Strategic Management Report: Global Firm Expansion Strategies Analysis

This report analyzes strategic management principles related to firm expansion. It begins by outlining the advantages and disadvantages of firm expansion, such as exporting, franchising, joint ventures, and wholly-owned subsidiaries, along with their respective benefits and drawbacks. The report then delves into Porter's diamond framework, examining factor conditions, demand conditions, supporting industries, and firm strategies. It also addresses the opposing forces of cost reduction and adaptation to local markets that companies must navigate during expansion. The report further explores various expansion strategies, including local market adaptation, transitional, and global strategies, highlighting their advantages and disadvantages. It provides a case study of the motion picture industry, applying Porter's diamond framework to illustrate national competitiveness. Finally, the report discusses ethical issues that arise when businesses relocate, such as cultural differences, financial risks, political risks, and currency fluctuations.

STRATEGIC
MANAGEMENT

MAIN BODY
1 Advantage and disadvantage of firm expansion.
Advantages
 Exporting helps to give the knowledge of local market of different country.
 Franchising helps to eliminate or reduce the risk of exposer in the overseas market
(Ansoff and et.al., 2018).
 Joint ventures helps to create third party or the organization at internation platform and
help to gain more profit internationally.
Intel is example of wholly own subsidiaries as its building in semiconductor plants overseas,
appropriate knowledge of country helped intel.
Disadvantages
 Disadvantage of exporting is that it has limited ability to fulfil their customer's demand.
 In the franchising, multinational firm only get portion of revenue rather than entire
revenue.
 Cultural differences of the different country may create problem to joint venture in its
marketing strategies.
 Wholly own subsidiaries are risky and expensive mode of expansion of business.
2 Four factors in Porter's diamond
Factor condition — This factor includes the skilled human power, infrastructure of the company
as according to that country. Advantage of these is to help in communication and making
strategies. For example, land, minerals and communication and stable banking system of
country.
Demand condition — This includes the strategies to fulfil the demand of the target costumers
who demand highly specific and sophisticated goods of that country by providing services and
goods.
Supporting and related industry — Supporting and related industry help the firm, in
international market by exchanging the ideas and strategies, with correspond to the suppliers and

customers. For example, country having strong supply base provide benefit by enhancing
downstream activities.
Firm strategies, structure — This referred as the strategies on the based on the competitions,
which helps to lead business by finding innovative ideas and technologies. For example any firm
which move to the china to operate business create strategies in order to compete with chines
competitors of same industry.
3 opposing forces for the firm
Cost reduction: Any firm which want to expand its business, its have to deal with cost
reduction. Firm's first objective is to make place in the market and attract large pool of
customers. For this, firm have to reduce their product's cost as compare to the competitors by
delivering high quality products. For example when any firm start its business international or
multinational level, cost have to be reduces as compare to there existing companies to attract
countries people.
Adaptation to local market: As for to attract large number of customers and increase the
demand of their products in any new country, firm has to adopt the local market of that country.
Its features, designs function of the local market products etc. so that they can have the enough
knowledge of local market and gain more competitive advantage. Therefore, firm must have to
deal with these opposing force. For example, any Maxican company move to china, firstly have
to adopt its local market trend to establish there business as both countries have great cultural
differences.
4 Strategies for expansion
There are four main expansion strategies.
Advantage
 Local market adaptation helps the firm to increase its cost structure wit the help of multi
domestic strategy.
 Transitional provide the flexibility in the international operation.
 Global strategy helps the firm and economy by standardization of products and lowering
the cost in few locations.
 By adaptation of the parents company, firm can become expertise to foreign market.
Disadvantage
 International strategies have to deal with high level of political risk and currency risk.

 Disadvantage of global strategy is that, if firm concentrate on single location activities
then all other activities will be dependent on that location.
 Only adaptation of local market may become backfire in the multi domestic strategy.
 In the transactional strategy firm may have to suffer with the quality and cost of the
labour and material (Wheelen and et.al., 2017).
5 Porter's diamond framework
 Motion picture works in film industry of US, as this adapt and hire well-trained
employees for their company like technicians, and other which contribute more to make a
fill more attractive.
 They also fulfil the demand of the customers and market by adopting high technological
equipments like camera, and other computer software for the editing and film making.
 Motion picture build their strategies as according to their competitors like viacom, sony
and many more.
 Supporting industry also helps the motion pictures to become expert in their work by
sharing of ideas, resources and strategies.
In this way porter's diamond factor helps to gain its national competitiveness with the
help these attributes.
6 Ethical issues
By relocating the business, firm may have to face some ethical issues while operating in
the new country like china and Mexico that raise such actions of relocation. Culture of these
country will be different from the North American, so the cultural issue may arise, apart from
this firm have to suffer from the financial risk as according to the economical condition of that
country like maxico. Also, may have to face political risk because of the ineffectibve domestic
system. Fluctuation in currency mayb also be a risk for the company (Riasi, 2015).

REFERENCES
Books and journals
Ansoff and et.al., 2018. Implanting strategic management. Springer.
Riasi, A., 2015. Competitive advantages of shadow banking industry: An analysis using Porter
diamond model. Business Management and Strategy. 6(2). pp.15-27.
Wheelen and et.al., 2017. Strategic management and business policy (p. 55). Boston: pearson.