Humacao Community College Pampers Company Optimal International Strategy and Organizational Structure Essay Question The final task before setting up shop
Humacao Community College Pampers Company Optimal International Strategy and Organizational Structure Essay Question The final task before setting up shop is to determine the optimal international strategy and organizational structure that will best support this international venture. The CEO of your organization has asked you to write a report on your recommendations of the type of international strategy and organizational structure they should adopt. For this portion of the term project, you will be focusing specifically on the concepts and discussions from Chapters 13 (Strategy) and 14 (Structure). Please also remember to research the actual organization you have been using as a reference for this project. Look at their current international presence (if they do not have an international presence, look at their domestic presence), their organizational culture, their current structure, and their supply and distribution channels. You are to use at least three additional sources to complete this assignment.PLEASE remember to cite all your sources; proper citation of your sources is a requirement for this course. This assignment is to be a minimum of 2 – 4 pages typed, font 12, double-spaced. Please support all recommendations with sound reasoning and research.Cite all your sources using APA style. See External Links for guidance in using APA style citations. International
Business,
8th Edition
Griffin & Pustay
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 13-1
Learning Objectives
? Compare joint ventures and other forms of
strategic alliances
? Characterize the benefits of strategic
alliances
? Describe the scope of strategic alliances
? Discuss the forms of management used for
strategic alliances
? Identify the limitations of strategic
alliances
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Chapter 13-2
International Corporate Cooperation
? Strategic Alliances
?Cross-licensing of proprietary technology
?Sharing of production facilities
?Co-funding of research projects
? Marketing of each others products using
existing distribution networks
? Joint Venture (JV)
?Firms Share Management
?One Firm Takes Responsibility
?Independent Managers Are Hired
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Chapter 13-3
International Corporate Cooperation
(Cont.)
Strategic
Alliance
Purpose Scope
Duration
Joint
Ventures
Broader
Longer
Non-Joint
Ventures
Narrower Narrower Shorter
Broader
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Chapter 13-4
Benefits of Strategic Alliances
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Chapter 13-5
Ease of Market Entry
? Overcome Entrenched Competition
? Deal with Government Regulations
? Get Economies of Scale and Scope
? Manage Costs of Doing Business
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Chapter 13-6
Shared Risk
New Market/New Product
Strategic Alliances
Reduce/Control Risks
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Chapter 13-7
Shared Knowledge and Expertise
Strategic Alliances
Gain Knowledge and Expertise
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Chapter 13-8
Synergy and Competitive Advantage
? Market Entry
? Risk Sharing
? Learning Potential
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Chapter 13-9
Scope of Strategic Alliances
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Chapter 13-10
Comprehensive Alliances
R&D
Design
Comprehensive
Alliances
Production
Marketing
Distribution
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Chapter 13-11
Functional Alliances
? Production Alliances
? Marketing Alliances
? Financial Alliances
? R&D Alliances
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Chapter 13-12
Implementation of Strategic Alliances
? Selection of Partners
? Form of Ownership
? Joint Management Considerations
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Chapter 13-13
Selection of Partners
? Compatibility Between Partners
? Nature of Products and Services
? Relative Safeness of the Alliance
? Learning Potential of the Alliance
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Chapter 13-14
Forms of Ownership
Corporate
Form
Limited
Partnership
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Chapter 13-15
Forms of Ownership:
Public-Private Venture
OPPORTUNITIES
CHALLENGES
?New Market
?Investment Lost
?Government
Support
?Assets Seized
? Reduced
Competition
?Operation Closed
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Chapter 13-16
Joint Management Considerations
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Chapter 13-17
Pitfalls of Strategic Alliances
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Chapter 13-18
Review Questions
? What are the basic differences between a JV
and other types of strategic alliances?
? Why have strategic alliances grown in
popularity in recent years?
? What are the basic benefits partners are likely
to gain from their strategic alliance? Briefly
explain each.
? What are the basic characteristics of a
comprehensive alliance? What form is it likely
to take?
? What are the four common types of functional
alliances? Briefly explain each.
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 13-19
Review Questions (Cont.)
? What is an R&D consortium?
? What factors should be considered in
selecting a strategic alliance partner?
? What are the three basic ways of
managing a strategic alliance?
? Under what circumstances might a
strategic alliance be undertaken by public
and private partners?
? What are the potential pitfalls of strategic
alliances?
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 13-20
International
Business,
8th Edition
Griffin & Pustay
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-1
Learning Objectives
? Define and discuss the nature of international
organization design, and identify and describe
the initial influence of international business
activity on organization design
? Identify and describe five advanced forms of
international organization design and discuss
hybrid global designs
? Identify and describe key related issues in
global organization design
? Explain the general purpose of control and the
levels of control in international business
? Describe how international firms manage the
control function
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-2
The Nature of International
Organization Design
Allocate Organizational
Resources
Assign Tasks
Organization
Design
Provide Information
Collects and Transmits
Information
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Chapter 14-3
The Nature of International
Organization Design (Cont.)
International
Division
Export
Department
Corollary
Approach
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Chapter 14-4
Global Organization Designs
Area
Knowledge
Global
Design
Product
Knowledge
Functional
Knowledge
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Chapter 14-5
Global Organization Designs (Cont.)
? Common Forms
?Product Design
?Area Design
?Functional Design
?Customer Design
?Matrix Design
? Managerial Philosophy
?Ethnocentric
?Polycentric
?Geocentric
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Chapter 14-6
Global Product Design
Related
Products
Unrelated
Products
M-Form
(Multidivisional)
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H-Form
(Holding)
Chapter 14-7
Global Product Design (Cont.)
? Advantages
?Expertise
?Efficiencies
?Global Marketing
?Geocentric Corporate Philosophies
? Disadvantages
?Expensive Duplication
?Knowledge Development
?Coordination Levels
?Corporate Learning
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Chapter 14-8
Global Area Design
? Advantages
?Marketing-Driven Strategy
?Brand-Name Reputation
?Expertise about the Local Market
? Disadvantages
?May sacrifice cost efficiencies
?May slow diffusion of technology
?Results in duplication of resources
?Raises costs of coordination
?Impedes global product planning
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-9
Global Functional Design
? Advantages
?Transfer Expertise
?Centralize Control
?Focus on Functions
? Disadvantages
?Limited Products or Customers
?Difficult to Coordinate
?Duplication of Resources
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Chapter 14-10
Global Customer Design
? Opportunities
?Serve Diverse Customers
?Focus Marketing
?Approach
? Challenges
?Duplication of Efforts
?Coordination Issues
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Chapter 14-11
Global Matrix Design
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Chapter 14-12
Global Matrix Design (Cont.)
? Advantages
?Organizational Flexibility
?Coordination and Comunication
? Disadvantages
?Limited use in firm with few products
?Limited use in fairly stable markets
?Involves more than one manager
?Creates a paradox in authority
?Tends to promote compromises
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Chapter 14-13
Hybrid Global Designs
? Size
? Strategy
? Technology
? Environment
? Culture
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Chapter 14-14
Related Issues in Global Organization
Design
? Centralization versus Decentralization
? Role of Subsidiary Boards of Directors
? Coordination in the Global Organization
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Chapter 14-15
Centralization versus Decentralization
Decision Making
Focus
Local Market
Response
Overall Needs of
the Firm
Corporate
Headquarters
Lower
Higher
Local Subsidiary
Higher
Lower
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Chapter 14-16
Role of Subsidiary Boards of Directors
Little Authority
MNC
Board of
Directors
Substantial DecisionMaking Authority
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Chapter 14-17
Coordination in the Global
Organization
? Organizational Hierarchy
? Rules and Procedures
? Ad Hoc Coordination Techniques
? Informal Coordination Mechanisms
?Informal Management Network
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Chapter 14-18
The Control
Function in
International
Business
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Chapter 14-19
Strategic Control
? Strategic Control
?Formulate Strategy
?Implement Strategy
? Role of Strategic Control
?Financial Resources
?Inventory Management
?Exchange Rate Fluctuations
?Joint Ventures and Strategic Alliances
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Chapter 14-20
Organizational Control
? Responsibility Center Control
? Generic Organizational Control
? Planning Process Control
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Chapter 14-21
Operations Control
? Processes
? Performance
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Chapter 14-22
Managing the Control Function in
International Business
? Effectively Manage Control
?Establishing International Control Systems
?Essential Control Techniques
?Behavioral Aspects of International Control
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Chapter 14-23
Establishing
International
Control
Systems
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Chapter 14-24
Essential Control Techniques
? Accounting Systems
? Policies, Procedures, Rules and Regulations
? Performance Ratios
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Chapter 14-25
Behavioral Aspects of International
Control
? Resistance to Control
?Reaction to Over-Control
?Inappropriate Focus
?Increased Accountability
? Overcoming Resistance to Control
?Participation
?Accountability
?Diagnostics
?Culture
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-26
Review Questions
? What are some of the initial impacts of
international activity on organization
design?
? What is the global product design? What
are its strengths and weaknesses?
? What is the global area design? What are
its strengths and weaknesses?
? What is the global functional design? What
are its strengths and weaknesses?
? What is the global customer design? What
are its strengths and weaknesses?
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-27
Review Questions (Cont.)
? What is the global matrix design? What are
its strengths and weaknesses?
? What are the three levels of control in
international business?
? Why is financial control so important?
? What are the four basic steps in
establishing an international control
system?
COPYRIGHT © 2015 PEARSON EDUCATION, INC.
Chapter 14-28
Running head: PAMPER COMPANY EXPANSION MARKETING RESEARCH
1
Pamper Company Expansion Marketing Research
Introduction
In contemporary society, baby diapers stand out to be among the most useful products
that promote the health of the infants. Shramko et al. (2013) argue that diapers are one of the
surest ways of protecting the babies from interacting with their urines and feces, especially when
they fall off to the ground. Diaper companies are among the most lucrative business in the world
given the fact that newborns are delivered every day and must be put on diapers before they
develop the capacity to be trained how to use the toilets. Despite the market conditions and other
challenges, Pamper Company has been able to expand her business opportunity to a wide range
of countries. However, the Pamper Company has not ventured into the market in China despite
being a very promising market. That said, the purpose of this paper is to conduct market research
for potential expansion of Pamper Company in the Chinese market.
A general overview of China
China is an up-and-coming country that will help to build on the future of the Pamper
Company. Notably, Chinas population is hyped as one that buys as much as it consumes.
Besides, given the large population of China, it will be no doubt that the Pamper Company will
flourish. Moreover, given the general trend of baby diapers in terms of revenue since the year
2010, the growth has been there, making China be a potential opportunity for investment by the
Pamper Company. Furthermore, the prices for diapers have been increasing steadily since 2010,
and future prices tend to increase as time elapses (Baby Diapers, 2019). That said, this makes
China an appropriate market for the Pampers Company.
Why venture in the Chinese market?
Chinas GDP
PAMPER COMPANY EXPANSION MARKETING RESEARCH
A study that was conducted by MGM Research (2018) shows that China has the more
substantial potential of GDP (Gross Domestic Product) than the United States of America.
According to MGM Research, Chinas GDP has been growing at a higher rate than that of the
United States of America since 2006. As of 2006, China had a GDP of 2.8 trillion U.S. dollars,
while the United States had a GDP of 13.8 trillion dollars. However, the MGM Research
forecasts that by the year 2020, China will have grown by 12.7 trillion dollars while the United
States GDP will have grown by only 8.5 trillion dollars. As such, by looking at the growth
potential of Chinas GDP, it will be ideal for the Pampers Company to invest in China.
Chinas GDP Per Capita
Kirsh (2016) argues that most of the global hygiene-related companies are competing to
have a larger market share in Chinese markets. While doing a study on the race to win over a
new generation of consumers in Asia, Kirsh noted that these companies had realized the high
GDP per capita that prevails in China ranging from 3 to 7% annually. As such, when the large
population of China has a high disposable income, the more they are likely to spend on
affordable products such as diapers and pampers. In the same study, Kirsh (2016) finds that the
GDP per capita of Southeast Asia, including Malaysia, Thailand, and Indonesia is more than
10000 dollars. Similarly, the GDP per in China is about 15000 dollars. Consequently, a study
conducted by Baby Diapers (2019) found that increased disposable income will increase the
revenue collected from the sale of diapers in China.
Labor
Chinas vast population specializes in different activities that require either skilled or
unskilled laborers. Essentially, there are those who are specialized in various machines such as
2
PAMPER COMPANY EXPANSION MARKETING RESEARCH
3
folding, laminating, and molding (Tipalti, 2017). Unspecialized or unskilled labor is provided by
the manufacturers and suppliers as well as retailers.
Total exports
Ideally, China profits a lot from foreign direct investments from the exporting its
commodities with its exporting partners. As such, the return on capital for China increases
significantly every year and making the region conducive for Pamper Company investment.
Eventually, this implies that despite the fact that there is a ready market locally, China will also
open up new marketing opportunities for the Pamper Company to earn foreign direct investment
(Tipalti, 2017). The products that will be exported will include baby wipes, training pants, and
diapers. Export partners will be developing countries.
Imports
The Pamper Company will still get import materials from the United States at a lower
cost and other parts of the world such as Japan and Thailand. More importantly, the company can
import from developing countries since it will get resources at a lower cost (Tipalti, 2017).
Ideally, in developing countries, resources are mainly untapped, and this means there will be
plenty of resources to import for the country.
Infrastructure physical (transportation) & informational (communication)
The development of infrastructure in China is one of the critical factors that lay the
foundation for growth for businesses. In a study that was conducted in China, Lee (2019) claims
that the country has one of the best examples of telecommunication infrastructure networks.
Besides, Lee (2019) argues that by the year 2023, China will have very attractive communication
infrastructure that allow companies to grow and develop. As of this year, over 600 million
people in China are said to be using their phones to make payments for companies services and
PAMPER COMPANY EXPANSION MARKETING RESEARCH
products. On a similar vein, more than 500 million people in China use their phones to do their
shopping online. In light of the Pamper Company, it can take advantage of this digital
technology in communication and venture into China. On the other hand, China has a massive
interconnection of physical infrastructure including airports, roads, and railways as well as the
water transport. Ideally, these physical infrastructures have allowed Chinas economy to go at
unprecedented levels given the presence of the high-speed rail (KPMG, 2009). Additionally,
given that China is an ambitious country towards development and overtaking the United States
as the leading world superpower, China has a huge potential for growth and Pamper Company
should take this as the perfect moment for investing in the country.
Unemployment
With an unemployment rate of 3.8%, the Pamper Company will help to tap a significant
number of the unemployed and potential workers, thereby reducing the problem of
unemployment in China (Xinyu, 2019).
Industries
Industries growth rate
An industrys growth in China is influenced by the strategic approaches the company
employs in making her products or services unique. As such, the Pamper Company needs to
come up with quality products with unique features that outfit China made baby products.
Geographic
China is endowed with natural resources such as land for business expansions and with
rich natural resources. Consequently, this makes access to resources and raw materials easy. As
such, this, coupled with the favorable climate in China, makes the expansion of Pampers
4
PAMPER COMPANY EXPANSION MARKETING RESEARCH
5
Company in China an appropriate move (Sun et al., 2011). Increased land use, however, has
resulted in some environmental issues that Pampers Company must be aware of including
pollution of air and soil, shortages of water, amongst others. As such, the company must
strategize on ways of ensuring environmental sustainability.
Political-Legal
The political atmosphere in China has been very supportive of international businesses.
In particular, the local government in China has a crucial interest in capital generation and that
the reason why China attracts more foreign direct investments (Sun et al., 2011). The stable
communist government in China encourages people to have mass production of commodities.
Consequently, this makes the regulatory requirements and approval procedures to be minimal for
the investors. However, the newly revised tax laws may be a problem for the pamper company
(Leng, 2019). Nevertheless, to counter this challenge, the company can produce massively highquality goods and adjust prices a little higher to keep in the market competition with the local
firms.
Conclusion
The main aim of the paper was to conduct a country study to evaluate the appropriateness
of investing in China. In light of the research, this paper recommends that the Pamper Company
will do well in the Chinese market despite the costs of purchasing the land, wages and salaries,
equipment, materials and supplies, service costs, and other miscellaneous expenses. Other than
these costs, there are additional issues the company should also anticipate, such as desertification
problems, air and soil pollution, and water problems. Ideally, these are critical issues that the
Pamper Company needs t…
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