GREAT ZIMBABWE UNIVERSITY

MUNHUMUTAPA SCHOOL OF COMMERCE

GRADUATE BUSINESS SCHOOL

MASTER OF BUSINESS ADMINISTRATION

JOSEPHINE TINEYI MUSHAMBI M102169

NYAZEMA JUSTICE TAPIWA M196687

PROGRAMME: MBA

LEVEL: 1.2

MODULE: MARKETING MANAGEMENT (MBA708)

LECTURER: DR J ZIMUTO

GROUP PRESENTATION:

QUESTION: MOTIVATE THE ADVANTAGES OF GLOBAL STRATEGY

FOR A START UP BUSINESS
Introduction

One of the most significant developments in recent years has been the emergence of global
markets. Today’s market provides not only an assortment of goods but also goods from many
places, Subhash (2020). It would not be surprising to discover that clothes worn by most
Zimbabweans come from China, second-hand cars from Japan and what have you. It is also
possible that you can drive a German car equipped with tyres manufactured in the UK.
Therefore millions of consumers worldwide want all the things that they have heard about,
seen, or experienced especially via new communication technologies. People are now able to
buy things via E-bay, Amazon, Be-Forward and so on which is an example of global strategy
by firms. Firms today are involved in world competition to serve these consumers, no matter
where they live.

Subhash (2020) states that a number of broad forces have led to growing globalization of
markets. These include growing similarity of countries like growing commonality of
infrastructure, distribution channels, and marketing approaches, more and more products and
brands that are available everywhere. Also falling tariff barriers where bilateral and
multilateral agreements have lowered tariffs markedly since World War II makes goods from
other countries more competitive. Moreover strategic role of technology has allowed a
decrease in operating costs. For example, electronic innovations have permitted the
development of more compact, lighter products that are less costly to ship. Transportation
costs themselves have fallen with the use of containerization and larger-capacity ships. At the
same time, technology leads to an easy flow of information among buyers, making them
aware of new and quality products and thus creating demand for them.

Jain (2016) details how firms enter, compete and grow in foreign markets. Jain argues
that global marketing is the act of promoting a business’s products, brand, or services to a
worldwide market. The process involves planning, promoting, and focusing a product or
service on the needs of potential buyers in other countries. If done effectively, global
marketing can create new streams of income, increase brand awareness, improve company
reputation and provide new marketing insights. Whether a company is looking to expand to
two other countries or one hundred countries, expanding across borders results in global
marketing, but successful global marketing begins with a concrete strategy. Therefore when
entering an international market, it is essential to consider all factors before beginning.

The purpose of this study is to motivate the advantages of global strategy in a start-up
enterprise. The writer will look at how and why a beverage manufacturing company in
Zimbabwe, Artisanal Foods, which is in the Small to Medium Enterprises sector can
exploit the global market successfully to achieve set goals and objectives.

Types of Global Strategies and definition

Global Strategy refers to ways organisations treat the world as largely one market and one
source of supply with little local variation. Importantly, competitive advantage is developed
largely on a global basis.

The terms international business and multinational business are often used interchangeably in
this field. Both international and multinational companies conduct business activities in
foreign countries which is also what is referred to as global strategy

Content

Subhash (2020) argues that global markets offer unlimited opportunities but competition in
these markets is intense. To be globally successful, companies must learn to operate and
compete as if the world were one large market, ignoring superficial regional and national
differences. Corporations geared to this new reality can benefit from enormous economies of
scale in production, distribution, marketing, and management. By translating these benefits
into reduced world prices, they can dislodge competitors who still operate under the
perspectives of the 1980s. Companies willing to change their perspectives and become global
can attain sustainable competitive advantage.

In Zimbabwe we have a lot of firms that are emerging particularly the small-medium
enterprises. A lot of these are in the informal sector because they find it difficult to declare
their businesses. The main reason is that they would not want to pay corporate taxes which
they believe erodes their profits. New firms face stiff competition from existing ones and as
such end up realising little to no profits and can even close shop. An example is in the
beverages sector that is dominated by Delta Beverages and Pepsi in Zimbabwe as well as
Dairiboard Zimbabwe which has now started to produce the baobab juice. These enjoy
economies of scale and are able to charge low prices for their products. They can also embark
on predatory pricing to force other firms out of business. This therefore means that start-up
firms can exploit the global market to enhance their survival.

If done effectively, global marketing can create new streams of income, increase brand
awareness, improve company reputation and provide new marketing insights and a company
like Artisanal Foods, a Small-Medium Enterprise, which produces baobab juice and other
natural foods can take a leaf from Jain’s book, Jain (2016).  

Advantages of global strategy

Rosenberg (1998) states that spreading out operations into multiple countries can help take
your business to the next level for this promotes better brand awareness. Global brands garner
far more recognition than merely domestic ones simply by virtue of their international scope.
PepsiCo products are enjoyed by consumers more than one billion times a day in more than
200 countries and territories around the world. If Artisanal Brands begins to distribute its
products in different countries, either through subsidiaries or its own stores, it can start to
build brand awareness elsewhere in the world, rather than only in its homeland. The small
firm can start by making its products available to nearby countries such as South Africa,
Zambia, Botswana and Mozambique to make their product known on the Regional market
and later on around the globe.

Another advantage of global strategy is having greater access to resources. As an

international business shores up its global presence, it gains access to resources from each
new country in which it starts to operate, Rosenberg (1998). Pepsi started operations in Brazil
in 1953. The company realised that Brazil is the largest exporter of sugarcane. Brazil
accounts for 50% production of world’s sugarcane. Pepsi decided to open its operations in the
country to gain access to sugarcane which is very important in the production of Pepsi
beverages. Artisanal Foods can use the same idea by starting operations in countries like
Madagascar, South Africa Limpopo province where there are baobab trees in abundance.
Production of the baobab requires baobab fruit as a major raw material which is found in the
aforementioned countries. This will allow the company to have access to cheaper raw
materials since they will be readily available

Global Strategy mostly likely to leads to increased revenue. Entering new markets in different
countries can bring in far more revenue than operating solely in a domestic market. Coca cola
has been enjoying the benefits of expanding their business beyond the USA boarders. For
example Coca Cola annual revenue for 2022 was $43.004B, a 11.25% increase from 2021.
Artisanal Foods recorded total sales of US$9,786.00 in 2022 from US$7,321.67 in 2021. This
was an increase in sales revenue for the baobab juice-producing company. However the
company can even garner more sales revenue by expanding into the regional market. Though
the company faces competition from companies like Ceres, Fruto, Pepsi, Liqui Fruit and
Cascade beverages they have a slight advantage of making it on the market because their
baobab juice product is not yet being produced by giants in the industry like Coca cola and
Pepsi. Only Dairiborad Zimbabwe has started production of the same. As businesses take
initiative to distribute product offerings in multiple areas of the world, more consumers have
the option to purchase these goods, thus raising the businesses’ revenue levels.

As a firm grows big it begins to enjoy economies of scale since they have lower costs of
production. Global companies generally have more efficient, effective, and inexpensive
economies of scale and economies of scope. As a company reaches out into different parts of
the world, it gains access to lower-priced markets for both labour and materials. This then
allows the globally minded company to pass on these lower costs to consumers as well,
Samuel, and Douglas, 1997. An example is the baobab juice produced by Dairiboard
Zimbabwe. It costs about 450 rtgs in local supermarkets. 500ml of pepsi costs about 350 rtgs
and 500ml of coca cola costs about 750 rtgs. Artisanal Foods does not enjoy economies of
scale. This is reflected by their failure to charge competitive prices. The company sells its
500 ml bottle at about 1200 rtgs at Mbare Musika Market. This gives the company a
competitive disadvantage in the beverages market.

Though there are advantages of doing global strategy, it is also paramount to know how these
international markets can be penetrated. Theoretically there are four basic avenues that
Artisanal Foods can take to market their baobab (mavuyu) juice globally and these are
exporting, contractual agreements, joint ventures, and manufacturing. The combination of
routes a company elects to pursue is contingent on internal industry and company influences,
as well as external factors. Important internal company influences include corporate goals,
product lines, size and financial strength, knowledge of and access to specific foreign
markets, and proprietary competitive advantages and technological strengths. Artisanal Foods
was motivated to produce the baobab juice because they wanted to address as gap in the local
market for provision of natural foods with high vitamin. The company started their operations
in 2019 and the writer believes they can make it to the markets outside Zimbabwe since the
juice is not popular on the international market albeit its deliciousness and health benefits.

Practically an example of how to enter the global market as well as some advantages can be
obtained from the history of Pepsi. History shows that the formula for Pepsi was created back
in 1893 by Caleb Davis Bradham in New Bern, North Carolina, USA. PepsiCo went through
branding changes and eventually settled on the red, white, and blue logo to represent
patriotism during World War 2. Finally, Pepsi-Cola merged with Frito Lay in 1961, and the
brand we know today started to take form. From new products to celebrity endorsements,
Pepsi’s marketing strategy has helped the company grow into what it is today. Pepsi created
new jingles and slogans to grab their audience’s attention. Their slogan, “You’ve got a lot to
live. Pepsi’s got a lot to give,” created a fresh, young brand voice. The edginess of Pepsi’s
marketing strategy subtly portrayed Coca-Cola as an outdated brand. Also, use of
sponsorships and endorsements also helped. It’s no secret that Pepsi’s marketing strategy
utilizes celebrity endorsements and company sponsorships to promote their product. In fact,
Pepsi now has exclusive rights to the Superbowl half-time show, which brings in about 100
million viewers each year. Pepsi has also been a key sponsor of the NBA since 2015 and
continues to reach out to other organizations. PepsiCo even became the UEFA Champions’
League sponsor in 2017.

Pepsi also has 36 bottling plants throughout the world including Zimbabwe. Moreover Pepsi
is especially popular in India, with it being the third most popular carbonated drink in the
country. Pepsi also relies heavily on a strong brand image and celebrity endorsements to
promote their product. They have had celebrities like Michael Jackson, Britney Spears, and
Beyonce publicly endorse the brand and its signature soda. Fast-forward in 2018 Varun
Beverages (Pepsi-Cola bottler) entered the Zim babwean beverages market using a
price penetration strategy (a dollar for two) and Delta which has been struggling to get
forex to import concentrates for its soft drinks felt the pinch. In 2019, the company
indicated that it increased production capacity at its new plant by over 150% and that
it is currently churning out 36 million bottles of soft drinks every month. In addition,
the firm is planning to invest USD150m in Zimbabwe over the next five years.

Conclusion

Subash (2020) states that a firm interested in entering the international market must evaluate
the risk and commitment involved with each entry and choose the entry mode that best fits
the company’s objectives and resources. Entry risk and commitment can be examined by
considering five factors which are characteristics of the product, the market’s external
macroenvironment, particularly economic and political factors, and the demand and buying
patterns of potential customers, the firm’s competitive position, especially the product’s life-
cycle stage, as well as various corporate strengths and weaknesses, dynamic capital budgeting
considerations, including resource costs and availabilities and internal corporate perceptions
that affect corporate selection of information and the psychic distance between a firm’s
decision makers and its target customers as well as control and risk-taking preferences.

Recommendations

1. Creating a solid brand

Though it takes some time, creating a solid brand can help you maintain a positive image
with your target audience. A cohesive brand can also help with brand recognition and loyalty.
You can experiment with logos, slogans, jingles, or other design elements to help you create a
memorable brand.

2. Embrace Partnerships

Just like how Coca cola’s marketing strategy utilized corporate sponsorships and celebrity
endorsements, you can use partnerships to increase your reach. Artisanal Brands can choose
to work with individuals or businesses that fit their brand values.

3. Take Risks (And learn from mistakes)

Rome wasn’t built in a day. The same goes for Pepsi’s brand, along with any other business
as well. Making mistakes is necessary for growth; the important thing is that you learn why
you failed and continue to try again. PepsiCo persevered through hardships in their early
years. Pepsi decided to buy their own sugar plantation to prevent going bankrupt again from
sugar shortages. Artisanal Brands might have to explore the regional market first and then the
global market to increase their market share. Competition for their product will be inevitable
but striving to do better has to be their main goal nomatter the hardships.
 REFERENCES

Jain, W (2016) in his book Global Strategy: Competing in the Connected Economy. New
York 

Rosenberg, J.A, 1998. Winning the Global Game. New York: The Free Press,

Samuel, C.C and Douglas, S.P., 1997 "Developing a Global Marketing

Strategy." Chemtech, April 1997, 44-49.

Subash (2020)

Wong C, Haroldm, and Rod H., 1998. Global Marketing Strategy. London: Financial Times
Management.