Business methods - external strategies

In this blog, I will talk about the external strategies, which are the company should concern to being global success. In external strategies, there are five methods which are joint venture, strategic alliance, franchise, merger and acquisition.

Joint venture is two or more company sharing the investment risk and cost by creating a new company in another country. Sony Ericsson is an example of joint venture. Sony is a Japanese electronics company and Ericsson is a Swedish telecommunication company, they built a new company called ’Sony Ericsson’ and focus on mobile phone industry. Although both companies should share the profit in ’Sony Ericsson’, it decrease the risk and cost in both company. It is the advantage of joint venture for the companies. https://www.youtube.com/watch?v=uIlSPyZt3hM

Strategic alliance is sharing human resource and financial resource on a project. For example, Hong Kong Disneyland has strategies alliance with Honda. Honda sponsors the cars for the new attraction in Disneyland, and Honda can use the image in Disneyland to promote their cars, motorbike or other products. In this example, Hong Kong Disneyland provide their brand image to Honda for promotion, and Honda provide their product to Disneyland for their new attraction. https://www.youtube.com/watch?v=HgfwzPRyVvw

Franchise is selling the brand, name, image and product to others to run their business. McDonald is a franchisor, and everyone can become a franchisee to run the McDonald for his or her own business. McDonald will provide training, equipment, food material or other things are related to the operation. It is a good strategy to develop the business globally, but the company should focus on quality control on each franchisee to ensure they provide the product or service are consist with your business, because their business are related to your company image. https://www.youtube.com/watch?v=EmjA6O2HIus

Merger is combine two or more company into a single company. If you would like to develop your business in other countries, merger a local company helps you look inside the local market and gain more knowledge in the market, at the result, you can enter the market more successfully. Tesco have decided enter the China market, but it fail to enter, because the company did not recognize the market and cannot meet the customer needs. Then, Tesco merger a Chinese company and being more successful, because the Chinese company provide the knowledge in the China Market, thus, Tesco can provide the services and goods, which are customer needs. https://www.youtube.com/watch?v=J-t6zD5G4bk

Acquisition has the same advantage as merger, but the firm will purchases the major equity interest of the other company. The Heng Seng Bank in Hong Kong and HSBC are an example of acquisition. Heng Seng Bank is a biggest bank in Hong Kong and it is the biggest competitor for HSBC. However, Heng Seng Bank is facing the financial problem, and they sold 62.14% of shares to HSBC to solve the issue. Heng Seng Bank is success, because the management level is Chinese people and they know the need of Hong Kong citizen, so HSBC did not change their management team. At the end, HSBC gain the market share of Heng Seng Bank and deduct one biggest competitor.

In conclusion, There are no strategies ensure the company must be successful in global by using this strategy, it is depend on which business are you in and based on your business needs.