BUS301: International Business

Quiz 2 (section 3)
Summer 2020

Name: Md. Shariful Alam Shabuj

Id: 17304061

Total Marks: 15
Time: 45 minutes

[ Save the file under your name and id and upload it under Quiz 2 folder in google drive]

1. Your company is seeking to expand by opening new customer representative and sales offices in
the European Union (EU). The size of the investment is significant, and top management wishes
to have a clearer picture of the current and probable future status of the EU. A colleague who
spent some time living in the EU indicated that Eurostat might be a comprehensive source to
assist in your project. After evaluating the state of the EU based on the statistics and
publications available, prepare an executive summary describing the features you consider as
crucial in completing your report. (10)
2. In what kind of industries does a localization strategy make sense? When does a global
standardization strategy make most sense? (5)
 Answers
1.
McBride (2016) suggests that many business organizations that invest in international
markets fail to survive due to the many existing and potential challenges. Major corporate
challenges include solid competition, poor knowledge of the market, and extreme protectionism
policies. Our company’s intention to expand its market reach by establishing sales offices and
customer representatives in the European Union (EU) is no exception. The current economic
status of the EU is influenced by increases technological advancement, climate change along
with related environmental issues, and the falling value of currency (Global EDGE, 2016).
However, the EU has trade resources available that include the European Investment Bank (EIB)
and Enterprise Europe Network (EEN). The EIB provides long-term financial support to
initiatives and projects within the EU. Also, EEN helps international businesses to find EU
funding, EU standards and laws, intellectual property standards, and international trading
partners.

The mission of EEN is to offer a variety of services for companies to start and properly
maintain profitable businesses in the EU. There are distinct features that I believe are crucial in
both the preparation and implementation processes to complete our company’s project. Our
company should align its goal towards sustainability by identifying strategies that will minimize
its environmental footprint. It should focus on socio-cultural diversity to enhance investor and
consumer relations. Another fundamental feature includes investing on advanced information
and communication technology to empower employees and achieve a competitive advantage in
the corporate world. Taking advantage of these features will allow our company to anticipate
future challenges and look for ways to respond to those challenges by seeing how we may be
able to turn them into opportunities.
2.

A localization strategy is a strategy in which a company adjusts its service or products

based on the area that a particular branch exists in. This strategy works best where there are
differences in what customers from different areas want. If a company can identify particular
properties of a service or product that would make it suited well for an area, then it is worth
considering creating a branch to deliver a tailor-made product. Products like this may succeed
even if there are cheaper alternatives. One of the things that change throughout culture is food.  
International companies in the food industry have to adjust to the local tastes. Whether due to
religion, tastes, or ingredient sourcing, menus will be different.

The localization strategy does miss out in one area, and that is economy of scale. With each
branch serving their local area, they cannot take advantage of mass production. Mostly food and
drinks companies follow this localization strategy except for Starbucks, Red bull and some
others. But companies like Nestle, Unilever they follow localization strategy to main more
customer satisfaction. Centralizing their production into lower cost areas such as India or China,
they miss out on lower labor costs and distributing the overhead costs across more units,
lowering the price for customers. This is the strength of a global standardization strategy.

The global standardization strategy makes great use of cost reducing effects. The advantage of
this strategy is one of efficiency. Electronics companies, Airbnb, some snacks companies follow
globalization strategy. Companies are able to offer their products at a lower cost than those who
do not use such advantages. The consequence to using such a strategy is the lack of flexibility in
their products. There is little concern for local differences using this strategy. Many electronics
are the same across the world. There may be differences in the programming for language
differences or charging methods, but the devices can be used anywhere.
References: McBride, J. (2016). NAFTA’s Economic Impact. Retrieved from

http://www.cfr.org/trade/naftas-economic-impact/p15790

Global EDGE. (2016). European Union: Statistics. Retrieved from

http://globaledge.msu.edu/trade-blocs/european-union/statistics