How Global Companies Win Out by Hout et al.

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Table of Contents

Summary
Review of Examples Hout et al. (1982)
Ideas from Academic Sources
Future Research
References

Summary

It is essential for today’s companies to expand their presence in new markets, which is catalyzed by intense globalization processes, developments in digital technology, and increased user access to the Internet. New local brands, products, and services in the current market are comparatively easy for consumers from other countries to learn about, which stimulates increased sales and brand awareness. In this regard, to improve profitability, diversify risk, and economies of scale, today’s companies should consider a strategy to enter international markets by becoming a global brand. This article reviews examples of companies successfully competing in the global marketplace, their strategies, and ways that a brand can be used to enter the global marketplace.

Review of Examples Hout et al. (1982)

In their HBR article on strategies for successfully competing in the global marketplace and answering the question of how and why a company can increase its profits through its presence in the international arena, Hout et al. (1982) describe three real-world examples. First is Caterpillar Tractor, which was able to achieve global success through a strategy of expanding dealer networks, establishing production facilities in several major countries, and adding local factories to the supply chain that would modify the company’s universal components to meet the needs of a particular country, thus reducing shipping costs. In addition, Caterpillar Tractor has cooperated with Komatsu’s competitor (Mitsubishi) in the Japanese market in time to block Komatsu’s access to the market and increase its market share. Second is Sweden’s LM Ericsson, which was able to gain worldwide success by investing in small emerging markets and creating technological innovations that were different from its competitors’ offerings. Finally, there is Honda, which was able to develop marketing campaigns to artificially generate demand for its products among an audience that did not seem to be ready for it. In addition, Honda’s marketing included generous and lucrative offers for new customers, which bribed large markets to become interested in the company’s products. Thus, Hout et al. (1982) describe several elements of a strategy that virtually guaranteed the company’s international success, namely, adapting to local markets, expanding production capacity, investing in innovation, fostering a global mindset, and competing effectively.

Ideas from Academic Sources

Although Hout et al. (1982) take a comprehensive approach to describing international success strategies for companies, their article was published almost 40 years ago, which means some of the considerations and ideas may have lost relevance. For this reason, this section examines the state of the current academic agenda on the issue of organizational strategies for global effectiveness. One study raised questions about the relationship between mental distance and global thinking as predictors of companies’ international success (Vătămănescu et al., 2020). By psychological distance, the authors understood the perceived cultural, social, political, and other differences between the two countries where the company is present in the markets. Thus, Vătămănescu et al. (2020) concluded that companies that develop a global mindset and actively manage mental distance are most likely to perform better in the international arena. These results partially correlate with those of Ghauri et al. (2021), who showed that a successful global business should be associated with organizational activities such as innovation and digital transformation, sustainability and social responsibility, risk assessment of geopolitical and health tensions, and a comprehensive study of the market realities of other countries. The example of Hout et al. (1982) is supported by the study of Tien et al. (2019), who postulated the beneficial role of marketing in achieving global success. Specifically, international marketing, according to the authors, plays a crucial role in helping businesses identify and respond to unique market challenges.

Academic discourse also often cites examples of companies that achieve international success. For example, Tien (2019) showed the example of Samsung and Apple as major global giants and described how a developed distribution system allows both companies to achieve success. The companies’ strategies are not identical: Apple focuses on building brand image, improving service quality, and a broad presence in retail stores, while Samsung develops partnerships and concentrates on direct sales. At the same time, each strategy allows the company to occupy a leading position on the global stage. Reza (2020) described the example of Unilever and showed that international success comes from developing products for different consumer segments that are environmentally friendly and sustainable, which covers the demand of communities.

Future Research

Based on the literature search conducted, the current state of the academic agenda largely echoes the thinking of Hout et al. (1982) but extends it to include the example of today’s global giants. In doing so, inquiries for future research directions have been formulated, expanding on the problem of developing strategies for global success. For example, risk assessment and prediction systems for external pressures such as COVID-19 should be explored to avoid disruptive consequences for companies in the future (Ghauri et al., 2021; Tien, 2019). However, Vătămănescu et al. (2020) emphasize the importance of empowering empirical research to obtain more representative data on global mindset as a predictor of success. It is also proposed to study in more depth the cases of successful companies and to identify the factors that contributed to their success.

References

Ghauri, P., Strange, R., & Cooke, F. L. (2021). Research on international business: The new realities. International Business Review, 30(2), 1-10. Web.

Hout, T. M., Porter, M. E., & Rudden, E. (1982). How global companies win out. Harvard Business Review. Web.

Reza, M. H. (2020). Marketing strategy and sustainable plan of Unilever. International Journal of Scientific Research and Engineering Development, 3(4), 680-692. Web.

Tien, N. H. (2019). International distribution policy comparative analysis between Samsung and Apple. International journal of research in marketing management and sales, 1(2), 24-27. Web.

Tien, N. H., Phu, P. P., & Chi, D. T. P. (2019). The role of international marketing in international business strategy. International Journal of Research in Marketing Management and Sales, 1(2), 134-138. Web.

Vătămănescu, E. M., Alexandru, V. A., Mitan, A., & Dabija, D. C. (2020). From the deliberate managerial strategy towards international business performance: A psychic distance vs. global mindset approach. Systems Research and Behavioral Science, 37(2), 374-387. Web.

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