As opposed to marketing foreign products to customers who may not initially recognize or understand them, companies modify their offerings and reposition their marketing strategies to engage with foreign customs, cultural traits, and traditions. International businesses are opened to perform business in different countries across the globe. Global companies attempt to homogenize their products and services in order to minimize costs and reach as broad an international audience as possible. Stephen B. Tallman and George S. Yip (1999) suggest that international business involves resolving issues pertaining to ‘internalization’ (geographic spread), ‘responsiveness (local adaptation), ‘globalization’ and strategic international alliances / M&A’s.While initial literature looked at exports as the base / minimum and FDI as key (Dunning, 1998) as the first step towards internalization, in the current context it is more about the intent than the actual means. These companies tend to maintain a central office or headquarters, usually in their country of origin, while also establishing dozens of operations in countries all over the world. Not surprisingly, for many companies, a significant proportion of their international operations subtracts, rather than adds economic value. This site uses Akismet to reduce spam. Setting future goals for your organisation is important in measuring the success of your business, and it will also help you develop a sustainable strategy for the future. Not only has the size of the international business market grown, it has also become more diverse and heterogeneous, in terms of the economic development, culture, and political systems of the countries involved in international business. It is, therefore, obvious that each of these two approaches have their advantages and disadvantages for the company aiming to explore a new region, the local competition and the customer base in the country. Subsequently, the company may need to adjust its strategy and create a multi-domestic platform through which it can manufacture and sell its goods more efficiently. We pay our respects to them and their cultures; and to elders both past and present and future. At the same time, they are equally clear that they feel un-equipped to cope effectively with this task. So for a company seeking international foothold, framing of an international strategy assumes a very crucial role. For instance, the choice of location and the geographic spread of activities are arguably more compound in an international context due to the multiplicity and heterogeneity of the possibilities available. Earning a Master of Business Administration (MBA) degree can equip professionals with the skills necessary for handling the rigors and complexities of today’s global economy. On the other hand, the success of companies with brick and mortar shops in new region is significantly higher than that of companies that rely exclusively on online retail (Steinfield, Adelaar, & Liu, 2005). Developing a business model and manufacturing strategies is a costly process for any company and changing this for the purpose of integrating new products specific to a region is an additional financial pressure for multinational companies (Zaheer, 1995). The company may choose routes like launching of a brand new product or venturing jointly with another willing partner company, already present in that market. Reference this. Professor Nachum is expert on issues related to globalization and international business, with more than two decades experience teaching, researching and consulting on these issues to firms and government agencies, including the United Nations, World Bank, and the European Union. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. An increasing number of countries have launched campaigns which promote local companies over the international competitors claiming that regional businesses understand the needs and desires of their customer base more, unlike the multinational firms. In other words, a company must set their priorities from the onset of internationalisation in order to maximise their earning potential and the international reputation through their chosen tactic for global reach (Vrontis, Thrassou, & Lamprianou, 2009). Once you’ve identified your audience, and more specifically their expectations and needs, you will be able to plan a more effective method to attract their attention. Market Expansion. The first step in forming an international strategy should be analysing the markets, in general, if not specifically. Through its online programs, Norwich delivers relevant and applicable curricula that allow its students to make a positive impact on their places of work and their communities. Journal of Marketing, 56(2), 1-17. International strategy for an company looking to grow is a continuous process. The international tactic is therefore made easy by the ability to promote a company through social media and export products, without any concern for local adaptation, through online shopping. You may opt-out by. On the other hand, without an adaptation to the locals’ needs and desires an international company’s ability to succeed may be compromised, but the financial impact of this failure will not be as great as that supported by companies who invest capital in adaptation. Whilst it was difficult at start for Starbucks to maintain a standardised approach to the design of their customer experience, taking over local coffee shop chains and their clientele has proven to be a successful tactic (Loeb, 2013). (2001). The second misconception that underlies the common approach towards international business strategy is that it is about overcoming challenges that operations in foreign, unfamiliar environments raise, as well as those that result from the need to coordinate activities across multiple countries. (2008). A Framework for Integrated Risk Management in International Business. To begin, the world of international business has become bigger. The effect of the tactic is a positive one from a financial viewpoint and, more often than not, a negative one from a reputation point of view, as citizens perceive this approach to disregard any specific cultural aspect of the region that multinationals penetrate. These companies opted for internationalisation as a strategy for global expansion, relying on the recognisability of their brand name, logo, specific products, packaging, etc. Analysis conducted by the KOF Institute, a Zurich-based consultancy, shows that the share of world population that forms the international market has grown from about 15-20% in the 1970s and 1980s to 95% in the first decade of the Millennium. How Global Companies Win Out, Harvard Business Review, Get Your International Business Terms Right, CBS News, The Competitive Advantage of Nations, Harvard Business Review, Biggest transnational companies, The Economist, International Business Strategy: A Journey Of Its Own, Forbes, The good, the bad and the ugly, The Economist. Is there really no hope for local brands? Contractor, F. J., Kumar, V., & Kundu, S. K. (2007). In conclusion, the role and effect of international business strategies are crucial in the success of expanding a business beyond its national borders, but the potential of these can only be maximised when taking into account other elements that contribute to the internationalisation, such as local culture, the demands, needs and wants of customer base targeted, etc. Corporate social responsibility in the multinational enterprise: strategic and institutional approaches. An effective business strategy will allow your organisation to predict and meet the changing demands of the current market. The Influence of Global Marketing Standardization on Performance. This is not an example of the work produced by our Essay Writing Service. Next, the company should identify the resources for its international expansion. vLinkD acknowledges the Traditional Owners of country throughout Australia and recognises their continuing connection to land, waters and community. Golden Arches East: McDonald’s in East Asia (2nd ed.). The business resources needed to sell internationally might typically include a sales team, brochures of products in various languages and an office team to handle sales orders b… International Business Review, 15(4), 361-380. Setting out a well-planned business strategy will ensure your entire organisation is working towards the same goals and instills a sense of shared responsibility amongst employees. Short and concise presentations will be given at the start of a 2-day top management workshop on the results of the previous steps 1 to 4. (2008). Companies talk about ‘going global’ when what they really mean is that they are moving internationally, outside their home countries. Journal of World Business, 42(4), 401-417. This is a misleading conception on several grounds. The decision-making, production, and sales responsibilities are evenly distributed to individual facilities in these different markets, allowing companies to have separate marketing, research and development departments aimed at responding to the needs of the local consumers.