SL 6.

With reference to one or two organizations that you have studied, evaluate different
strategies businesses can adopt to respond to issues of globalization​.

My chosen organizations are the two airlines British Airways and Easyjet. Although they are
based in Europe, they are good choices here as they have to respond to issues of globalization
(in the sense of: international competition, liberalization of the market, increasing power of the
consumers thanks to the internet, the world becoming a small place). In that dynamic context,
British Airways and Easyjet have to plan and implement (long-term) strategies – and we can
already see the challenge, as strategies are like “set in stone”, once decided and written in
business plans, typically for 5 years, whereas globalization is all about speed of change, flows
of people/capital/ideas and “here today, gone tomorrow” (like an airplane!)

Despite the impression that senior managers could choose between hundreds of business
strategies, Mister Ansoff showed in his famous matrix that ultimately only 4 options exist:
● Market penetration
● Product development
● Market development
● Diversification

We will now examine each business strategy in turn, examining what it means in the context of
globalization, with reference to British Airways and Easyjet (and both their current strategies and
possible future strategic decisions).

Market Penetration
Market penetration is relevant for a company (for example British Airways) well established in its
market, offering the same product (flights with a range of services such as corporate lounges
and business class facilities) to the same customers (business people, wealthy people). Here
promotional marketing is the key, for example with its latest campaign “To fly, to serve” BA
wants to reinforce the message that it’s an old company faithfully serving the British public (so
saying “we’ve been loyal to UK travelers, UK travelers should be loyal to us”).

Market development
Market development is about targeting new customers, so in the case of Easyjet it is targeting
potential travelers in countries where Easyjet is not operating yet. At the moment, Easyjet does
not offer flights from Romania to other places in Europe – so a form of market development for
Easyjet would be to start operating from airports in Romania (Bucharest). The new market is
Romania, which is a good example of globalization, as Romania is now in the EU. Easyjet has
probably planned that already, so it is realistic.

Product development
Product development is about new products; in the case of Easyjet, they have now created
Easycruise, a budget cruise line based on the same principles as Easyjet. The market is the
same (budget-conscious travelers who don’t care about extra services), but the product is new
(a cruiseship with minimal facilities).

Diversification
Diversification is the most risky strategic option, so businesses rarely go for it. For BA, it would
mean selling new products to new customers, for example opening UK-themed restaurants or
schools in South America. It could work (if they use the image of quality and Englishness)
though I would not recommend it, especially as globalization means hyper-competitition, and
they don’t know the markets and the products well, although they can do a lot of primary and
secondary market research.

For customers, all these strategies are good, as it means that they can access more products
and services (for example Romanians who want to travel to England with Easyjet would be
cheaper than with British Airways). For shareholders, all these strategies are good, though
diversification is more dangerous and they could lose their investment if the strategy fails. For
societies, all these strategies are good too, as they bring people closer together (especially in
the case of airlines!) but globalization can also mean a loss of national identity and culture.

In conclusion, we have seen that all companies have 4 types of business strategies (market
penetration, product development, market development and diversification), it’s called the
Ansoff matrix. Since the dawn of time, it has been the case, it is a universal model, but
globalization makes it even more important and difficult, as companies compete more and more,
and must keep innovating to beat all their international competitors.

Assessment criteria Marks Marks available

awarded

Criterion A 4 4

Criterion B 4 4

Criterion C 4 4

Criterion D 3 4

Criterion E 4 4

Total 19 20

Examiner comments
Criterion A
The candidate shows a good understanding of the two concepts (globalization defined explicitly
and strategy implicitly in the introduction). A relevant business management tool, the Ansoff
matrix, is well explained and also used as an effective structuring device. A key strength of the
essay is the consistent integration of the concepts and content throughout.

Criterion B
The candidate applies the concepts of strategy and globalization and the Ansoff matrix well to
two organizations (British Airways and Easyjet), with many appropriate and illustrative
examples. The examples selected for British Airways diversification are not realistic, but this
does not take away from the overall impression of relevant examples. Had the candidate written
about just one organization, more in-depth application would be expected. However, given that
the candidate writes about two organizations, a best fit for application is 4.

Criterion C
The candidate makes relevant arguments about the various strategic options in the airline
industry brought about by globalization and evaluates them in a balanced way. The concrete
examples offered justify the arguments effectively.

Criterion D
The essay is organized around the Ansoff matrix, which is exceptionally clever: the matrix provides both
the analytical framework and, organizationally a framework for the essay. This way, the analytical
framework reinforces the organization and the organization reinforces the analysis. Further, the candidate
introduces the essay appropriately and has a conclusion. However, weakening the structure is the
candidate’s tendency towards expressing ideas very briefly, in parentheses and not always in complete
sentences; the response would be further strengthened by more essay-like expression. Strong 3 but not
enough for 4 marks.

Teaching tip:​ ​teachers may want to show students how analytical tools, such as the Ansoff matrix and the
BCG matrix can lend themselves to a strong organization of their essays.

Criterion E
While there are some references to social trends throughout the essay, the candidate also
dedicates a paragraph to individuals and societies. Three relevant stakeholder groups
(customers, shareholders and the wider society) are considered and discussed in a balanced
way.