SUMMARY
Professor Juan Alcacer, a teacher in the Strategy Unit at Harvard Business School, emphasizes the importance of adopting a long-term geographic strategic approach when expanding businesses. Regardless of whether the expansion is within a nearby town or internationally, this article stresses the significance of considering tactical factors and timing when opening new operations. Furthermore, it discusses the essential factors that need to be evaluated when expanding business operations globally.
The article discusses various companies and business firms, including Walmart Company and Pixar Company, which serve as illustrations to elaborate on the presented ideas. Professor Alcacer highlights three key elements related to a company’s strategic value: the advantage of playing strategic chess over tactical checkers, and the notion that the decision to expand is occasionally influenced by misguided motivations.
Many companies are tempted to expand their operations to new locations, viewing geographic strategy as a short-term checkers match instead of a long-term chess game. Professor Alcacer emphasizes the importance of considering geographic strategy as a long-term chess game. Many companies assume that if their business is successful in one location, it will automatically be successful in other locations, leading them to engage in expansion.
The success of the Walmart Company illustrates strategic expansion. Owned by Sam Walton, this variety store strategically opens branches in small rural towns and later expands to urban areas. The article emphasizes the significance of not only financial resources but also the time and energy invested by managers in ensuring the company’s successful expansion. Additionally, it highlights the importance of internal linkages in expanding business, both locally and internationally.
LEARNING, COMMENTS AND REACTIONS
Within our community, I have observed a growth in local businesses and eateries. However, their outcomes have varied; some have thrived while others have not. As an individual who is still in my teenage years at 17, I do not possess the necessary understanding of the elements to contemplate when extending operations to fresh sites. Nonetheless, having perused this article, I now grasp the importance of regarding geographic strategy as a protracted game akin to chess rather than a fleeting game resembling checkers.
Just as chess requires ample time for strategizing and selecting the optimal move against an opponent, business expansion also calls for careful consideration of the time needed to make a wise decision about the location for the expanded operation. This is crucial in ensuring its success.
Just like in chess, choosing the wrong move can lead to losing and giving the opponent an opportunity to win. This concept also applies to business expansion. If a company picks an inappropriate location for their operations without valid justification, they may lose their concentration and ultimately fail. Hence, it is crucial for companies to carefully select a location, similar to making the initial move in a game of chess.
It is important for companies to understand that what works in rural areas may not work in urban communities, and vice versa. Timing and location are key factors for success. Additionally, a company’s actions and initiatives are critical in achieving success. Evaluating the potential long-term risks of expansion is also essential.
The negative consequences of a company’s expansion can result in a weakened organization and hinder its effectiveness. Thus, it is crucial for companies to remain adaptable and prepared for unforeseen outcomes. I concur with Associate Professor Juan Alcacer’s perspective that numerous companies expand for less than ideal reasons. It is important to emphasize the importance of being a strategic chess player rather than solely engaging in tactical checkers.
Strategic expansion is essential for a company rather than tactical expansion, as solely relying on the affordability or attractiveness of the location may result in hiring cheap labor, which is not advisable. Merely depending on cost reduction for expansion does not ensure a competitive advantage over competitors.
Professor Juan Alcacer’s assertion that prioritizing low costs to the detriment of other factors is a mistake is accurate. From a strategic standpoint, it is crucial for companies to take into account the actions of other companies in the target market in order to gain a competitive edge when expanding. Before embarking on expansion, I place significant importance on studying the culture of the target location. “Countries and consumers vary; the population in India differs from that of the United States.”
This statement caught my attention. It is crucial for a business to tailor its services and products to fit the local culture when expanding operations. This involves considering the local tastes and lifestyles, as well as grasping what people in a specific location desire. For instance, if a restaurant aims to expand both internationally and locally, it must acquaint itself with the local culture and take into account the preferences of people in that area in order to attain success.
The previous sections mention the importance of flexibility for a company’s expansion. Flexibility enhances competitive advantage, as well as the quality and services provided by the company. A prime example of a company demonstrating flexibility, excellent quality, and services is McDonald’s, the renowned fast food restaurant established by Ray Kroc. McDonald’s has achieved great success in expanding its operations and possesses a strong competitive advantage.
McDonald’s is renowned worldwide for its excellent food quality, efficient quick service, and enjoyable environments in all of their branches across the globe. Taking this into consideration, McDonald’s has effectively adapted and enhanced their offerings to meet the unique needs of customers in different geographical locations, which sets them apart from competitors. I also concur with Professor Juan Alcacer’s viewpoint that strategic location assessment should consider factors such as available resources, support systems, and the company’s ability to gain a competitive advantage.
PROVOKING QUESTIONS
- What is the most effective strategy that a company must do prior to global or international expansion?
- In targeting a location prior for expansion, what do companies need to consider so that by the time the shop has been established their efforts and sacrifices will not go into nothing?
- How do expanded operations of companies maintain competitive advantage over other companies?
