Developing a Global Business Strategy - Coursework Example

Developing a Global Business Strategy

Introduction

International Commerce has expanded greatly with the onset of the 21st century. In Light of this, there are certain elements that may have been employable in the previous business arena that are in truth, inapplicable in the new one. For instance, while the previous business capacities were sales oriented, the new ones are more focused on customer comfortability for the purposes of longevity. This is to say that businesses are primarily focused on ensuring that the clienteles’ needs are met. This is not to say that the sales as a goal have taken the back sit, but rather that there is a lot more focus on the client as a bigger entity. This is especially with regard to international business which has developed into one of the most competitive domains of operation. The main perspective of Multinational Enterprises (MNEs) has now become to ensure that they remain relevant in their industries for long periods of time to ensure that the profit margins they create are sustainable (Motohashi, 2015). While there have been many concepts taken on with most of them being challenged scholarly, this perspective is one that has remained fairly uniform. MNEs that have remained relevant and successful in their industries have all had to take on customer understanding and satisfaction as the primary goal (Beamish, 2016).

Another key focus in development strategies is the creation of internal cooperatives. This is a practice that has been taken on quite a bit in the new age. This is a result of the breakage of international barriers that previously stood in the line of such executions. The breakage of said barriers has a come a long way following the creation of mechanisms through which cultures can be respected and adapted into (Prange, 2011). Therefore, business persons have become less varies to allowing other foreign business people investments into their local domains. The billion-dollar boost that international business has received over the last 15 or so years could heavily be attributed to international cooperative partnerships, and hence the relevance cannot be overlooked. In this regard, however, there are certain risk factors that heavily threaten the accomplishment of a successful business. These are such as unfavorable governance structures. This paper’s focus is to point out such factors and the manner in which they impact the future or lack thereof of international partnerships. However, although this phenomenon is still gaining ground, those that have been able to acquire a good handling have created formidable business partnerships (Mehmood, 2015). This is particularly useful in the achievement of not only individual business goals but national development agendas well.

The paper will also focus on barriers that stand in the way of the development of MNEs (Apetrei, 2015). This will primarily be in terms of the achievement of an optimum working environment for both developed and developing countries. This means that the paper has taken on a magnified observance of the difference in MNE operations regarding developed and developing countries. The term developed insinuates that a country has a well laid out system that allows for ample creation of opportunities and maximum utilization of said opportunities to cultivate intensified results. On the other hand, the term developing insinuates that a country is just now coming into such a system. In light of this, there are certain market failures in terms of institutional voids that would then be characteristic of a developing country (Mehmood, 2015). These factors go a long way in influencing the activities of MNEs that operate amongst countries that bear both terms and those that operate strictly in the developing world. Consequently, the status of the locality of operations determines the risk factors that one would encounter.

This paper will approach the concept of global development strategies from various other perspectives. However, the above are some of the major factors of analysis. The aim, in the long run, is to come up with a comprehensive analogy of the important elements that define strategies of global development.

Literature Review

International commerce is determined by one’s understanding of the concept of internationalization. This is the process in which companies allow their operations to cross over borders (Prange, 2011). The author then explores the various elements that define the occurrence of success in the concept. As pointed out, the focus in the text is not only about the possibility of one succeeding in their operations but to what extent certain elements define said success (Mehmood, 2015). The factors presented in that regard are such as the inclination of one towards exploitation or exploration of their area of operation (Prange, 2011).

It is of extreme importance that stakeholder interests remain the primary focus of an organization (Mehmood, 2015). While there is the possibility of getting out of line every so often as the company advances, doing so would render the development process vain. The best way to ensure that said diversion does not come of being is to see to it that the necessary achievement measures are put in place. As the company proceeds in its operation there ought to be measurement strategies put in place per said time frames. This allows room to correct the occurrence of error prior to its advancement (Fojcik, 2015).

One determinant factor in international commerce is technology; the future will see to it that competition is at a very high level. This is all based on pricing schemes and technological factors (Mehmood, 2015). These are the two variables upon which the future is reliant. The technological element of business controls mobile commerce more than anything. This is because mobile commerce in itself is a factor of technological creation. International business is reliant almost entirely on the creation of many mechanisms through which mobile commerce can occur (Motohashi, 2015).

Furthermore, the pricing scheme then determines the amount of sale that an organization enjoys. It is therefore of extreme importance that the scheme that is used to set said prices is first before all else, fair. Equality ought to be maintained between both the entrepreneur and the consumer (Mehmood, 2015). The price must not incline towards the favor of either of the two. Pricing is usually set based on certain factors such as the amount of demand and the availability of the supply. Once the price has been set ,organizations must not veer far from the standard price when selling the product (Prange, 2011). In the event that this happens, they are said to be well in line with violation of their ethical requirements.

There has been speculation of equality in the concepts of performance and control. The performance aspect lies in the productivity that one is able to inject into the process of production. Often times, this then goes on to define the output that will stem from the process (Fojcik, 2015). Performance levels are measured differently in various organizations (Beamish, 2016). This is because of the nature of each Type of business varies. In some companies, the performance level could be determined by the number of sales that one is able to drive up. In some others, the performance level could be defined by the number of new clientele that one attracts into the organization.

While there is the general assumption that performance goes on to equate control, this may not necessary be true (Beamish, 2016). Control would see to it that one impacts/influences the direction of an organization. Control, much like performance presents itself in various forms. Those at the top of the organizational hierarchy (predominantly, management) usually have the highest amount of control over the company. The issue, therefore, is situated along the lower rankings (Mehmood, 2015). The point of conflict is whether infact ordinary employees of a company are able to impact larger amounts of control if they attain higher levels of performance (Beamish, 2016).

The world has eased into international trade and investment. This is because the process has been liberalized through the breakdown of barriers that may have posed a threat to the process. This is to say that countries are much more willing to allow foreign participation across their borders (Motohashi, 2015). This is because there is the understanding that for one to succeed, they too would have to be able to understand other locality’s forms of operation and cultural inclinations (Beamish, 2016). The International business operates under an undocumented “give and take policy.” Interactions are carried out on the basis that the players are giving and receiving. Thus, in order for a country to be able to allow its business people an opportunity to tap into another market; they would have to be able to relinquish a part of their own (Motohashi, 2015). This understanding has developed following increased literacy and competition levels (Mehmood, 2015). The more a country is able to relinquish a certain percentage of market control, the more it is allowed entry into various others (Prange, 2011). Countries that have successfully mastered this give and take policy have gone on to enjoy tremendous amounts of internationalization success; case and point, the United States.

For one to able to tap into the modern day liberalization, they would have to be adept in terms of the kind of research methods that they employ. Research is a wide concept of application and can therefore in truth be quite tricky (Prange, 2011). There are a lot of components of research that one could focus their skills on. In the event that they focus on the wrong aspects, they would then find that their outcomes make a very little impact on their business (Beamish, 2016). Consequently, scholars have asserted that research should be knowledge based and resource based (Prange, 2011). This directly alludes that the central focus should be to ensure that one has greater insight on how they could increase their resource inflow and tap into them extensively (Motohashi, 2015). In this way, they are always able to enjoy constant innovation and stay ahead of their competitors.

Notably, different organizations in the same line of business usually have different sources from which they acquire resources (Beamish, 2016). For one to effectively capture the process of internalization, they would have to be able to understand their competitors’ resource base as well and whether they too can venture into it (Mehmood, 2015). However, this concept is vaguely explored in the sources; this paper attempts to assimilate further on the concept into practical realization.

The concept of liberalization could be explored from previous untapped standpoints. Scholars assert that while liberalization has definitely allowed a wider interaction scope, operators must be careful that they do not overdo the process (Fojcik, 2015). This is to say that products ought to be customized in a standard procedure and not in accordance with variations of culture (Apetrei, 2015). In this way, they would avoid dissecting the brand into a new image every time they crossed a boundary (Fojcik, 2015). This perspective is definitely one that contributes greatly to the scope of study in that it demystifies a myth or line of direction that new MNEs may be tempted to take on.

However, the texts reviewed in this regard fail to provide befitting examples that could pointedly illustrate the above concept to a greater understanding. A good example would have been Nike. The company has been able to operate successfully in over 120 countries on the globe following the standardization of its merchandise. The merchandise in question is designed to suit clients from all over the world. There isn’t specific inclination or alterations based on the desire to attract a certain group of clientele. Furthermore, the brand has remained true to the kind of merchandise it intended to put out from the start only being slightly influenced by variations in preferences.

Some scholars, however, argue that in given the right amount of effort, standardization and adaptation can work hand in hand (Apetrei, 2015). There are various strategies that could be employed into both concepts that would work for various types of operators (Prange, 2011). In the process of adaptation, the authors assert that the issue could be explored from the standpoints of either submission or indifference. As regards submission, this is whereby an entrepreneur allows themselves to learn intently another culture and therefore adapting to it naturally (Apetrei, 2015). As regards indifference, this is whereby entrepreneurs allow employees that are from within a locality adapt the company to the culture. This is by contributing to decision-making factors to ensure that the company is in line with certain cultural necessities. However, notably in a case such as that, the entrepreneur does not them conform or attempt to adapt to the culture individually.

In the case of standardization, the authors assert that there are two strategies; superiority and disputable standardization. Standardization by superiority refers to a situation whereby one completely overlooks one cultural context and glorifies another. This is by ignoring the cultural contexts of the point of operation and upholding the other strictly (Fojcik, 2015). On the other hand, disputable standardization is where both cultures are taken into context and thus usually creates conflict. The entrepreneur is called upon to adapt the conflicting environment to their own culture (Apetrei, 2015). The texts, however, fall short in their distinctively sketchy explanation of that last concept.

As with standardization – adaptation, companies usually experience momentary difficulty in determining whether to take on exploration or exploitation (Fojcik, 2015). As exploration implies innovation, it is, therefore, the more “logical” inclination. However, this result in what scholars refers to as the “failure trap” (Prange, 2011). According to the author, this is because this usually leads one to spend a lot of time on processes of experimentation. In experimentation, nothing is guaranteed. One could keep trying out new ideas without achieving any form of progress for so a long time (Mehmood, 2015). In this case, they usually end up wasting too much time and giving the competition the upper hand. In truth, it is extremely difficult for one to realize that they may have invested too much time in exploration (Prange, 2011). In an entrepreneur’s mind, this is all usually part of the innovation and creativity train. In most cases, it always takes an outside party for one to realize their unfavorable inclination (Fojcik, 2015). On the other hand, exploitation allows for people to put into practice what they have learned. The reason there ought to be a balance between the two is because for people to practice what they have learned they would need to learn first. Hence, successful MNEs learn through exploration and then take on application through exploitation and the cycle continues (Prange, 2011).

Application to Real Life Organizational Situations

Companies have to decide the more suitable option to pursue in terms of taking on foreign markets. Exploration calls for one to be able to adapt to environmental ideas and processes. This is in that they are able to work hand in hand with the circumstances provided to them in the environment that they are situated. Exploitation, on the other hand, refers to the ability to leverage the capabilities that one currently has (Prange, 2011). This is usually in reference to the products and services. Scholars have argued over which of the two qualifies as a better development strategy on a global scale. The general disposition is that it proves extremely difficult to be able to apply both of them at the exact same time. However, there is also the general scholarly disposition that in order for a firm to succeed in international business both factors would have to apply. Thus, a company must use the knowledge it already has to the maximum effect while at the same time adapting itself to the environment. A good example of a company that has mastered the combination of both this element is McDonalds. This is because once the company ventures into a new locality it very fast learns to operate like other businesses within that locality hence the quick assimilation. However, the brand never loses the routine and process of operation that it is already used to.

In light of the above, it would be extremely difficult for a company to be able to operate effectively on international scales if it is unwilling to relinquish autonomy. Once a company leaves its mother country and begins to operate in another as well, it must be willing to come to a guidance strategy that would assist it to acquire a market in the new country fast enough. This could only happen through allowing local research and development centers a little autonomy (Motohashi, 2015). In this way, they are able to point out, in accordance with a country’s regulations whether the company in question is well in line with the standards. Good examples of such of companies that have had to let this happen are travel and package delivery companies. For Instance, DHL is a company that operates across various borders. However, the company’s greatest strength has been by far its flexibility; the ability to allow local R&D centers propel it towards its market and help define its operations. This is especially in countries that are in developing countries where the industry hasn’t picked up as well. DHL relies on the R&D Centers to define its positional placement so that it is not put in a locality that is, for the most part, disinterested in the service.

In truth, there is always the chance that whatever choice on inclines towards is a risk. The occurrence of partnerships has become a common endeavor in international business. This is an advisable strategy by both sociologists and economists. It allows for companies to be able to shoulder the challenges that are presented as well as the possibility of loss. In a way, it is a form of insurance that upon negativity people could shoulder the consequences together. Notably, though it is important that certain factors are taken into consideration in the process of partnership selection. One such factor is the experience level of one’s partner (Beamish, 2016). Of the partners that may comprise an MNE, a percentage that is not less than 50% ought to have ample experience in the field. Any percentage that is lower than that would set the odds against the success of the MNE. The partnership may not necessarily comprise of companies in the same line of business. For instance, an upcoming fitness line could partner with a recognized media house to help promote the line and in the process help it acquire credibility. Before partnering, companies must critically analyze each other’s Strengths, Weaknesses, Opportunities and Threats (SWOT). This is in order to ensure that there is an awareness on factors such as asset limitations and deficiencies in capability.

Once operations have kicked off, there is the decision on whether to adapt or standardized. If a company is experienced and more adept at internationalization, this decision usually would have been made prior to the commencement of operations. There are certain factors that determine whether one ought to standardize, adopt or employ both processes. These concepts operate similarly to that of exploration - exploitation. One determinant factor is the entrepreneurs’ level of experience (Apetrei, 2015). In some cases, standardization would call for one to be extremely experienced in order to be able to make it in the international market. For instance, as in the case of Nike, the company would easily be able to standardize its operations regardless of the locality. This is because, for one, the company has a viable reputation. Supposing Nike opened a branch in a country where most operation shut down by 5Pm and Nike regulations require it to be shut by 4pm. If Nike were an emerging company, it would have to operate up to the standard 5 pm in order to compete effectively and gain the market’s approval. However, seeing as Nike has cut a niche for itself and already has a certain percentage of loyalty, it would standardize its operation time in accordance with its own regulations. Most of its consumers would not veer off to other companies owing to brand loyalty. Other factors that determine adaptation - standardization are such as personal values and similarities (or lack thereof) in the entrepreneurs’ culture and host culture.

Another relevant factor in the process of standardization is the nature of the business activity that the MNE takes on. Some activities require that the entrepreneur adapt the business while others require that they standardize (Apetrei, 2015). A good example of an industry that requires adaptation is the restaurant business. For instance, in the opening of a Chinese restaurant on American soil, the entrepreneurs would have to adapt it to the American culture. This is regardless of the fact that the business is Chinese oriented. Research has it that while consumers like to believe that the food they consume is ethnically authentic, they also like to have recognizable elements. This explains why for instance while Chinese food is spicy and oily, the American version prepared in Chinese restaurants is less of the two as Americans have inclined more towards health and wellness. In contrast, IT companies would have to standardize and not adapt. In truth, in the IT World, the option of adaptation is null and void. The industry in question is reliant on technology and formulas. Regardless of whatever part of the world one is IT methods and formulas remain the same. Therefore, before all else, the nature of a business determines whether it should standardize or adapt.

Another factor of consideration is an MNE’s flexibility to exchange rate. An MNE should be able to expect certain changes in the exchange rate and have mechanisms to deal with it (Fojcik, 2015). A good case and point are that of electronic companies that deal with different currencies based on their location. For instance, while operating in the United Kingdom, Samsung merchandise is traded by use of the Pound. While operating in the United States, the merchandise is traded by use of the Dollar. While operating in South Africa, it is traded by use of the Rand. This, therefore, protects the company against huge amounts of profit decrease in the event that one currency value drops. However, for companies such as Nike that operate under the standard dollar currency, they experience huge declines in profit whenever the dollar drops. They would only be at the optimum height of success if the dollar maintains or increases its value. In whatever way one approaches the matter, there are both advantages and disadvantages for both Samsung and Nike’s currency operations. Notably, though scholars assert that Samsung’s flexibility is an ideal mode of operation in terms an international business’ longevity.

In summation, development when extensively defined has its goals. The achievement of these goals is what determines its occurrence and hence the success of an organization. One such goal is the technologically driven aspect; the incorporation of foreign mechanisms of technological advancement. Deductively, international business success is defined by an organization’s ability to take on changes in technological advancement. This usually proves a task as incorporating said advancement is costly and could also interrupt the routine under which a company operates. Another goal and measure are the policy driven aspect. This concerns itself with the ability to respond to local organizations through adaptations or standardization (Motohashi, 2015). In that, a company must be able to ensure that its policies do not end up conflicting with those of the environment they are in. If this happens, this is usually the first step towards a long road of failure. Another measure of development and arguably the most important one is the cost driven aspect. This concerns itself with the ability to source and utilize resources at a cheap cost. If Multinational Enterprises achieve this three or are in line with their achievement, then success is the more likely outcome.