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Issues With Business Expansion

By Edited Nov 13, 2013 0 0

As we all know, language is the most essential tool which we use to communicate with our customers, suppliers, employees, retailers and etc. When expanding overseas, the biggest barrier is perhaps the language barrier, which is to translate one language to another. Coming upon the translation job, companies often make mistake when trying to replicate their success in domestic market. They overlook the pitfall lay under the different meaning of each language.

For instance, let's consider Pepsi's failure in Taiwan. Pepsi's advertising slogan sounds like this, "Come alive with the Pepsi's generation". But when it is being translated into Chinese, the slogan gives a different meaning of "Pepsi will bring your ancestors back from dead" to the Taiwanese. The company makes such mistake when they are too keen in branding themselves with a single identity, using the same marketing campaign and brand message for domestic and foreign market. The problem is not just about the translation, the same word will have different meaning in different language and culture. Chinese pay great respect to their ancestors and Pepsi's slogan is being viewed as an offended act. Pepsi thus lost great volume of customers.

As a solution in this case, we can refer to the bridging stage of MBI. We can make use of the three skills, which is preparing, decentering, and recentering, in bridging for effective communicating in cross-cultural setting. Language is one of the context which we should do adequate research before entering a foreign market, especially when the foreign language is not our native tongue or spoken language.

Business is just like a war. Regardless of the kind of businesses, competition always occurs. Only if we are strong enough to fight with the competitors we can be "the king". If we are not, we will be replaced by the rivals. Hence we must never look down on our competitors; no matter how strong or weak they are. In fact, we must always be aware of them and keep an outstanding performance in order to get a foothold. Otherwise, we will be kicked out of the market.

For example, Starbucks is forced to close down many of their outlets in Australia simply because of underestimating the competitors. When Starbuck first entered the Australia market through franchising and brought in coffee with the café cultural to the masses, they found out that there is already several similar cafés operating in the local market. The company underestimated local people preferences for local coffee and the comfortable drinking environment created by the opponents. In the end, they have no choice but to move out of the Australia market.

To cure this problem and overwhelm the competitor, the company can consider the business model to create value and earn profit in competitive environment. Business model is how a firm delivers its value proposition to customers and how they make money. Developing a business model can help Starbucks differentiate themselves from the local competitors and create uniqueness. Due to changing environment, Starbucks need to continue to evolve their business models. Even being in the same industry, with business model, Starbucks can use vastly different business models to deliver their products and services to beat down the competitors.

Standardization is very common among the MNCs. Companies such as McDonald's, Starbucks and etc are all practicing standardization. They are constructing the outlets with same design, selling the same products worldwide, and practicing the same concepts, to show cohesiveness for their brand name. Standardization is good but overemphasizing on it might bring failure. While attempting on globalization, we must not forget about localization.

KFC has done this mistake when entering the India market. The company is very insist in global standard and thus is not willing to price their goods too low compared with their outlets in other countries. Therefore, they are targeting on those high-income customers in India. Nevertheless, this target market segmentation is prove to be failed as two pieces of KFC chicken is about the same price of a full tandoori chicken offered by local Indian restaurants. Such comparison make KFC failed even focusing on those with higher purchasing power. Due to this major reason and some other minor factors, KFC's status in India is totally ruined. They are forced to move out of India for three years and reentered after that. The investors have lost their confident and trust towards KFC and hence affected the company's future investment.

Balancing between standardization and localization is perhaps the best way of doing international business. When KFC faced pressure of global integration and local responsiveness, they should consider the characteristics of the fast food industry to select the international strategies such as international strategy, global strategy, transnational strategy, and multi-domestic strategy. The company will have to make decision on how much they should adapt and how much original identity they should remain based on the cost pressure and/or global integration pressure, and pressure for local responsiveness.

The Corporate Social Responsibility (CSR) is a concept which company integrates social and environmental concerns in their business operation and the interaction with their stakeholders on a voluntary basis. If we want to invest in a particular country, we have to fulfill the CSR in order to increase customers' preference towards our brand and thus directly boost our sales.

According to the research, Coca-Cola's business practice in India has totally ignored the CSR. Coca-Cola has created destructive problems such as water shortages, pollution of the groundwater and soil, distributing toxic waste as fertilizer and etc. Consequently, the firm has lost millions of dollars in sales and legal fees. As the costs of neglecting the CSR, the firm is forced to do some remediation on this problem such as permanently shutting down the bottling facilities, cleaning up the contaminated water and soil, recharging the depleted groundwater, compensating the affected community members and etc. All these problems not only cost the firm money losses, reputation damages, and more seriously, future development barriers in India.

To ensure that the CSR is being fulfilled, there are few principles should be followed by Coca-Cola including consumer protection, environmental protection, political payments and involvement, basic human rights and fundamental freedoms, and community responsibility. The firm should safeguard the health and safety of their consumers, protect the environment from pollution, avoid any illegal involvement in internal politics, respect the rights of people to life, liberty, security of person, and privacy, and lastly, work with the host country government and communities to improve the quality of life.



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