International Management Solutions

International Management Solutions

Entry into the global market provides new opportunities for an organization to beat the domestic competition, expand its sales, and maximize its profitability. Entry into the global market also poses unique challenges to an organization. International management has proved to be a significant problem for organizations operating in the global market. The challenge of international management is evident in the case of Yushan Bicycles described by Bartlett & Myers (2017), a Taiwan Bicycle manufacturing company the has entered the global market. The case name above is analyzed in this paper. The critical problem is identified, analyzed, and alternatives to address the problem developed. An outline of how the best alternative will be implemented to address the identified problem is formulated.

Statement of the problem

Though Yushan Bicycles had entered several markets in the global market, it faced significant challenges in the Australian market. Bartlett & Myers (2017) say that in one of the quarters of the year 2015, the Yushan Australia (YA) recorded an unexpectedly poor financial performance. The leadership of the company in Taiwan and the top leadership of Yushan Australia led by James Hamilton had opposing opinions on the cause of the poor finance recorded by the subsidiary. James Hamilton attributes the poor performance to pricing transfer policies, delivery delays, and problems related to information systems. The Taiwan leadership, on the other hand, questions Hamilton’s entry strategy and operations, a factor that makes Hamilton feel that the leadership of the parent company does not trust his decisions. On a meeting at the company’s headquarters, there seems to be no agreement on the way forward. It is evident that the main problem that the organization has not adopted a particular international strategy. An international strategy defines the management relationship between the parent company and subsidiaries operating in different countries.

Alternative solutions
Yushan Bicycles may adopt either of the three established international strategies to help in addressing the management crisis that has been experienced between the management of the parent company and the subsidiary operating in the Australian market. A multi-domestic strategy is one of the strategies that could be adopted by the company. Grunig & Morschett (2017) define a multi-domestic strategy as an international management strategy that emphasizes concentration on the specific needs of different markets. National cultures are different, and as a result, the specific needs of consumers change from one region to another. As a result of being rational, consumers expect their needs to be fulfilled by the products/services they purchase. In the case of Yushan Australia, a multi-domestic strategy will see the leadership of the parent company allow James Hamilton to employ management style and strategies that enable the company to penetrate the Australian market considering the situation on the ground and the identified specific needs of the consumers. Adopting the multi-domestic strategy will, for instance, allow the leadership of Yushan Australia to adopt a suitable pricing strategy depending on the price elasticity of the market and counteract the implementation of the pricing transfer policy.

The second alternative that can address Yushan Bicycles’ challenge is a global strategy. It is a strategy that disregards the inherent differences of national cultures that influence market needs and emphasizes efficiency (Grunig & Morschett, 2017). As opposed to a multi-domestic strategy, the global strategy does not allow differentiation regardless of the difference in national cultures that trigger changes market needs from one country to another.

The third alternative available to Yushan Bicycle is the adoption of the transnational strategy. According to Grunig & Morschett (2017), a transnational strategy balances the principles of multi-domestic and global strategies. The strategy emphasizes both the need for efficiency and differentiation that is meant to meet the specific needs of different markets.

The preferred alternative and its implementation

The adoption of transnational strategy is the most suitable alternative for Yushan Bicycle. The grievances of James Hamilton are realistic, and if addressed, they can help overturn the poor financial performance recorded by Yushan Australia. For instance, Hamilton laments that the pricing transfer policy is not suitable for the Australian market considering the competitiveness of the market (Bartlett & Myers, 2017). Considering the law of demand in elastic price markets, it is justifiable to argue that the pricing transfer policy may hurt some of the subsidiaries’ performance depending on the prevailing relevant market conditions at the time of the transfer. On the other hand, some of the recommendations made by the leadership of the parent company help in improving the financial performance of Yushan Australia. For instance, improved accuracy in forecasting will improve the subsidiary’s reliability, and hence, improve consumers’ confidence.

In implementing the transnational strategy, Yushan Bicycles will need to implement an effective organizational structure. Flat organizational structure is suitable in this as it will help reduce the complexity involved in the approval processes, a factor that, in turn, will help Yushan Australia efficiently make decisions and implement them. It is recommendable that the company restructures to allow for flexibility at the subsidiary level and, at the same time, maintain certain levels of control at the leadership of the parent company. The company also needs to formulate and implement a differentiation strategy. The differentiation strategy should ensure that the market needs to inform decisions specific to the individual markets of the individual markets. Policies should be developed to ensure the implementation of the recommended differentiation and restructuring strategies.

References

Bartlett, C. A., & Myers, P. S. (2017). Yushan Bicycles: Learning to Ride Abroad.

Grunig, R., & Morschett, D. (2017). Developing international strategies. Springer Berlin Heidelberg.