In the fast business growing world, there are many companies that are competing for the customers both nationally and internationally. Competition is one of the key challenges facing businesses that intend to make their operations global. As a result of this stiff competition, there are a number of pressures that firms face as a result of expanding their businesses in the global market. Some of these pressures include local responsiveness and cost reduction pressures. Therefore, it is noteworthy that businesses intending to prosper in their activities to strategize on how to handle the pressures effectively.
As a result of globalization of businesses, there are a number of issues that businesses face in the course of their performances. One of the competitive pressures is that related to the reduction of costs in the company. This implies that businesses have a challenge of maximizing their profits because of the high costs of operating businesses internationally. Secondly, companies seeking to expand their operations worldwide are also faces with the problem of achieving local responsiveness. That is pressures concerned with the varied consumers’ tastes and preferences, infrastructural issues, host government demands, distribution channels, and different traditions.
In order to overcome these pressures, it is appropriate for companies to come up with strategies. Some of these strategies are international, transnational, global standardization, and localization strategies. International strategy is appropriate when the company is facing weak pressures of both cost reduction and local responsiveness. Localization strategy is suitable for a firm that faces strong local responsiveness pressures, and weak cost reduction pressures. Transnational strategy is appropriate for a firm that experiences strong cost reduction, and local responsiveness pressures. Additionally, global standardization strategy is fit for a company that faces strong cost reduction and weak local responsiveness competitive pressures.
In the case of the Coca Cola Company, Robert Goizueta changed from the localization strategy to global standardization strategy because of he wanted to reduce costs pressures in order to maximize profits. Furthermore, localization strategy is expensive and cannot allow the company to enjoy the benefits of a standardized production. Global standardization strategy is beneficial because focuses on cost effectiveness of the company. As a result, the company will realize higher profits in their operations because of the minimized costs.
Because Coca Cola Company was failing to achieve its financial objectives, it immensely declined in its performance. Therefore, Goizueta’s global standardization strategy was replaced by Daft’s localization strategy. Daft’s objective was to ensure that the company meets the local needs of the people, and be managed by the local managers. However, Daft’s plan failed because it did not have varied prices, product development, and marketing message, according to the market conditions.
Under the leadership of Neville Isdell, Coca Cola Company changed its strategy from the ones that the initial leadership had applied to a transnational one. The new leader applied a plan that could handle both product development and local marketing. This was an effective strategy in the company because it focused on varying product offering, pricing, and market message according to the conditions of the market. The plan is different from Goizueta’s and Daft’s because in that it integrates both global standardization, and localization strategies. In fact, this plan is in the midpoint of the two initial plans of the company. Moreover, it is beneficial because it allows the leveraging excellent ideas worldwide. Since the adoption of the strategy, the company has realized maximum profits, and maintained a wide, global market for its products. However, some of the possible costs of the plan include contrary demands put in the company.
In the case of Coca Cola Company, there has been an explicit strategic evolution. This implies that the company has been shifting from one strategy to another in an attempt to maximize profits and reduce its operation costs. On contrast, the company has experienced a number of threats and opportunities in the process of evolution. Some of these threats include high costs of production, stiff competition, loss of the market and decreased production.
In conclusion, some of the competitive pressures that companies face are local responsiveness and cost reduction pressures. Nonetheless, there are strategies such as localization, transnational, global standardization, and international strategies, which are useful in handling these pressures. Therefore, companies intending to maximize their profits and lower operation costs ought to develop appropriate strategies to use in order to achieve their objectives.