Chapter 2: Literature Review

2.1. Introduction

In this chapter, past studies about the application of multimedia strategy, as well as informational systems, in the expansion of businesses internationally are systematically reviewed. A review of the studies assists in the realisation of the objectives of the present study. It explores the past findings that have a bearing on the present study. As well, the review outlines the principal theories and ideas that inform the study. Particularly, the past studies reviewed in the chapter cover subjects such as the different multimedia strategies and information systems used by businesses, and the factors that determine their utilization. Other studies explore the workings of the strategies in addition to how they assist multinationals in their operations.

2.2. International Business

There is ample literature characterizing, or defining, international business (IB). To appreciate IB, one should have a wide-ranging conceptual, or theoretical, understanding of the necessity of investment and trade across international boundaries. Investment and trade can be explored based on diverse nations’ comparative advantages. Countries export to international markets the products that can optimally produce. From the markets, they import products that they cannot produce optimally using their production factors such as labor as well as land. A country with lots of labor will export labor-intensive products to the markets. A country with limited labor will import the products (Allen & Raynor, 2004; London & Hart, 2004, pp.350-361).

The literature projects IB as now widely acknowledged (Allen & Raynor, 2004, pp.16-19; Buckley, 2005; Daniels & Radebaugh, 1997). The commonly accepted definition of IB is that it is a set of commercial transactions, and operations, which occur across international boundaries. This definition is considerably broad. It includes the markedly small import or export businesses whose trade volumes are quite small. As well, it includes large multinationals with strategic and integrated alliances and operations (Daniels & Radebaugh, 1997). Within this broad definition, Buckley (2005) and Daniels and Radebaugh (1997) make distinctions among diverse forms of businesses with an international reach. Clearly, the distinctions are valuable in appreciating their functional decisions, organization, and strategy. The decisions relate to operations, human capital, marketing, administration, and financial management as well as control (Daniels & Radebaugh, 1997).

One source formulates an unusual, continuum-like characterization of IB using some of the distinctions. It typifies businesses, whose operations are multi-domestic, and that have autonomous subsidiaries as typical domestic firms. On the other hand, international firms have considerably integrated, interconnected and related subsidiaries (Punnett & Ricks, 1997). The definition of IB using such distinctions presents all businesses as having varying levels of an international character and a domestic character in a continuum. At one of the continuum’s ends are distinctly domestic businesses. Distinctly global businesses are at the other end. There are numerous possibilities between the two forms of businesses. Businesses are considerably unlikely to be at any of the continuum’s ends since they commonly combine features of international operations with the features of multi-domestic ones (Allen & Raynor, 2004; Punnett & Ricks, 1997). The sources that support the continuum-based characterization of businesses do not demonstrate how additional investment into them and their expansion of trade affects their position in the continuum.

IB is often defined based on the differences between it and domestic business (DB). In private, as well as public, sectors, IB and DB aim at functioning profitably to sustain their operations. Unlike IB operations, DB operations are based within a nation-state under one government and uniformly applied currency, tax, culture, and law regimes. On the other hand, IB operations are based in different nation-states with diverse currency, tax, culture, and law regimes (Buckley, 2005; Kauser & Shaw, 2004, pp.17-42). Two principal forces are significant in IB operations. One of the forces comprises of the technological advancements that make international transportation, as well as communication, considerably convenient and quick. The second force relates to the waning of communism, which has increasingly opened many international economies and markets to private enterprises (London & Hart, 2004; Welch & Wilkinson, 2004, pp.216-228). London and Hart (2004) and Welch and Wilkinson (2004) do not demonstrate the extent to which the two forces are significant to DB operations.

2.2   International Business Strategies

International business strategy (IBS) comprises of the schemes, or plans, which guide business transactions between firms in different nation-states. Characteristically, IBS refers to the actions along with plans of private firms as opposed to government-owned firms. Thus, the principal objective of an IBS is to grow profits. Various sources agree that the majority of firms of considerable size have one or several international business partners along particular supply chains. In fields that are well established, the firms face global competition (Culpan, 2002; Glaister, Buckley & Husan, 2004; Verbeke, 2013). Since business is done differently in diverse nation-states, clear appreciations of linguistic along with cultural barriers, politico-legal systems, and the numerous intricacies of global trade are critical to business success (Culpan, 2002). When emerging economies become more and more prominent, additional markets emerge. Additional sources of products emerge as well. The markets and products make it more and more critical for established businesses to have workable IBS. Commonly, consultants such as Amritt facilitate the development of IBS (Glaister, Buckley & Husan, 2004; Verbeke, 2013).

The development of IBS is hinged on particular philosophies. Three IBS philosophies are common in various sources. The IBS industry-based philosophy holds that industry-specific conditions shape strategy. The IBS resource-based philosophy holds that company-specific variations shape strategy. The IBS institution-based philosophy holds that resource-based, as well as industry-based views, should be enhanced by explaining the pertinent social variation of the other philosophies (Culpan, 2002; Verbeke, 2013).

IBS guides businesses to endure global competition, and collaborate with multinationals in their operations. The need for an IBS is not dependent on the size of a business functioning within the international economy. Particularly, IBS helps businesses build wider client bases, endure seasonal commercial swings in their home markets, use their surplus manufacturing wherewithal that is unused in the home markets, and lessen production expenditures. Various elementary factors are considered when coming up with IBS for a given business (Glaister, Buckley & Husan, 2004; Verbeke, 2013). The factors are the expected clients, how the clients characterize value, the relevant market trends, and ways of enhancing the market share for the business’ products. As well, the IBS of a particular should be awake to the dynamics of the targeted markets. The dynamics include language familiarity, living standards, infrastructure for overseas businesses, political stability, currency value and stability, and legal impediments. Others are ease of transport along with communication, cultural ethics along with values, trade tariffs and related, and openness to distant intervention in international markets (Glaister, Buckley & Husan, 2004; Verbeke, 2013).

The IBS for an IB provides it with strategies of marketing its products in the international markets. The strategies are built on analyses of external, as well as internal, factors. The IBS informs the IB on how to develop marketing methods for diverse market circumstances, or situations. Several sources agree that marketing is aimed at gaining suitable equilibriums between the realization organizational profits and the creation of enhanced value for clients (Arora, 2013; Jansson, 2008; Verbeke & Merchant, 2012). To attain the equilibriums, many businesses adopt a philosophy of marketing referred to as marketing orientation. The orientation focuses organizations on the identification of clients’ preferences with respect to needs along with wants. In addition, it enables the identification of the preferences with an aim of outdoing competitors in the efficient, as well as effective, delivery of products (Arora, 2013). Some businesses adopt a production philosophy (PP) in place of the marketing one. Such businesses focus on the enhancement of production along with distribution efficiencies to cutback overheads and deliver reasonably priced products to clients (Jansson, 2008; Verbeke & Merchant, 2012). Arora (2013) and Jansson (2008) present marketing orientation and PP as the only marketing philosophies underlying the marketing strategies of businesses, including IBs. Arora (2013) and Jansson (2008) fail to characterize businesses that follow selling concepts as having a distinct marketing philosophy. Such businesses aggressively zero in on selling, as well as promotion, efforts to enhance product demand and enhance sales (Verbeke & Merchant, 2012).

Various organizations adopt multimedia marketing strategies to promote their products in international markets. The strategies entail the usage of interactive media in marketing particular products. Picard (2014, p.7) provides a concise assessment of why businesses fail to optimize their multimedia marketing activities. He indicates that often, there are marked tensions in maintaining the activities on one hand and hybridizing models that are essential in a business’ survival on the other hand. Firms that sell media products keep struggling with their models and strategies as they grow their activities and international presence. Commonly, the strategies entail product and geographic diversification. As well, they entail brand extension. For the majority of the firms, the activities are aimed at creating value by enhancing communication with extant clients, attracting additional clients, enhancing competitiveness, and creating additional uses of the extant resources. In addition, they are aimed at developing additional product lines and streams of revenue. Some of the activities help businesses to reposition into providers of information rather than businesses that zero in on lone mediums (Picard, 2014, p.7). The conclusions drawn by Picard (2014) have several weaknesses. One, they are not substantiated by empirical evidence. Two, he has not shown whether and how they apply to businesses that do not deal with multimedia products.

Ample research has been carried out in relation to the different multimedia platforms that businesses may adopt for marketing purposes (Harnett, 2010; Roberts, Shaw, Grigg & Glasgow Caledonian University, 2001; Springer, 2009). Largely, the research shows that businesses use the platforms in building brand-related awareness in a powerful and unique manner. The platforms include mobile marketing, file and video sharing, podcasting, live casting, and photographs. The related forms of social media go viral rapidly. The platforms facilitate small businesses in communicating with their employees, clients, and prospective customers (Harnett, 2010; Springer, 2009). They help businesses convey mass marketing-related messages to preferred devices on demand. Presently, many multimedia tools are compatibly used with other tools in supporting business processes: product promotion, selling, and marketing. Although Harnett (2010) and Springer (2009) provide ample discussion on how small businesses make use of the platforms, they do not clarify the scope of the businesses’ operations. They do not specify whether the small businesses that they refer to have global operations or domestic operations or both. As well, they do not back their conclusions with empirical findings, putting their credibility into question.

There are different helpful ways of leveraging multimedia like videos, podcasts, video, and related mobile marketing tools (Doyle, 2011; Hua, Mei & Hanjalic, 2011; Marsh, Guth & Short, 2005; Meyerson & Scarborough, 2008). A number of online groups, or communities, upload and share photographs over the internet, which has a global reach. Numerous small-scale businesses take advantage of the communities’ services in marketing their merchandise. The businesses share videos to establish a distinct presence on social media (Doyle, 2011; Hua, Mei & Hanjalic, 2011). The videos are shared on sites such as YouTube. Smartphones are increasingly being utilized in marketing owing to their prevalence and capabilities. Worldwide, over four billion individuals use mobile telephones, including smartphones. Smartphones have led to the mainstreaming of internet access from mobile telephones. Their carriers access numerous forms of data in real-time and at the comfort of their home, offices, and social places. Marketers, even with the growing privacy concerns, access much of the information that they share. The marketers use the information in creating advertisements, which are markedly targeted (Kobre, 2012). Marsh, Guth and Short (2005) and Meyerson and Scarborough (2008) do not back their conclusions with empirical findings, putting their credibility into question. In addition, Marsh, Guth and Short (2005) and Meyerson and Scarborough (2008) do not specify whether the small businesses that they refer to have global operations or domestic operations or both.

There are limited sources covering how IBs use information systems in their operations. The systems are characterized as schemes that businesses use in integrating   business, people, and information technology. They allow for the integration of business modules of information and functions to establish effective channels of communication. Notably, such channels are projected by Abramowicz (2009) and Inderscience Enterprises (2005) as helpful in making precise and timely decisions. As well, the channels are presented as enhancers of organizational competitiveness and productivity. Businesses find such channels helpful in their operations especially global outsourcing, and building strategic partnerships and alliances. Notably such channels help businesses remain competitive in terms of their responsiveness, flexibility, product, product prices, dependability, and quality (Abramowicz, 2009). Abramowicz (2009) provides ample information on the benefits that businesses enjoy when they use information systems and the related technologies, techniques, strategies, and tools. Even then, the information provided by Abramowicz (2009) is neither industry-specific nor country-specific.

Washington State University (2014, par.1-2) agrees with Abramowicz (2009) and Ritchie, Marshall and Eardley (1998) that organizations that use the systems enjoy the benefits associated with automation. The systems support the automation of their processes across the world. The systems are helpful in addressing the conversion of currencies, and accounting for time variations. The systems simplify the conversion. Multinationals commonly convert and integrate varied sets of data across diverse, or heterogeneous, information topologies. The systems assist them in the conversion, as well as integration, of the sets of data. As well, the systems assist multinationals in reporting various pieces of information to diverse regulatory and governmental organizations. They apply the systems in the summarization along with formatting of information for different reporting needs (Washington State University, 2014, par.1-2). The submissions made by Washington State University (2014) are not backed by empirical findings. As well, Washington State University (2014) does not demonstrate how IBs can concurrently use the systems and multimedia strategies in their operations in China or other specific countries optimally.

2.4. Success Factors

In the presently available literature, there appears to be a growing consensus that the success associated with the usage of multimedia tools by business largely depends on their users’ expertise (McCulloch, 1998; Picard, 2014). To create effective multimedia content, individuals from various disciplines work together in structured regimes. The disciplines include photography, education, sound editing, advertising, video production as well as marketing. Each of the disciplines has unique ways, models, and practices for accomplishing given tasks. Each of the individuals should clearly understand his or her role to ensure successful completion of his or her assigned multimedia-related task (McCulloch, 1998, par.1-3). To succeed in the use of multimedia tools in the marketing and distribution of software, audio, as well as audio, products, companies should have a broad outlook of their services and products, partner with established IBs, and expand their business knowledge. They should maintain their particular focus, choose suitable multimedia activities and technologies, target international markets, use sustainable business models, and suitably control the activities’ growth (Picard, 2014, p.3). As well, they should employ business intelligence consultants to make out and check on all developments that may influence their elementary multimedia-related operations (p.4). Notably, McCulloch (1998) and Picard (2014) do not substantiate their conclusions with empirical evidence.

In the presently available literature, there is an emphasis on the need for structured planning and use of multimedia strategies by businesses. Some of the terms commonly used in place of “planning” include “pre-planning”, “instructional design”, “pre-reproduction”, “instructional systems design” or simply “design” (Smith & Ragan, 1993, p.4). Markedly formalized planning is associated with the development safer, cheaper, better products (McCulloch, 1998, par.4). McCulloch (1998) does not provide criteria for evaluating the formality of a planning process. Broadly, McCulloch (1998) agrees with Kim (2014, p.7) that companies should use multimedia applications that allow for the securing of their multimedia-related intellectual properties, targeting of products via new channels, and enhancement of brand reliability and quality. McCulloch (1998) bases his work on the conclusions drawn by Gagné and Merril (1990). Gagné and Merril (1990) demonstrate that multimedia designers should work within the confines of established bodies of practice and theory, a position that McCulloch (1998) and Rossett and Barnett (1996) find wholly agreeable. Gagné and Merril (1990), McCulloch (1998) and Rossett and Barnett (1996) fail to establish if the designers may benefit from borrowing planning approaches, as well as analytical tools, from traditional models to enhance their final, or finished, multimedia products.

The success factors associated with the implementation information systems are only narrowly covered in the presently available literature. The results of the study done by Nah, Lau and Kuang (2001) imply that the factors include information system composition and teamwork, change management, managerial support, business process reengineering, and project monitoring along with evaluation. Others are business vision and plan, effective communication, troubleshooting and testing, and the development of suitable software as well as legacy systems (Nah, Lau & Kuang, 2001). Chong (2005), Chong and Choi (2005), and Salleh and Goh (2002) agree that businesses should ensure that their information systems, particularly those aimed at managing knowledge as a resource, are based on people rather than technology. There is a need for the training of the employees who use the systems, especially with respect to the standardization of information in diverse settings (Bennett & Gabriel, 1999; Bukowitz & Williams, 2000; Gumbley, 1998; Salleh & Goh, 2002). Clearly, there is ample literature emphasizing the need to train the employees.

2.5. International Business in China

Although there are many sources covering the subject of international business in China, most of them are unscholarly. Adams (2013) and Katz (2008) present commentaries on the subject. They project China as a large and markedly appealing market for foreign investors and entrepreneurs. Even then, the foreign investors and entrepreneurs face various challenges in their operations within the market. They have to endure high-level red tape, and shaky business partnerships as business contracts and deals are rarely viewed as material agreements (Adams, 2013; Katz, 2008).

Adams (2013) opines that the business climate in China and the related regulatory frameworks are improving gradually. Adams (2013) and Katz (2008) advise the investors and entrepreneurs on what they should focus on in order to succeed in the market. They should find local partners, appreciate the unique Chinese business culture and related dynamics, and exploit the incentives offered by the Chinese government to attract and retain foreign investments (Adams, 2013; Katz, 2008). Notably, the commentaries given by Adams (2013) and Katz (2008) are not backed by scientific findings. Even then, the commentaries are rather believable since the two have long-running research and journalistic interests in the Chinese market.

2.6. Summary

There is ample literature characterizing IB. There is limited literature on the marketing philosophies on which the use of different multimedia platforms in marketing operations especially by IBs is hinged. There is limited literature on how IBs use information systems in their operations is limited. The literature is not backed by empirical research findings. The literature is neither industry-specific nor country-specific. There is a need for research on how particular industries or companies concurrently apply the systems and multimedia strategies in particular markets.

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