not eliminated by a global market. Rather, it presents chances for firms to adjust
and provide goods that are attractive to a specific market.