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There is an increased opportunity for home automation, in general, because the demand for this technology is growing. However, in emerging markets such as India is growing significantly, due to its increasing application to the Lighting, Security, Heating, Ventilating and Air Conditioning, and Entertainment sectors (Salhotra, 2019).
This large demand for home automation devices provides an incentive for Netgear to diversify its product line globally, which would require a global strategy. India is a prime location for these efforts not just because the market is growing there, but also because of the potential low-cost manufacturing available. Netgear already has sales and R&D personnel based in India. It has also begun planning to outsource manufacturing its network products there (Moorthy, 2019). Therefore, the company should have an international strategy to help it successfully combine its network and home automation endeavors.
So that Netgear can continue to support its customers with low cost and differentiated products, it should implement the business-level international strategy of integrated cost leadership/differentiation strategy. In addition, a corporate-level international strategy will be needed. These options include the multidomestic, global, or transnational strategies. The multidomestic strategy is used when strategic and operating decisions are decentralized to the business units in each country to tailor products to the local market (Hitt, Ireland, & Koskisson, 2015, p. 236-237).
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However, there is no significant need for tailoring products locally in this industry. Therefore, Netgear should not use it or the transnational strategy, which also includes the multidomestic option. The global strategy would be more useful and applicable. The global strategy is one in which a firm’s home office determines the strategies business units are to use in each country because it has a high need for global integration and a low need for local responsiveness (Hitt, Ireland, & Koskisson, 2015, p. 237).
Using the global strategy, Netgear can standardize its products, develop economies of scale, and more easily apply innovations to other markets. For example, to support a potential home automation manufacturing initiative, Netgear can utilize its current R&D, technological, engineering, and marketing departments with little expansion because resources can be shared (offices, equipment, technical expertise, etc.). These departments can work closely with potential third-party home automation manufacturers in India just as they have been able to do in China with their network products.
Recommendation
Netgear should use the integrated cost leadership/differentiation business-level strategy to remain competitive domestically and internationally. This strategy can help it provide affordable, easy-to-install, and differentiated products customers want. Value chain analysis should be used to develop capabilities and efficiencies in supply-chain management, operations, distribution, marketing, follow-up service, finance, human resources, and management information services. The home automation industry, with large projected growth in general, and its growth in the emerging market of India, incentivizes Netgear to implement a corporate strategy that diversifies into this global market.
Because home automation devices and network devices share electronic similarities and are related, there is potential for the company to share resources in producing them, which creates efficiency. By using the global strategy, Netgear will be poised to standardize its products, develop economies of scale, and apply innovations to this market and potentially other markets as well. The strategy will also allow the company to provide R&D, technological assistance and other organizational support to its third-party manufacturers because of the similarities in technology and standardization of products.
Conclusion
Netgear’s business-level, corporate-level, and global strategies help the company be competitive. With this ever-changing industry where competitors are constantly looking for advantages, it is imperative to use the proper strategies that allow a company’s strengths to be a competitive advantage. By using an integrated cost leadership/differentiation strategy, Netgear can have both of these advantages to create customer value. Having corporate-level and global strategies to diversify into other product markets and into international markets can help the company be successful because they can provide the best direction in how the company can best use its resources to take advantage of growth opportunities.
