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MTV Maintain

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1. Define global strategy and explain different types. Give examples and pro’s and cons. (Do not only explain the 4 strategies but also look in to the axes)

A global strategy is a strategy that can be used when a company decides to expand their operations abroad to achieve competitive advantage and superior profitability. It defines a company’s strategic guide to globalization. A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Global strategies require companies to tightly coordinate their product and pricing strategies across international markets and locations.

A company can decide to choose one of the four basic strategies. Global standardization strategy, localization strategy (multidomestic), transnational strategy, and international strategy.

Global standardization strategy – Companies that are pursuing a global standardization strategy focus on increasing profitability by lowering the costs that come from economies of scale and location economies. They want to market a standardized product worldwide, so they can gain maximum benefits from economies of scale. If there is strong pressure for cost reduction, and demand for local responsiveness is minimal, then a global standardized strategy is the best strategy to pick. These conditions prevail in many industrial goods industries, whose products often serve universal needs.

Localization strategy – This strategy focuses on increasing profitability by customizing the company’s products so that they provide a good match to tastes and preferences in different national markets. This strategy works if there is low pressure for cost reduction and if there is a high pressure for local responsiveness. By customizing the product offering to local demands, the company increases the value of that product in the local market. On the downside costs tend to be higher, since a company needs to change their product for several markets. MTV is a good example of a company that has had to pursue a localization strategy. Otherwise MTV would have lost market share to local competitors, advertising revenues would have fallen and its probability would have declined.

Transnational strategy – This strategy was created by Bartlett and Ghoshal, two researchers who were researching on this subject. Companies that choose for a transnational strategy are trying to develop business models that simultaneously achieve low costs, differentiate the product offerings across geographic markets, and foster a flow of skills between different subsidiaries in the companies’ global networks of operations.

International strategy – Some companies have the chance to be confronted by low cost pressures and low pressures for local responsiveness. These companies are selling a product that serves universal needs, but they do not face significant competitors, so they don’t have pressure to lower their cost structure.

Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

2. What is corporate governance?

Corporate governance is the system by which companies are directed and controlled. Sometimes people use the term to determine how good, efficient and responsible a company must be led. A good corporate governance policy translates the interests of the stakeholders towards the policy and the outcomes and the future expectations are reported to the board of directors and the shareholders. With a good and clear policy it is possible to prevent fraud.

Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

3. What different entry modes/strategies are there?

There are five different entry modes possible for a company: exporting, licensing, franchising, entering into a joint venture with a host country company, and setting up a wholly owned subsidiary in the host country.

Exporting – Most companies begin with exporting as a global expansion and only later switch to one of the other modes for serving a foreign market. It has two distinctive advantages: it avoids the costs of establishing manufacturing operations in the host country, and it may be consistent with scale economies and location economies. The company may be able to realize substantial scale economies from its global sales volume. There are also a number of downsides. First, exporting from the company’s home base may not be appropriate if there are lower-cost locations for manufacturing the product abroad. Sometimes a company has to pay to manufacture in a location where conditions are most favorable. Second, high transport costs can make exporting uneconomical. Finally, a company may work with a local agent, but it has no guarantee that the agent will act in the company’s best interest.

Licensing – International licensing is an arrangement whereby a foreign licensee buys the rights to produce a company’s product in the licensee’s country for a negotiated fee. The licensee then puts up most of the capital necessary to get the overseas operation going. The advantage of a license is that a company does not have to pay for development and risks associated with a foreign market. There are three downsides. First, it does not give a company control over manufacturing, marketing, and strategic functions. Second, licensing limits a company’s ability to coordinate strategy. Finally, there is a risk when a company provides the technological know-how to another company.

Franchising – This is very similar to licensing, except that franchising tends to involve longer-term commitments than licensing. However the disadvantages are less, than in the case of licensing. There is no reason to consider the need for coordination of manufacturing to achieve experience curve and location economies.

Joint ventures – A joint venture is one of the most popular forms of global expansion. Joint ventures have a number of advantages. First, a company may feel that it can benefit from a local partner’s knowledge of a host country’s competitive conditions, culture, language, political systems, and business systems. Second, when the development costs and risks of opening up a foreign market are high, a company might gain by sharing these costs and risks with a local partner. Finally, in some countries, joint ventures are the only feasible entry mode. There is also the risk that a company provides the technological know-how to another company. Also a company doesn’t have full control.

Subsidiaries – This way a company owns 100% of the subsidiary’s stock. It will offer three advantages. First, when a company’s competitive advantage is based on its control of a technological competency, it will lower the risk of losing this control. Second, a subsidiary gives a company the kind of tight control over operations in different countries. Finally, if a company wants to realize location economies and the scale economies that flow from producing a standardized output, a subsidiary would be the best choice.

Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

4. What are the ethical dilemmas for MTV for localization?

The term ethics refers to accepted principles of right or wrong that govern the conduct of a person. Managers may be confronted with ethical dilemmas, situations in which there is no agreement over exactly what the accepted principles of right and wrong are or where none of the available alternatives seems ethically acceptable. In MTV’s case, customers have the right to be fully informed about the products and services they purchase, including the right to information about how those products might cause harm to them or others, and it is unethical to restrict their access to such information. Programs like Teen Mom, Sweet Sixteen, Jersey Shore ect. can be unsuitable for several countries.

Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

5. What is the influence of the most important stakeholders from MTV?

First of all, there will be a board of directors composed of a majority of outside directors who have no management responsibilities in the firm, are willing and able to hold top managers to account, and do not have business ties with important insiders. Second, there is a board in which the positions of CEO and chairman are held by separate individuals, with the chairman as an outside director. Third, there is a compensation committee formed by outside directors. It is the compensation committee that sets the level of pay for top managers, including stock option grants and the like. Fourth, the audit committee of the board, which reviews the financial statements of the firm. Finally, the board should use outside auditors who are truly independent and do not have a conflict of interest.


Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

6. How did MTV implement the gene transfer? And look in to the future challenges of MTV in the broadcasting business.

MTV opens up a local station, and it begins with expatriates from elsewhere in the world to do a ‘gene transfer’ of company culture and operating principles.

Jones, G. R. & Hill, C. W. L. (2010) Theory of Strategic Management. Hampshire: Cengage Learning

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