Introduction: International business is the trade of goods, technology, services, capital, or knowledge across multiple national borders using national or transnational levels.
Strategy is an integrated and coordinated set of commitments and actions that reflect the company’s present situation, identifies the direction it should go, and determines how it will get there. When you put the following two above definitions you get the definition of international business strategy. International business strategy is efficiently and effectively matching a multinational enterprise’s internal strength with the opportunities and challenges found in geographically detached environments that cross international borders. The international strategy transfers a company’s capabilities, resources, and core competencies into foreign markets where they don’t already exist, or if they do exist, they can be managed at a more efficient level of being delivered or made at a cheaper level.
The control remains with the headquartering company, since it is the senior executives who understand the background process of bundling the company’s resources and capabilities. Multinational enterprises have different products that set the global standard, benefits from few rivals, high profits, and moderate operational cost. Those products or processes that speak to a universal customer preference works well when it comes to strategizing. Sometimes when companies tend to expand into global operations, viewing the world one way may make multinational enterprises miss out on opportunities or misread the possible threats in foreign markets. As long as the rivals tend to be unsuccessful the international strategy will be useful.
There are many ways to enter the international market, and there are two major types of entry. The first is equity mode which includes joint venture or owning subsidiaries. The second one is non equity mode; this is contractual agreements and exporting. Importing and exporting is the most commonly used way of becoming an international company. If you want to enter the global marketplace but at a lower cost of risk, then you should partake in licensing. Franchising is another one and we should be familiar with this one, it is much like licensing, but you are granted the opportunity to be included in the development and have a say so in the marketing phase.
Joint ventures are another way to join, they also are similar to licensing. The difference is that they have a management voice and an equity position. Strategic alliances are used to come up with multiple agreements that satisfy the different firms. Lastly, I have direct investments. Direct investments are 100 percent ownership, and investments are made directly into the production of a foreign market. There are many options at hand that can help multinational enterprises venture into the global marketplace. You just have to do your research when it comes to what works best for you and your company that will grant success for many years to come whether you offer, goods, services, technology, knowledge or simply capital.
Chen, K. H., Kuo, H. M., Wang, J. S., & Wu, T. J. (2018). Effects of Industrial Ecology Evolution and Business Strategy on Business Regeneration Capacity of an Enterprise. Ekoloji,129-134. Retrieved July 24, 2019.
I chose the Effects of Industrial Ecology Evolution and Business Strategy on Business Regeneration Capacity of an Enterprise because It showcases how entering the global marketplace strategy has become an essential topic of research within international business. The active reconfiguration of global business, the new perceptions that have emerged from channel management, global strategies, political economies, and alliances have brought out new outlooks into how the entry mode research has been renewed.
Pathak, H., PhD. (2018). A perspective on joint venture: An international business expansion strategy and legal implications with specific reference to India. Juridical Tribune,8(1), 131-137. Retrieved July 25, 2019.
This article was selected because it gives a great insight into the process of joining into joint ventures within India. The rules and laws that must be followed are similar to those of any other. A company just doesn’t decide to partner with foreign subsidiaries unless they see a need for it. This is where the international business strategy will come into play.
Maciel, J. P., Esparaza, A. P., & Gutierrez, J. S. (2017). The Mexican Multinational Business Groups, Global Expansion Strategy and Its Impact on Performance. 113-119. Retrieved July 25, 2019.
This article was chosen because it highlights how the M & A strategy that is commonly used by multinational enterprise in emerging countries. Emerging countries must have a strategy that allows it to partake in international business.
Review of the Selected Articles:
Article 1: Effects of Industrial Ecology Evolution and Business Strategy on Business Regeneration Capacity of an Enterprise (2018) is the first article that I chose to use. It showcases how entering the global marketplace strategy has become an essential topic of research within international business. The active reconfiguration of global business, the new perceptions that have emerged from channel management, global strategies, political economies, and alliamces have brought out new outlooks into how the entry mode research has been renewed. This article reviews and manufactures this literature. The evolutionary process of the entry mode research is displayed and how its future endeavours will play into action. Partnering strategies are also suggested throughout this framework.
They broke business strategies up into 3 categories; competition, mixed, and cooperation. Competition strategy is dived into differentiation, cost, and centralization. The purpose was to expand or reduce businesses so that the business operation conformed to industrial ecology development trend. Cooperation strategy is the merge and alliances between businesses. This is largely due to complementary demand for technology, products, and production. Mixed strategy combines both competition and cooperation. It is competition based on cooperation, and cooperation based on competition. This exists within both characteristics of competition and cooperation.
There are two dimensions that regeneration capacity will fall under. The first is psychological quality: It is the psychological quality of organizational members. This study puts emphasises on the norms and values that employees agree on, with business regulations. The second is evolution ability: It is the ability of a business organization to keep up with the movement and the varied needs of production, products, organizations, technology, process, and management covered within the capability.
H1: Ecology evolution presents remarkable correlations with regeneration capacity.
H2: Business strategy shows notable correlations with regeneration capacity.
Findings: High-tech industry statistical data provided by Fujian Provincial Government are utilized for secondary data analyses in this study. Regression analysis is applied to understand the relationship among ecology evolution, and business strategy.
Article 2: The second article that I will discuss is A perspective on joint venture: an international business expansion strategy and legal implications with specific reference to India. This one is solely based on India and the joint venturing process. As I stated earlier joint ventures are another way to join, international businesses, it is similar to licensing. The difference is that they have a management voice and an equity position. It can be referred to as a profitable enterprise commenced jointly by two or more parties which will result in them keeping their own distinct identities. Joint ventures are usually put together to complete specific problems. Joint ventures can be long term or short term, they result in separate business entities being made.
Joint ventures can be formed for three of the following reasons; save money, combine resource, and combine expertise. As I have learned from my marketing classes advertising can be costly, so companies tend to merge and save money on advertising when they combine. One company may be good at one area such as marketing and the other may be good at finance so if they combine, they can help each other where they lack at. One industry may have more pull in one area that can contribute to the success of the lacking company.
India’s economic growth is being looked at as a powerhouse from all over the world. India ha made it easier for companies to enter its foreign markets. Still there are some laws that are in place revolving around joint ventures:
- Companies Act, 2013
- Competition Act, 2002
- Partnership Act
- Foreign Trade (Development and Regulation) Act, 1992
- Industrial Policy and Procedure
- Policy for Foreign Investment
- Contract Act
- Foreign Exchange Management Act, 1999
- SEBI Guidelines, Regulations, Notifications & Circulars
With most of these in place you are protected when you begin a joint venture. You have to follow the rules and laws that govern the matters that arises when you create one. India has no separate laws for joint ventures they are all governed by contractual relationship.
H1: Deicde whether the joint venture company will be a public or a private limited company,
H2: Place the joint venture on the Registered Office of the Joint venture Company, and propose a name of the joint venture company and check its availability from the Registrar of Companies (ROC) where the registered office of the company is to be situated and the company is to be incorporated
Findings: make sure all rules and laws have been followed that way you can continue the expansion and go ahead and start your international business.
Article 3: The Mexican Multinational Business Groups, Global Expansion
Strategy and Its Impact on Performance is business groups in Mexico date from the late nineteenth century, particularly in the city of Monterrey, where at that time there was a wave of industrialization driven by the neoliberal policies of the federal government leading to the creation of the first groups of large manufacturing factories and the banks that financed them.
A business group is a legal entity that includes a headquarter company and its subsidiaries. These companies establish formal relations and can also be defined as a group of legally constituted companies with a management relationship. This can be done by extending the period analysed. There may also be some limitations, as it cannot be verified that there is a significant high relation with foreign direct investment. Therefore, other types of statistical analysis and qualitative analysis are necessary.
State of the Art: As I was reading through all of the articles, web pages, and the many different books I found out something very important, I should have known this because the topic is so broad and there are many different ways to implement a strategy or strategies. There is no one strategy that every company uses to engage in international business. You have to pick what works best for you and your company. What you have to offer and how you will distribute it plays a major part. If there are already multiple competitors handing out the same products or services, then you probably wouldn’t thrive in the global marketplace.
There is no way that expanding multinational enterprises will not partake in global expansions. This is something that is always going to happen. You will either get onboard with what is happening or get left behind. Global expansion is growing at an all-time high and it will continue to. It isn’t going to slow down at any point soon. The only way to have an effective transition is to have a global mindset in your future if you aren’t already involved in global expansions. You don’t wake up on Monday and say you want to expand into the global marketplace, and on Tuesday you are in. There is an extensive process that comes with creating an effective strategy. Most importantly there needs to be mutual agreements that have been established between the two parties. To maintain and keep an effective and thriving strategy is to make sure that all strengths weaknesses, opportunities and threats are known.
After researching international business strategy, I would like to discuss the international expansion Spector of it. International expansion is the spread of a company’s business actions through several regions throughout the world. This won’t only focus on certain areas of the world, but this would be all over. With the rate of international business growing the way that it is, I’m sure there will be more international expansions happening and rapidly at that. I would like to see how fast this would happen, and would the multinational enterprises be able to keep up with it. Trades can be a lot of different things. Products, services, technology, knowledge, profits, and production.
Objectives: Companies go international for a many different reasons, but I think the main goal is to allow a company to grow or for expansion. Company’s hire international employees or search for new markets abroad to help with this process. An international strategy will help differentiate and increase a business. Communication is also another major factor in the equation. Words often have different meanings to different people.
Literature Review: International Business Strategies and International go hand in hand. In order to expand into the foreign markets, you must have a strategy that will help you stay afloat. As I stated earlier, they will be growing rapidly. The current state of both is that they are headed towards phenomenal growth.
Hypothesis: The first one could be just because you want to participate in international business trades, doesn’t mean that you should. In order to keep down the risk and loss of money you should make sure there is a need for what you are trying to offer in the foreign market.
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