Outsourcing by multinational companies as part of global corporate strategy
Sample Dissertation INTERNATIONAL BUSINESS- OUTSOURCING EXECUTIVE SUMMARY Any student requiring help in assignments or dissertations…
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A brand can be considered as a promise to the customers from the organisation and the totality of the perceptions about a product or service or even the organisation (Ohnemus, 2009). The brand equity or image is developed by the customer based on the past experiences, present associations and future expectations. Hence the brand is always to be evaluated from the customer’s perspective. The brand equity and image of the product and services of the company enhances the awareness and reduce transaction costs of customers and companies alike. A global brand is a standardised product or service; or family of them having a common identity wherever they are marketed. They are developed and promoted with a unified vision of global communications supported by local promotions. The concept, personality and values of the brand are common to all global cultures (Holverson and Revaz, 2006). Even though most of the branding is carried out on the products and services manufactured by companies, the global level of branding indicates quality of the brand as well as the manufacturing organisation (Salinas, 2011). Organisations from both the developing and developed regions of the market have tried to establish their own brands at a global level in order to enhance their market potential.
The relevance of small-scale organisations in the global landscape is increasing day by day. The reduction in the various barriers to several global markets has provided many small companies a wider market reach. Moreover the introduction of e-commerce has enabled organisation to cater to the larger segment of the population in global markets. The e-commerce has enabled organisations also to compete with global companies are different levels. However, one of the significant impediments of small-scale organisations is their unbranded products and services and the customer’s perception of such companies. It is necessary to develop the customer perception of the products and services by developing a unique concept and idea promoted by the product and service of the company. Nevertheless, a global brand necessarily means a unified communication strategy where the identity and the image of the product are the same across regions (Hutchens, 2009). This may not be possible for all kinds of organisations as they may be developing and promoting their products and services based on the specific needs and requirements of customer in different market segments.
The idea of branding has appealed to a lot of organisations in the small and large scale spectrum. Even though many of the small-scale organisations are focusing on domestic markets, the potential to expand into global markets has a created the need for branding their products on a global scale. Jinwoong is a tent manufacturer based in South Korea but according to Parker, (2005) controls 35% of the global markets. The website of the company indicates that from 1999 onwards the company have changed its name to North Pole (a rebranding exercise) with the desire of being recognised as a quality manufacturer of outdoor recreational products such as tents, sleeping bags etc. (http://www.northpoleltd.com/about/, 2012). As most of its products are sold in the international markets mainly in the developed countries, the change of name from Jinwoong to North Pole indicates the desire of the organisation to be recognised on a global basis. Although the company has expanded since then, essentially it was a very small company who expanded to the global markets based on the global branding of the products.
Another example is the Hongjin Crowns which manufactures motorcycle helmets and command 40% of the US market share (Stokes and Wilson, 2006). The company has branded and marketed the motorcycle helmets under the brand name of “HJC” which is popular in the United States but not many know the origins of the brand and its manufacturer as a South Korean small-scale company. The “HJC” brand of motorcycle helmets are very well known in the North American continent and many of them considers it to be a Western manufacturer rather than a South Korean small-scale company.
When considering other examples there are several information technology companies in India which can be considered as small-scale enterprises catering to several information technology related applications and services for global organisations. Even though they are recognised at a global level and appreciated, not many have considered the need for a global branding of the products and services. They are catering to institutional buyers and hence brand is not a key concern where the search and evaluation cost can be reduced. According to Wong and Merrilees, (2005) the importance of brand comes when the company is able to reduce the search and evaluation cost of the customers. However, in the case of specialised equipment’s and other information technology services, the branding does not sufficiently contribute to a reduction in the search and evaluation cost for the customers especially for institutional buyers. However there are many companies which sell directly to the consumer’s across the globe and many of them are family owned or individually owned businesses with decision-making concentrated at the top levels.
One of the problems with a small-scale company is the lack of strategic focus and a long-term vision on the part of its management and necessarily the owners and promoters of the company. Many companies do not focus on a long-term approach and also do not have sufficient managerial skills especially relating to marketing of products and services (Ohnemus, 2009). On the contrary it is the small-scale organisations and budding entrepreneurs that develop innovative products and services that challenges conventional management practices with creativity (Holverson and Revaz, 2006). Several examples can be found for the creativity and proactive management of small-scale organisations which have developed into some of the largest and well-known companies in the world. Almost all the large companies which have the global brand recognition have started out as small-scale companies. The examples are Apple, Google, and Microsoft etc. However it is also to be noted that these technology companies did not initially relied upon developing a brand but the innovative character has contributed to the development and branding followed later based on the identity of innovativeness.
One of the characteristics of small-scale organisations is that they cater to a really small market and many do not find a proper reason to brand the products and services. Some of the entrepreneurs perceive branding as a liability than understanding the opportunity available through them (Salinas, 2011). One of the problems faced by small-scale organisations is the lack of funding and budgeting for a long-term strategy. Many of the small-scale entrepreneurs are concentrating on production and manufacturing as most of the businesses mainly those creative ones have been developed by innovative entrepreneurs with little knowledge of marketing the products but high understanding of innovation, production, distribution etc. However there are other organisations who perceive the advantages of branding at the local level and even the global level. According to () many organisations derive a competitive advantage at the local market through a global branding strategy. Although organisations develop a brand for the global market, a product centred approach often denies the opportunity for developing communication to the potential customers at a global level.
Even though many of researchers has suggested the potential advantages of branding at a global level, there are researchers such as Wong and Merrilees, (2005) who indicates that branding at a global level is a resource consuming process and may not be required for a small-scale organisation as they will be catering to specific markets even at the global level. Many small-scale companies are concentrating on its ports to specific geographic locations especially in the developed countries. There are companies with different range of products for the local market and the global market and has adopted a product centred strategy for catering to the different needs and requirements of the customers. Hence the necessity of branding has been evaluated by the organisation based on the long-term strategy as well as the market they are going to sell.
However even with the nuances of developing a global brand, Hutchens, (2009), has identified several limitations to developing a branding strategy at a global level for small-scale organisations. According to Kluyver, (2010), many small-scale organisations do not have the potential managerial capability to implement branding strategies along with the resources necessary for implementing them even with a strategy. However the adoption of information technology and the potential available through websites have provided the organisations with a cost-effective strategy of developing a global brand without having to employ many resources. The potential advantages of a global brands are many, but Huang and Hsieh, (2011) have also indicated that small-scale organisations may need to develop their product oriented strategy and specifically cater to the needs and requirements of different markets. According to Simeon, (2001) it may not be feasible to develop a product or service with similar value propositions in every market and it may be required to position the products and different levels in varying market conditions.
However with respect to the necessity or the ability of small-scale organisations to develop global brands, Holverson and Revaz, (2006) have indicated that the constraints often force the companies to adopt branding based on market conditions and hence do not have a unified global branding strategy. Oftentimes this is the most suitable position to be adopted by small-scale organisations however Johnson and Turner, (2009) have evaluated several rebranding of the products and services of small-scale organisations when they reach a level of business across the global stage. At this stage many companies feel the necessity to unify the identity and image of the products and services and adopt a single global brand image. Hence for many small-scale organisations the best strategy would be to concentrate on products positioning based on segment in the market in the initial stages of the growth and further moving on to developing and brand specifically based on the needs and requirements of the customers.
On the whole, when analysing the topic, it has been understood from the research literatures that small firms indeed can have a global brand, but development of such brand image and identity at a global level may not be always suitable to the characteristics of the small-scale organisation. The development of a global brand depends on market conditions and the characteristics of the company. Hence it is necessary to evaluate the potential advantages to be received from developing a global brand and the strategy of positioning the product based on market segments. There are several constraints to develop the global brand of products and services and the organisation to evaluate the positive and negative factors.