- April 28, 2020
Strategies that Xiaomi and Roy Choi Should Cultivate to Expand Internationally
Strategiesthat Xiaomi and Roy Choi Should Cultivate to Expand Internationally
Strategiesthat Xiaomi and Roy Choi Should Cultivate to Expand Internationally
Expandinginternationally is often multifaceted and challenging since firmswill engage new markets and environments. Before, expanding globally,a firm will need to make decisions on how to react to differentcultures, social, legal, and political settings (Chen, Li, & Liu,2013). When organizations concentrate on world markets, they oftenfocus on a global business strategy. However, because of tradebarriers, cross-border incentives and subsidies, access to cheaplabor, and global associations, firms have to decide which approachor overall strategy is appropriate for expansion. To sell products tointernational markets, organizations need to acclimatize theirmarketing policies and products to suit local cultures andenvironments. Thus, it is significant for firms to formulate andintegrate a comprehensive business and marketing approach. Forexample, a good strategy should be aligned to realistic goals andcapable of identifying potential clients and business successfactors. This report will discuss the most appropriate plans thatXiaomi and Roy Choi should develop to expand to internationalmarkets. The discussion will revolve around the decision to choosestandardization or localization as immediate approaches and global,multi-domestic, or transnational as overall strategies. The tactictaken should consider the market, culture, product development anddifferentiation, and the nature of the industry.
RoyChoi and the suitable expansion strategy
Roy Choi’srestaurant empire, Kogi Korean BBQ began with a single food truck,but it soon grew into a big firm with numerous restaurants spreadacross Los Angeles. Today, Kogi is a blend of food trucks celebratedfor its combination of Mexican and Korean food (Walker, 2013). Thefirm has extensively used social media, especially YouTube andTwitter to convey information about its products and locality. RoyChoi has utilized the internet to market his products and interactwith his clients. However, given the existence of different culturesin the international market, he will have to develop other forms ofmarketing and consider adapting to a new strategy. The cuisineindustry is an interesting one with diverse cultures and customers’needs. While standardization refers to the provision of the sameproducts across markets, localization denotes the provision ofdifferent products in different markets based on customers’ needs,cultural differences, and business needs (Herbig, 1998). Roy Choishould utilize the localization approach to entering theinternational market in order to meet the needs and demands ofclients. Different cultures have different preferences and needsthus, it is overly difficult for a restaurant wishing to join thefast food chain to adjust to standardization. For instance, customersin China have different preferences compared to clients in Europe,America, Australia, or Africa.
Although there exist low trade barriers and increased utilization oftechnology, which allow firms to standardize their products easily,it is difficult for a restaurant to succeed by standardizing itsproducts only. Carpenter and Dunung (2012) and Chen et al. (2013)assert that multinationals should adapt their goods in response todiverse market environments. Moreover, Chen et al. (2013) contendthat localizing products allow firms to benefit from pricerealization, market share, and competitive position. It is imperativeto note that a localized list of food appeals to extensive customergroups across different markets. Thus, by adopting localization, RoyChoi will manage to meet the cultural and preference demands or needsof customers, as well as, use the different cuisines offered to enternew markets, gain market share, and compete with other companies bycharging a low price. On the other hand, Roy Choi should adopt amulti-domestic to match customer needs and national conditions ineach market. The restaurant has become popular because of itsMexican-Korean cuisine combination and the food trucks blend. In amulti-domestic approach, a firm exploits local receptiveness byoptimizing products to the local markets (Carpenter & Dunung,2012). The strategy assumes that despite the increased globalization,markets differ thus, there exist different political structures,customer needs, social norms, industry conditions, and desires. Aglobal strategy pursues maximization of efficiency by standardizingproducts across markets while a transnational approach follows acombination of multi-domestic and global strategies (Carpenter &Dunung, 2012). The multi-domestic will proof successful for Roy Choigiven the successes that other multinational restaurants haveenjoyed. For example, KFC does not adapt its international market tothe US industry. The company adapts to local preferences andnegotiates well when political and cultural situations change: in theUK, it stresses potatoes and gravy while in China and Japan it sellsspiced chickens and tempura crunchy strips.
Theappropriate strategy for Xiaomi
Headquarteredin Beijing, China Xiaomi is a consumer electronic and smartphonemaker known for its cheap-priced phones that borrow heavily fromiPhone designs (Shih, Lin, & Luarn, 2014). The company hasalready expanded to some Asian and African countries. Since thesmartphone market is highly competitive with the major playersoffering their flagship phones at a high price, the company shouldadopt transnational as the overall strategy and standardization togain market share and obtain profitability. Already, the companyoffers iPhone-look-alike smartphones and it has managed to gain afair share of the Chinese market, as well as, becoming the fourthlargest smartphone maker. Carpenter and Dunung (2012) and Chen et al.(2013) posit that the development of technology and homogenization ofthe global markets have made it easier for firms to standardize theirproducts. Furthermore, the increased globalization has made itpossible for different cultures to converge especially in consumerelectronics’ preferences (Herbig, 1998). Thus, people’s choicesand demands for products are becoming alike. For example, Apple,recognized as the most reputable brand designs and manufacturesstandardized products throughout the world (Shih et al., 2014). Otherfirms including Samsung, HTC, Google, and Huawei have managed to sellstandardized but differentiated products to meet technology platformsand application support. For instance, Samsung provides standardizedflagship phones especially regarding design and ecosystem butexcludes some features in certain models because of local regulationsand availability of some services in certain nations.
It is imperative to note that it would be difficult for the firm tolocalize its products given the labor, processes, and measuresemployed in designing and producing a phone. Shih et al. (2014)contend that Xiaomi sells cheap phones but with features similar toexpensive gadgets from Samsung and Apple thus, customizing productswould not work for it in any way. The company should standardize itsproducts across markets and sell cheaply to gain market share andappeal to clients who want cheap “iPhones.” The transnationalstrategy would allow the firm to possess and control its productionunits. The approach will allow Xiaomi to lower production costs andappeal to different consumers from diverse markets. The firm willproduce standardized but differentiated products to meet demand andgain competitive advantage. For example, it can use glass material oraluminum to appeal to American customers and use cheaper materials toappeal to ordinary clients. Moreover, it can include a dual-lenscamera, large RAM, and memory, and edge screens to sell to technologysavvy consumers or include familiar features. Most smartphone makershave adopted the strategy to gain market share in different nationsor situations: both Samsung and Apple develops two differentflagships to sell to two groups of consumers. Google also followedthe cue when it produced its pixel products. Given that Xiaomi offersits products at a cheaper price, it would easily gain a large marketespecially in India and Africa where consumers are mostly constrainedfinancially.
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