Understanding Global Strategy
Expansion is a strategy that allows companies to reach new customer groups, create more locations, and increase demand. Opening locations or targeting consumers in other countries creates an international business. This practice is facilitated with the help of a global strategy that includes the analysis and planning for international expansion (Peng, 2021).
A business may choose different approaches to global strategy. For example, some companies select a standardization strategy where their products and services do not differ from country to country (Peng, 2021). In other cases, an international approach is used by keeping the main office in the original country and working with foreign suppliers and manufacturers (Peng, 2021). Finally, a business can customize its offerings to each location, following a multinational global strategy (Peng, 2021). Each approach requires a unique plan and asks for different connections, collaborations, and resources.
Global Strategy in the Furniture Industry
For furniture manufacturing and selling companies, a global strategy may be based on the abovementioned options. Furniture trends and requirements differ for most nations, but home furniture needs remain high (The Business Research Company [BRC], 2019). Thus, the competition among these businesses is also significant, requiring finding a market where the supply is not overflowing and the demands are not fully met. Among the largest markets for this industry, Asia Pacific countries, such as China, Japan, India, and Australia, are some of the most promising (BRC, 2019). Moreover, Western Europe is considered a large market with a stable presence in the segment (BRC, 2019). Finally, North America is a significant player in the industry.
Comparative Analysis of Potential Global Markets
China
The three countries that are eligible for expansion are China, Germany, and Japan. China currently holds the leading position in the furniture industry, being a prominent manufacturer, exporter, and home furniture consumer (BRC, 2019). It has various available facilities, a robust labor force, and access to a developed transportation network across the Eurasian continent. Therefore, a company may readily use the country’s resources.
However, the main issue with choosing China lies in that it is the leading exporter and manufacturer of furniture. This means that Chinese companies produce tremendous goods in demand inside and outside the country, making the competition extremely high (BRC, 2019). Thus, a business that does not offer a unique or affordable product may not succeed in China.
Japan
The second country selected for global expansion is Japan. In contrast to China, Japan does not have the same manufacturing abilities and available facilities. However, the country imports a lot of furniture, and its citizens have high purchasing ability (BRC, 2019). Thus, the main drawbacks of global expansion are the limited workforce and facility options, which hinder production growth. Another major drawback is that Japan is more remote and isolated from other countries, which challenges marketing and further expansion.
Germany
Germany is the third potential country for expansion, similar to Japan in many ways. It also has limited manufacturing resources but is a good opportunity for export due to customers’ high demand and good purchasing ability (BRC, 2019). At the same time, if the company chooses to export furniture or find alternatives to produce goods within the country’s limitations, it may enjoy a high demand for its products.
Recommended Country for Global Expansion
Based on the analysis of the three countries, Germany seems to be the best option for expansion, primarily if the company builds relationships with local retailers and focuses on exports rather than moving all parts of the business to the new country.
References
Peng, M. W. (2021). Global strategy. Cengage learning.
The Business Research Company. (2019). Household furniture market – By type (wood furniture, metal furniture, plastic furniture), by area of use (bedroom furniture, living room furniture, dining room furniture, household furniture), and by region, opportunities, and strategies – Global forecast to 2023. Web.