Report on the various international strategies Essay Sample
This report will discuss various international strategies used by the organisations and how these strategies (international strategies) can act as medium of strategic competitiveness for companies competing at international level. To do this examination we begin with the analysis of following topics; identifying international opportunities, explore resources, capabilities, and mode of entry to the markets.
First of all, it is essential to describe what an international strategy (IS) is? An international strategy (IS) can be defined as the plan or strategy by which an organisation sells its products or services outside its domestic market (Hitt, Ireland, Hoskisson, 2011). Another definition on international strategy (IS) states that IS includes the investigation or study of cross-border exercises or activities of monetary agents or the strategies and administration of organisations engaged in such activities (Tallman & Pedersen, 2015). Based upon these definitions, we can say that international strategy is a kind of blueprint for entry into markets outside of the home market of a firm.
A firm can achieve four primary benefits by implementing one or more international strategies. These benefits are discussed as under:
1. Increased market share: Increase in the market share is one of the primary benefits that a company can achieve by implementing international strategy. As we know domestic markets are smaller as compared to international markets and many times domestic markets it supports limited growth opportunities. An international market’s has larger market share and offers higher potential returns and lower risks for the companies to invest in those markets. So, by concentrating on international market, a firm can produce products more effectively and create more value for customers. For example, as we discussed in class during the case study of Dr. Pepper, that the soft drink industry in the United States is relatively saturated and the Coca Cola’s volume grew just around 1percent per quarter in 2001 in North America; which is its largest market but, it grew about 5 percent at international level.
2. Economies of scale and learning: This is the second benefit of using international strategies. Expanding scope or size of markets results in achieving economies of scale at various levels i.e., marketing, operations, distribution and R&D. more precisely, firms targeting international markets are able to standardize their process which results in reduction in costs and increase in profits. In addition, companies are able to exploit their core competencies in international markets and create synergy by sharing knowledge and resources which results in decrease in costs and more learning opportunities.
3. Location advantages: Firms may move to certain markets because they have better access to certain resources such as cheap labor, raw-materials, suppliers and key customers. Other reason could be to reduce the transportation costs. It is critically important for the firms to manage these facilities effectively to gain the maximum out of location advantage.
Firms choose one or both of two basic types of international strategies: business level and corporate level (Hitt et al., 2011). We already discussed business level strategies in our previous report. Therefore, we are more concerned about corporate level business strategies and we will discuss them in detail in following paragraphs.
Each International firm first develop domestic strategies at the business level and at the corporate level if the firm has diversified at the product level.