Summary
The strategy of international business refers to arrangements that facilitate execution of commercial activities between businesses and firms that are located in two or more countries.
They are profit maximization programs that are executed by businesses in order to sell their services and products internationally. Basically, the strategies boost global business competition. Determining the ideal time to expand globally should not bother any business because there are no parameters that can be used to measure when a business should go global.
Factors like size of business, the capital structure and duration spent in business are not enough to establish the exact time to go global. In this regard, any businessperson who is ambitious and enthusiastic about going global should do so as soon as possible. Business operators are only required to understand simple things when formulating the international business strategies. These factors include:
- Determining the target customers.
- Establishing how such customers will define the value in the products supplied by the business.
- Laying down the strategies on how to keep up with the prevailing market trends in the country of choice.
- Determining the ways of increasing the product’s market share.
Traditionally, no business that operates in a country can exist independently. It has to partner with a foreign country in one way or the other. The supply chain clarifies that businesses expand as a result of their trade with other global businesses. The need for
companies to go multinational did not occur recently. It is a topic that commenced in the 1960s. Since then, various business analysts have confirmed that the key to turn an
economy into a modern one is creating multinational companies. In order to ensure that the strategy of international business is encouraged, various international strategies have been formulated.
Lessons Learnt from the Strategy of International Business
The strategy of international business is very helpful. This mechanism is sure way of gaining competitive advantage over others. For instance, if a business operates in a domestic environment that is saturated, going global will ensure that it diversifies its operations and in this way it will be able to earn profit regardless of the economic situations in the home country. The most commonly used international strategies that a company can use are:
- The global standardization strategy. This strategy aims to ensure that a growth in profits is achieved. The strategy advocates for cost reduction by promoting economies of scale.
- Localization strategy. A businessperson who applies this strategy should ensure that customized products are provided. It is the best strategy to use if a businessperson operates in an environment where customers honor their tastes and preferences. Customers from various countries have different tastes and preferences. As a result of this, a business should supply goods and services that match with the requirements of the buyers.
Generally, the strategy of international business is a must-have tool that should be embraced by any company that aims to expand and excel. It is a mechanism that enabled several companies to excel. For example, Toyota has managed to expand to several parts of the world due to its adoption of the strategies.
The company’s application of the transnational strategy has enabled it to become a notable business in the globe (Ellis & Williams, 1995). Every business that aspires to excel in international trade should consider these strategies as part of doing work. The strategies teach us that regardless of the size of business, international business strategies should be set.
Reference
Ellis, J., & Williams, D. (1995). International Business Strategy. London: Pitman Publishers.