Expanding a large company into international territories is an ambitious challenge that requires extensive amounts of research, hard work and competence. However, a company’s effort of entering the global market can also be rewarded with dramatically increased profits and a significantly enhanced reputation of prestige. Companies can successfully expand into international regions by establishing effective factor conditions within those territories and by adjusting their product or marketing strategies to accommodate different regions of the world.
P & G is one of the largest consumer goods distribution companies in the United States. The company was established by William Proctor and James Gamble in Cincinnati during the 19th century, and the immense success of the company has enabled P & G to sell its brands in over 180 countries today. An important and beneficial strategic decision of P & G was to partner with Abudawood as a method of flourishing in the Saudi Arabia and Middle Eastern markets. Abudawood is a large and respected Saudi Arabian goods distribution company that has been a partner of P & G since the 1940s. P & G established the partnership because Abudawood is capable of providing the company with reliable factor conditions and efficient distribution systems, which enabled P & G to maintain a significant competitive advantage and to dominate much of the Saudi Arabian market (Abudawood History). The partnership was also successful because Saudi Arabia has experienced a dramatic increase in population and a flourishing economic environment, which in turn increased the sales and profit margins of P & G. Additionally, investing in Saudi Arabia allowed P & G to also introduce many of its products into the many Middle Eastern countries surrounding the Saudi Arabian area.
Pepsi expanded into Saudi Arabia by developing a partnership with Al Jomaih in 1957. Al Jomaih functions as a bottling plant and business partner of Pepsi Cola International, and the plant provides Pepsi with exceptional factor conditions in the Saudi Arabian area, including sufficient land, a high quality manufacturing plant, an abundance of laborers, and an effective distribution system. The successful partnership has enabled Al Jomaih to utilize over 2,500 employees, to produce a plentiful volume of Pepsi products, and to help Pepsi dominate the soft beverage market share throughout Saudi Arabia (Al Jomaih). Thus, partnering with Al Jomaih helped Pepsi develop superior factor conditions in the form of land, labor and distribution systems, and these favorable conditions allowed Pepsi to thrive in Saudi Arabia and to also successfully expand into other Middle Eastern countries.
Although KFC has several restaurant chains in Saudi Arabia, currently KFC is getting out-performed by its competing fast-food chicken chain, Albaik. Albaik is a Saudi Arabian fast-food chicken chain that was established in 1974. The exceptional taste of the food, the diverse options on the menu, and the affordable prices has caused Albaik to flourish as one of the biggest fast food chains in the Middle East (Mohammed). Reports demonstrate that Albaik meals cost about 30 percent less than KFC meals, and the less expensive prices encourage many customers to choose Albaik as their preferred fast-food chicken chain because Albaik allows them to feed their families delicious and fulfilling meals for substantially lower prices than KFC. Thus, KFC can more effectively compete with Albaik and attract more customers in Saudi Arabia by offering more discounts, better deals, and lower meal prices. Another advantage that differentiates Albaik from KFC is that Albaik incorporates seafood meals into its menu. The inclusion of seafood increases its customer base because the restaurants can attract people who desire chicken or seafood meals, and the diverse menu encourages customers to buy meals from Albaik at more frequent intervals (Albaik). KFC can improve the sales of its restaurants in Saudi Arabia by adding a more diverse range of meals and seafood options onto the menus.
McDonalds has also effectively expanded into several international territories in the recent decades. Because McDonalds produces and sells its products in a multitude of different countries, McDonalds is generally referred to as a highly successful global company. McDonalds developed and implemented many excellent strategies to ensure that the globalization of the company was successful. One effective strategy was that McDonalds made slight alterations to the menus in different areas to accommodate the specific customs and taste preferences of foreign populations. For instance, McDonalds sells English style breakfasts in London and flatbread kebobs in Israel. Additionally, McDonalds has succeeded in many international regions because the company also adjusts its marketing strategies according to the values and traditions of the targeted culture (Leading By Example). Developing effective marketing techniques attracts foreign customers, provides the company with credibility, and maximizes the sales and profit margins ascertained by each restaurant chain.
Adjusting the globalization process of expanding a company into international regions can significantly improve the brand-name recognition and overall sales profits of the company. Entrepreneurs should learn from the strategies that have enabled companies to successfully globalize in the past and apply those strategies to their own company’s globalization efforts. Companies that expand into multiple countries often must develop superior factor conditions within the new territories and adjust their menu or marketing strategies to most effectively appeal to the people in those territories.
"Abudawood History." Abudawood Group. N.p., 15 Jan. 2012. Web. 6 Feb. 2014. <http://www.abudawoodcareer.com/history>.
"Al Jomaih." Al Jomaih Bottling Plant. N.p., n.d. Web. 6 Feb. 2014. <http://www.aljomaihbev.com/>.
"Albaik." Albaik. N.p., n.d. Web. 6 Feb. 2014. <http://www.albaik.com/en>.
"Leading By Example - Global Advertising Campaigns." About McDonalds. N.p., n.d. Web. 6 Feb. 2014. <http://www.aboutmcdonalds.com>.
Mohammed, Irfan. "Al-Baik 4th local popular brand in Mideast." Arab News. N.p., 23 Oct. 2012. Web. 6 Feb. 2014. <http://www.arabnews.com/al-baik-4th-local-popular-brand-mideast>.