Reply 2 to discussion (Global Strategy)
Introduction Internationalization entails a company broadening its reach beyond its national boundaries. This can be accomplished via commerce or direct investment and presents both possibilities and obstacles. Companies may opt for internationalization to leverage foreign market prospects or access resources and expertise that may not be readily obtainable in their home country (Grant, 2019). Almarai is a highly reputable business enterprise that originated in the Kingdom of Saudi Arabia (KSA) and has since expanded its operations globally. It has emerged as the largest and most successful dairy company in the Middle East, catering to a vast and loyal customer base across multiple countries. (Almarai, n.d.) Competitive Advantage International Extension Almarai is known for its commitment to innovation and producing top-tier products, earning them a reputable standing. As they expanded globally, Almarai ensured that their offerings matched or exceeded local standards and preferences. Their vertical integration model, encompassing the entire supply chain from farming to distribution, enabled them to maintain consistent quality and cost control. Almarai has replicated some aspects of this model to maintain its high standards in foreign markets. The company’s strong brand recognition in the GCC region has helped it expand into new areas, as its reputation for freshness and quality has attracted customers worldwide. However, replicating their competitive advantages in foreign markets isn’t always feasible due to different regulations, consumer preferences, and logistical challenges. This can make achieving vertical integration complex in countries with stringent land ownership and agriculture laws. Additionally, varying consumer tastes can require product options to be adjusted. (Hanaysha, 2023) Foreign Market Entry Mode When exploring investment prospects in international markets, there are two main avenues to consider: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). FPI pertains to brief investments in foreign financial assets, whereas FDI involves a direct financial stake in a foreign country and often necessitates a significant amount of capital (MAVERICK, 2023). Almarai employed a multifaceted approach, encompassing joint ventures, acquisitions, and exports, to extend its reach into previously unexplored markets. The company initially focused on exporting its products to gauge demand while avoiding excessive expenses. In cases where legal or cultural barriers presented a challenge, Almarai established partnerships with local enterprises, taking advantage of their distribution networks and specialized knowledge. These astute moves toward backward integration bolstered the company’s national and international core businesses (IvyPanda, 2020). Acquiring companies such as Fondomonte in Argentina also enabled Almarai to secure dependable feedstock sources for its dairy operations (All About Feed,2020). Resources and Capabilities Almarai expanded its business in foreign markets through strategic partnerships and joint ventures with local companies. Almarai gained access to valuable consumer data, distribution networks, and market knowledge by leveraging these collaborations. To ensure top-notch delivery of their products, Almarai prioritized building strong distribution networks in foreign areas, sometimes through acquiring local competitors. Additionally, Almarai skillfully navigated local laws and customs in new markets by leveraging connections made through their strategic alliances. The company greatly emphasized integrating with local business culture, which can differ significantly in foreign markets. Almarai’s successful global expansion showcases the importance of adapting to local conditions and regulations while utilizing competitive advantages and core skills from the home market. (Hanaysha, 2023) Reference • All About Feed (2020). Saudi dairy giant secures feed supply in Argentina. https://www.allaboutfeed.net/home/saudi-dairy-giant-secures-feed-supply-inargentina/ • Almarai. (n.d.). Almarai brands. Retrieved April 11, 2024, from https://www.almarai.com/en/brands/almarai • Grant, R. M. (2019). Contemporary strategy analysis (11th ed.). John Wiley & Sons. Print ISBN-13: 978-1119815235 • Hanaysha, J. R. (2023). Almarai Company: Regional Growth in the Arabian Gulf Market. Emerging Economies Cases 81. https://doi.org/10.1177/25166042231179656 Journal, 5(2), 74- • IvyPanda (2020). Almarai Company Profile: Performance & History. https://ivypanda.com/essays/almarai-company/ • MAVERICK, J.B. (2023). Foreign Portfolio vs. Foreign Direct Investment: What’s the Difference?. Dotdash Meredith. https://www.investopedia.com/ask/answers/060115/what-difference-betweenforeign-portfolio-investment-and-foreign-direct-investment.asp
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