Principles of Transnational Strategy of Snap Fitness – Term Paper Example
International Business Strategy Every business’s desire to expand must be coupled with a comprehensive strategy that acts as a guide in the company’s operations. Snap Fitness is no different and if it is to succeed in setting up operations in South Korea it must make use of the present information to come up with the best fitting strategy. In this case, Snap Fitness is not exactly a localized business it has over the years experienced what it is like to run overseas/international establishments. With a presence in 15 countries, Snap Fitness management has enough knowledge on the challenges most likely to face new market entrants. Even though the knowledge gathered over time is vital and applicable in most scenarios it is critical to note that every new market has unique attributes. These are defined by factors such as demographics, social as well as economic differences (Bartlett & Ghoshal, 2002). Therefore, in formulating an international strategy, Snap Fitness ought to put into considerations these factors as well as consider its own standing in terms of business values and its defining internal factors. In an attempt to do so, the business must look for an international strategy that harmonizes the existent set ups with the planned establishment.
Considering these needs, this analysis deems transnational business strategy as the most appropriate. A transnational business strategy amalgamates most of the other theories and is thus seen as a hybrid strategy. It is preferred because of its ability to integrate the crucial aspects of all the other strategies to come up with a comprehensive yet business enhancing strategy. There are several tenets of transnational strategy, at a global level this strategy seeks to establish a strong central control. This is crucial in managing new establishments and maintaining the business culture throughout new establishments (Stonehouse et al 2007). Other aspects under the global scope are economies of scale and product standardization which seek to ensure consistency and cost consciousness. If the strategy is properly instituted these global aspects can ensure that Snap Fitness carries the consistency, quality of service and the existent business culture to the planned South Korean establishments (Bartlett & Ghoshal, 2002). Internationally, it is important to notice that the strategy even with its strong central control allows for subsidiaries to actively participate in decision making especially at the local scene. One thing that is solely left with the parent company is the role of resource allocation (Stonehouse et al 2009). All subsidiaries, such as the planned one in South Korea, will have to continually receive funding from the parent company. This is important as it helps vary resources or capital based on the establishments’ level of growth or other aspects that dictate resource demand. The central themes under this strategy are coordination, cooperation and interdependence of all establishments under the Snap Fitness Company irrespective of their location.
Given the need to retain existent structures and to ensure transmission of existent business values and culture, the organization structure must be modeled in such a way that it allows for proper communication. Another very crucial aspect is that the adopted structure must be adaptive it must be able to allow local subsidiaries make decisions and act on them at the local level (Bartlett & Ghoshal, 2002). This is critical as it allows local establishments assimilate new business practices that are in line with the local client’s tastes and preferences. Choosing the wrong structure would make such adaptation very cumbersome and is buoyed down by bureaucracy (Stonehouse et al 2007). Lastly, an organization structure is important in the sense that it improves or complicates cohesiveness of the entire business. A complex structure becomes a deterrent to development both at the local scene and at the international scene. This is a result of closed channels of communication or slow means of information dissemination either from the top (parent company) to bottom (subsidiaries) or vice versa.
In this respect, it is considered that adopting a decentralized organization structure would be best for Snap Fitness. Notably, a decentralized structure does not entirely sap power from the parent company. The parent company still retains its capacity to make crucial decisions and one with wide ramifications to the entire company. However, the difference results from the fact that the subsidiaries have their own mini-structures that handle operations (Bartlett & Ghoshal, 2002). The decisions made at the local level affect the local subsidiaries and not the entire company. A decentralized system is beneficial as it allows best practice in subsidiaries and also facilitates adaptation as operational changes do not have to await the parent company. Perhaps the best thing to emerge from a decentralized system is the ability to empower intermediaries and enhance efficiency.
Bartlett, C.A. & Ghoshal, S. (2002). Managing across border: the transnational solution.
Boston : Harvard Business School Press.
Stonehouse, G., Campbell. D., Hamil, J. & Purdies, T. (2009). Global And Transnational Business: Strategy And Management 2nd Edition. London: Wiley India Pvt. Limited.
Stonehouse, G., Campbell. D., Hamil, J. & Purdies, T. (2007).Global and Transnational Business: Strategy and Management. London: John Wiley & Sons.