Over a few decades, the independent national economies and markets have gradually transformed into a united global economy where the national boundaries do not restrict the enterprises from the engagement in cross-border commercial activities and partnerships. Instead of focusing on the domestic markets alone, many organisations prefer to expand their business in other countries in order to increase product demand, customer attraction, and profitability.
Entry to a new market may give company opportunities to strengthen its competitive advantages, yet the process of internationalisation entails many financial and non-financial risks. Therefore, it is important to design an effective strategy that would stimulate the implementation of internal and external capabilities for the efficient development of positive internationalisation experience.
The global market has no boundaries and, it is much more difficult to sustain competitiveness in the non-restricted economies (Greenwald & Kahn 2005). While entering new markets companies pursue various benefits such as access to new customer groups, increase in exploitation of organisational core competencies, decrease and spread of financial risks, and achievement of cost-efficiency. However, it is important to pay attention to the situation in the hosting cultural, political, legal, and economic environments to understand the actions of local competitors, increase own competitiveness, and, in this way, attain ‘privileged access to customers or suppliers’ (Greenwald & Kahn 2005).
The researchers emphasize the significance of technological advancement, responsiveness of marketing strategies and advertising to interests and needs of local consumers, and efficiency of pricing for the success of internationalisation process (Greenwald & Kahn 2005; Taylor & Jack 2013). Moreover, the effectiveness of distinct organisational capabilities’ exploitation may substantially depend on mode, scale, and pattern of international business expansion (Taylor & Jack 2013).
For example, when a company enters a culturally and economically proximate market, where the customers have similar needs and preferences, the significant transformation of marketing strategy maybe not required. But when a European organisation enters a distant market in one of the BRIC or the MINT countries, it should conduct a thorough preliminary investigation of the environment to reduce potential risks and avoid financial losses that may be provoked by the lack of experience.
The examination of hosting culture and peculiarities of business conduct may be considered the main premise for the strategic efficiency. ‘The more local a company’s strategies are, the better the execution tends to be’ (Greenwald & Kahn 2005, p. 10). Even in the context of globalisation, the demands, needs, tastes, and styles of business conduct vary from one country to another. The consideration of local culture is important for the development of right localised strategic objectives, the efficient integration of products or services into unfamiliar markets, and the attraction of local business partners and suppliers.
Based on the findings obtained through the literature review, it is possible to say that localisation of business strategy through the exploration of hosting market’s distinctive features serves as the basis for the successful entry into a new economy, attainment of business stability, and strengthening of competitiveness in the international market. The initial investigation of external environment leads to the detection of culturally appropriate strategic goals and the consequent understanding of internal organisational strengths and weaknesses.
The core competencies that create advantages in the domestic market may become less effective and important in another market, and the analysis of local environment thus can help to identify the direction in the course of organisational capabilities’ development and implementation that should be followed.
Reference List
Greenwald, B & Kahn, J 2005, ‘All strategy is local‘, Harvard Business Review. Web.
Taylor, M & Jack, R 2013, ‘Understanding the pace, scale and pattern of firm internationalization: An extension of the ‘born global’ concept’, International Small Business Journal, vol. 31, no. 6, pp. 701-721.