Question

I need a positive feedback about the comment below made by my classmate.

How do organizations make decisions to pursue a global strategy?

-One major reason is the nature of the industry in which they operate. Firms that pursue a global strategy are typically highly centralized and at the same time bring in cultural diversity and creativity as well as best practices.\

How can expanding globally become a threat to a multinational enterprises (MNEs) reputation? Explain with the help of a real-world example.

-One of the most valuable resources that a firm may possess is its reputation. A firms reputation can have several dimensions, including a reputation for innovation, customer service or brand reputation. Apple’s brand is an example, its brand stands for innovation and superior customer experience. Their reputation is one of their most important resources. The brand is valued at #230 billion, making it one of the most valuable brands in the world.

What is meant by cultural distance? How does it affect a firm? Use a real-life example of a business affected by cultural difference.

-cultural difference is the degree to which norms and values or working methods between companies and consumer preferences differ between countries because of differences in their national characteristics. Cultural difference does not seem to affect how much capital firms invest and whether they enter through a joint venture or fill ownership. Interestingly, cultural distance has a strong negative effect on subsidiary performance but no effect on the performance of the whole multinational company. An example of cultural difference s as they pertain to the workplace include employees who are younger or older than their co-workers, employees who hold higher degrees than others in the workplace and individuals who grew up either metropolitan areas or small towns.

What are IKEA’s external and internal challenges? Which ones pose the greatest threat? Why? How would you address the challenges?

- The one that faces the great threat is the lack of adequate supply of wood. This is because lack of wood supply implies that the company does not have the potential of expanding globally. Such a situation will occur since it does not have sufficient raw materials to sustain the conduct of its business activities. Moreover, deforestation has become a global issue, which implies that the company may lack carbon credits. As such, the target market may decline as potential customers become sensitive to the global issue of deforestation. The problem lack of adequate supply of wood can be solved if the company can engage in environmental activities, which involve planting of trees. This will ensure that the company has the ability to access its own raw materials, as well as from other sources. Further, IKEA should partner in business and environmental activities with companies that produce wood. As such, it will become easy for IKEA to acquire raw materials.

Answer 1

Indeed one of the most valuable resource or asset of the company is its reputation or goodwill. Various criticalities are based on the reputation of the company. It defies the way, a customer perceives a brand and rules the level of trust that customers may hold for a company. The potential recruits and talent also get attracted to the company, based on the company’s reputation and goodwill. Government as well as investors get ready to help the company if its reputation is good and trustworthy. When a company is entering a new market, it has to ensure that it will be able to maintain its reputation and brand value in the new market. MNEs need to come up with a strategic plan which facilitates its overall reputation in the global market. The example of this concept is quite well explained with the use of Apple’s reputation. Apple products have carved a niche for themselves. The reputation of the company is as such that the customers consider possessing Apple products as status symbol. Apple needs to maintain the same reputation in all countries. Hence the company maintains its product quality in all new expansion propositions so as to facilitate its overall reputation.