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This paper aims to analyze three different consumer products to gain insights into the distinctive features of international products and organizations. Table 1 summarizes the data about countries supplying materials for the selected consumer products, manufacturing these products, marketing and promoting them, and serving as target markets for these goods.
Table 1. An analysis of consumer products.
Note. aNike (2019). bThompson (2019). cSuper Shop (n.d.). dLego (2017). eLego (n.d.-b). fLego (n.d.-a). gInditex (n.d.). hPatel (2019). iInditex (2018).
The first conclusion that can be made from the found information about consumer products is that the companies’ motivation to expand internationally was related to factors of production. According to Daft (2010), cheap labor and access to raw materials are among the leading factors causing companies to go multinational. As is seen from the table, international companies generally do not manufacture products in the country where they are incorporated. For example, although Nike is headquartered in the US, most of its manufacturing takes place in Asian countries. This is because labor, which is an essential factor of production, is expensive in the US but cheap in Asian countries (Nica et al., 2021). In addition, Nike (2019) allows its independent contractors and suppliers to buy raw materials in the countries where its products are manufactured. As a result of these measures, Nike can save up to $0.15 per piece (Nica et al., 2021). Thus, low-cost production factors motivate companies to move their manufacturing facilities to other countries. Based on these findings, it may be recommended that international companies should consider moving their manufacturing facilities to countries with cheaper production factors to reduce the cost of production.
Another conclusion is that companies become international to get the benefits of economies of scale. According to Daft (2010), large-volume production allows for achieving the lowest cost per unit, but the domestic market is often too small for the company to realize all the produced goods. Therefore, in order to benefit from economies of scale, firms have to establish an international presence. For example, Zara, which is the main brand of the Spanish company Inditex, realized the economies of scale through operating in 96 markets and launching 106 more markets around the world in 2018 (Inditex, 2018). Furthermore, the population factor plays a role when companies decide to expand internationally. All the reviewed companies sell their products in parts of the world far from their headquarters location. They are especially drawn to the Chinese market because of its large size and substantial purchasing power.
In addition, it can be assumed that all three companies benefit from economies of scope, that is, “the number and variety of products and services a company offers, as well as the number and variety of regions, countries, and markets it serves” (Daft, 2010, p. 213). This is because the reviewed companies offer a wide range of products and operate in countries in different parts of the world. These findings suggest that international companies should consider entering new markets, especially those with high purchasing power, in order to get the benefits of economies of scale and economies of scope.
Finally, the marketing and promotion in these companies are done by the countries in which they are headquartered. This can be explained by the need for headquarters to actively engage in planning and control to ensure that all the company’s subsidiaries move in the same direction (Daft, 2010). For example, Nike has global marketing groups that develop marketing campaigns for promoting its products worldwide (Thompson, 2019). The same is true for Lego and Zara since they align the marketing efforts in their subsidiaries with those developed by the headquarters. Based on these findings, it may be recommended that international companies should align their marketing strategies throughout their global operations. Although international companies may allow their subsidiaries to adapt marketing campaigns to local cultures, the main direction of marketing efforts should generally be consistent among different subsidiaries of one company.
References
Daft, R. L. (2010). Organization theory and design (10th ed.). South-Western Cengage Learning.
Inditex. (n.d.). Traceability. Web.
Inditex. (2018). Zara launches online sales in 106 new markets through new global platform. Web.
Lego (n.d.-a). About us. Web.
Lego. (n.d.-b). Porsche 911 GT3 RS. Web.
Lego. (2017). The LEGO Group’s supplier list. Web.
Nica, I., Chiriță, N., & Ionescu, S. (2021). Using of KPIs and Dashboard in the analysis of Nike company’s performance management. Theoretical and Applied Economics, XXVIII(1(626)), 61-84.
Nike. (2019). Annual report on form 10-K. Web.
Patel, P. (2019). Zara uncovered: Inside the brand that changed fashion. BBC News. Web.
Super Shop. (n.d.). Nike SB Shane Shoes (midnight navy/white cerulean). Web.
Thompson, A. (2019). Nike Inc. organizational structure characteristics (analysis). Panmore Institute. Web.
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