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The following essay will be a reflection of my learning about international business strategy based on my understanding from the course work, other resources, and the three briefing papers I presented in the seminar. It will widely dwell on regional strategies for global leadership, Global and Transnational strategy, and the way local companies keep multinationals at bay as per the briefing papers.
International business refers to the business transactions that involve two or more nations. It is not limited to the major business transactions with only the multinational corporations but also includes export and imports by sole proprietors. International business strategies are the policies that are laid down to govern and harmonize international businesses, which have become the order of the day in the world we are living in.
For instance, the General Agreement of Tariffs and Trade was laid down in 1949 during the UN conference on trade and employment and resulted from failure of the negotiating countries to create the International Trade Organization.
These strategies are meant to govern their short and long-term objectives such as the day-to-day running of the company, Increase in sales, marketing and profits as well as growth and stabilization of the company in the market (Pearce, 2010)
Regional strategies for global leadership
Global leadership has been brought about by globalization where by the world has been reduced to a cyber space and communication has been very efficient around the world. For a business to be successful globally, it has to carry out regional strategies in order to find out where its business can perform best.
The regional strategy focuses on building bridges between societies, which facilitates healthy business across the border business. For any business to be successful globally, it has to invest much of its resources on studying regions instead of generalizing ideas in order to invest in a region depending on its needs.
Most of the successful companies globally have employed five types of regional strategies, which include home base, portfolio, hub, platform, and mandate. A company may not necessarily employ all the regional strategies at once but it would be important to take a reconnaissance in the region interested in for it to settle down on the best strategy (Harvard Business School Press, 2009, pg 198).
In the home based strategies, companies manufacture from products from their home country and then export to their neighboring countries. This approach ensures that all the benefit goes to the home country thus promoting their Gross Domestic product. It creates employment to the citizens of the home country and the profits develop its country of origin.
Home based strategy tends to exploit the country of export since it competes with the developing domestic industries. It may incur a lot of cost when the country of export has laid down many business barriers to multinational Corporations. I would recommend that all companies interested in international business to apply foreign direct investment so that both countries may benefit from the rewards therein.
I would recommend portfolio strategy for businesses looking for long term investment. This strategy operates by investing in foreign direct investment. It may face challenges when establishing but gain root in the foreign country with time and is able to compete well with the local companies. For the hub strategy, it would be important to create a good relationship between companies in different countries.
This would enable it benefit its home country better with the benefits it is getting from its businesses in the region. The operations of the mandate strategy add up to specialization and enjoyment of economies of scale.
This is because specialization ends up in manufacturing of quality products at affordable prices and though the company may not make high revenue at once, the overall benefits are good both to the home and to the foreign country.
Global and transnational strategy
After learning the concept behind global strategy and transnational strategy, it has become so clear that these two strategies are very dependent on each other. The transnational strategy is diversified in a manner that it works on both local and global interests through headquarter thus taking the advantage on global integration.
It targets experience-based economies and is keen on local responsiveness such as consumer tastes and preferences, indigenous business practices, the policies of the local government among others. The global strategy ensures that all international business transactions meet the global standards.
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It is governed by a global headquarter, and good communication is necessary for the subjects to meet the set standards. It has great influence on cost reduction and standardization thus the firms enjoy the advantage of economies of scale (Anon. 2010).
I have learnt that the global strategy invest a lot of its resource on configuration, co-ordination and local responsiveness. In configuration, the company tries to analyze how the business it wishes to carry out is carried out in other nations. It also tries to study how international businesses are coordinated (Stone House, 1991).
The transnational strategy facilitates configuration and coordination of a company globally while still maintaining local responsiveness. Therefore, a company can serve the local market efficiently and effectively while still serving the world market. The good thing with this strategy is that it is able to balance local and international trade.
How local companies keep multinationals at bay
Multinational strategy deals with the responsiveness of the local public such that they can monitor and respond to the local needs and opportunities. It enables the international market to be able to serve the interest of the public up to the grassroots. This is mostly facilitated by the local governments, which make the necessary communications to the local market (Barlett, 1989).
Most multinational corporations pose a big threat to the local companies especially in developing countries by subjecting them to stiff competition. This mostly happens because the multinational corporations are well established and are financially stable such that they can advertise their products to the public very easily. The local companies have therefore come up with strategies to keep these multinational corporations at bay.
Such strategies include imposition of high tariffs to foreign companies, policies of foreign direct investment among others.
According to Harvard Business review, the local companies have come up with a six-part strategy to keep MNE’s at bay which comprise of offering customized goods and services, development of business model solely to curb obstacles, being up to date in terms of technology, utilizing low the abundant low cost labor and doing local trainings, capitalizing on new ventures and maximizing on their talents (Bhattacharya and Michael, 2008).
I have realized that the local companies have come a long way through these strategies and can now compete well with the MNE’s. However, there cannot lack challenges in the implementation and they can only be safe when they are fully established.
International business strategies are important in the smooth running of either regional or international businesses. International market gives every business an opportunity to maximize profit and to enjoy economies of scale due to the availability of a wider market. It also gives people a wider variety if goods and services to choose from thus making life easier.
International business strategies make it easier to carry out businesses across the borders since some countries may set policies, which may not be favorable for their counterparts.
Anon. 2010. Strategy of International Business. Web.
Barlett, G., 1989. International Business Strategies. Web.
Bhattacharya, A. K., and Michael, D., 2008. How Local Companies Keep Multinationals at Bay. Harvard Business Review. (Attached material).
Harvard Business School Press. 2009. Harvard Business Review McKinsey Award Winners. MA, Harvard Business Press. Web.
Pearce, R., 2006. Globalization and development: an international business strategy approach. Web.
Stone house. 1991. Global and Transnational Strategy. (Attached document).