International Strategy and Global Strategy - Essay Example

? International Strategy and Global strategy Part International Strategy An international expansion strategy for a firm is to go to outside of the domestic market to sell the goods or services. A beginner firm generally concentrates on the domestic market only but as it expands its business it goes to international market. Global marketing strategy is broadly used term. There are few steps for an organization to go to domestic to global marketing. The steps are as follows: Domestic --- International ---Multinational ---- Global. A firm first deals with the domestic market because it is easier for the firm to understand the local market environment. The Multinational companies are those which have more than one branch in different foreign countries. A global company is a kind of company which has no boundary, for a global company there is more than one head office in different foreign countries and there is no boundary in appointing the board of directions also (Lou, 1999). The difference between the global company and the multinational company is that the global companies don’t differentiate between the home country and host country employees. It is evident that though many international companies claim themselves as multinational companies but from their R & D, know-how, and technicalities they keep the host country aside. Here, it is important to note that, host country is the country in which the organization wants to do business and the home country is said to be the country in which the organization has its base that is the origin. A company is said to be a global company when the country would have similar amount of representatives present in their board of directors from the home country as well as from the host country Recommendation: The recommendations depend on the nature of the company. If a company has sufficient amount of production so that it can export it in the international market then off course it is recommended for going outside of the country. For example, a dairy company can easily sell the oversupply of cheese and milk to the outside country. If a country has key competence in any of the field then the company can move to the international market to capture the international market. When the firm sufficiently produces surplus products it can go for international market. There are many other reasons for going international of firms. Justification: The move of a company for going international depends on the company’s strength on some parameters. There are mainly three reasons present for the justification of a company’s move towards international market. One is the increased of market share, possibility of increasing economies of scale and scope or learning, gaining competitive advantage, branding of the company (Lou, 1999). Increasing the market share is very important reason to go in the international market. Creating brand awareness among the customers is required to enhance the brand position. Global brand itself is a positioning of any company. If a company is positioned itself as a global brand then it can automatically create popularity and loyalty among the customers. Implementation: The organization should execute both primary and secondary market research for new foreign market to determine the market demand. Recommendation: Establishing franchisee is also a kind of international business strategy. For example, KFC has established its franchise system in different countries even in the third world nations by adopting the culture of the developing countries. Justification: Franchisee would be effective global expansion strategy. The organization can capitalize on the international business opportunities through the seer knowledge of the franchisee owners about the market demand and several key cultural factors. Implementation: The organization should consider favorable location and footfall regarding the establishment of franchisee. A transparent agreement with the owners will help the organization to perform effective business performances. Recommendation: Licensing is another method for international business expansion that should be implemented by the company. Justification: It will help the organization to practice business operations for a particular time period without any chaos. Implementation: The organization should make a license agreement for 3 years. Licensing is given to any host country’s company for a certain period of time. But in licensing method the licenser have some certain amount of freedom in terms of operating the business in their way where license could be given for using a specific trade secret also. Recommendation: Dumping is one of the policies to sell the products in international market. For going to international market the first step is to export their oversupply to the outside market. The other possible ways to go for international market is to expand the branches in the international market (Kleinemal, 2007). Third way is to build the subsidiaries in the international market. The difference between the Branch and Subsidiary is that the branches are treated as foreign company in the host country but the subsidiary could get some relaxation from the host country government policy as it is considered as the local company (Hitt, Ireland & Hoskisson, 2011). Justification: The company needs diversification and market development due to the local market saturation. International market is the best possible solution that time. Implementation: In this case the organization should again try to understand the market demand of that particular foreign market. Effective market research will help them to establish new branches or outlets according to the effective market demand. Recommendation: The organization should invest in foreign country’s organization as an expansion tool. Justification: The organization can utilize client base of the particular organization of foreign country. Moreover, the organization can share business profit with the organization of host country. Implementation: The organization needs to invest directly in the organization of foreign country. It will help them to achieve business growth in that particular market. Recommendation: Depending on the favorable financial, economic and environmental situation the organization should go for international market (Jansson, 2008). Justification: Determining potential market demand and target customer base is necessary for the organization. In adequate market demand and unfavorable environmental situation can affect business growth. Economies of scale is again a justification for a company to go global, if a company can gain economies of scale that means it can operate in low cost and can earn more profit from the production. Implementation: For implementing the international strategy, it is important to analyze the external environmental situation it includes the political, economical, social and technological environment of the international market. Before implementing any of the above mentioned method of international strategy, it is important to know the social and cultural factors of the international market. For example opening branches in the foreign market means the home country company should have researched about the legal conditions of the host country. Implementation should come after a complete analysis of foreign market research. Recommendation: The organization needs to merge with other global organizations as business expansion strategy. Justification: The organization can avoid several legal market entry barriers, such as government regulation through merger. Implementation: The organizations should legally merge together in a formal way to provide better services and products to the customers. Recommendation: The organization should work together as a joint venture with the host country’s company in order to achieve the objective of the project. Justification: The organization can use the supply chain network and resources of the host country’s organization by forming joint venture. Implementation: The organization should form a joint venture with a foreign country’s organization for a long-term time period. Recommendation: The organization should consider turnkey projects as effective international expansion process. Justification: The organization can provide effective training programs to the employees through turnkey projects. It will help to increase the efficiency of workforce. Implementation: They need to hire external training consultants to increase the efficiency of a workforce. Recommendation: The organization should undertake contract manufacturing process as global expansion strategy. Justification: The organization can execute manufacturing process in cost effective countries to reduce business operation cost. Implementation: The organization should focus on cost efficient contract manufacturing process to control the manufacturing cost. Part 2 Corporate Governance The corporate governance means how an organization is directed and controlled. Corporate governance is the process to identify the distributions of functions and rights among different participants in the organization such as board of directors, shareholders, creditors, stakeholders, regulators, auditors and stakeholders. It is a process to specify the rules and regulations. Governance provides a structure to deal the organization with the social and environmental issues. It is the way through which organizations set and pursue their objectives. Recommendation: Reinforcing the board role and differentiating it from the management role. The board role and management role should be differentiated to keep clarification (Tricker & Tricker, 2012). Justification: This strategy will bring efficiency in the decision making process. Implementation: Role and responsibility of the board need to be reviewed in every quarter. Recommendation: Organization should apply new procedures to maximize effectiveness and efficiency of the board. Justification: Implementation of change process is required to enhance business operation. Implementation: Disclosure of effective financial statement and transparency will maximize the effectiveness of board. Recommendation: In-depth analysis made in the board by the members to measure the changes applied in the board structure. Justification: It will help to find out the real issues within the board structure. Implementation: Ethical behavior towards all the board members will help to reduce analytical conflicts. Recommendation: Organization should upgrade the internal audit system of the organization. Most of the companies do not have proper internal audit system. Justification: This internal audit will help to reveal several internal problems of the organization. Implementation: Interests of the stake holders need to be maintained during this process. Recommendation: The organization should properly manage the risk. Justification: It will help the organization several legal conflicts. Implementation: Rights of the shareholder need to be secured and maintained in order to avoid legal risks. Recommendation: The organization should improve transparency and shareholder’s relations. Justification: It will help to motivate the investors to make investment. Implementation: They need to provide all financial statements and positions in the annual report. Recommendation: The organization needs to bring transparency in the reporting system and strengthening the analytics system. Justification: It will help the organization to provide accurate outcome in the annual report. Implementation: The organization should motivate all the members and stakeholders to work collaboratively. Recommendation: The organization should improve in-house financial management system. Justification: It will help to record all the internal financial aspects of the organization within an effective time period. Implementation: The organization should focus on resource allocation and risk measurement. Recommendation: Organization should focus on analyzing the family role in board. Justification: It will help the organization to find out any kind of discrimination. Implementation: The organization can engage its employees in decision making process to avail several strategic options. Recommendation: Board level improvement (By adding new skill sets in the in the board level, specially adding the independent members in the board). Justification: It will help the organization to improve the competency and skill of the board to improve corporate governance. Implementation: The skills, performances and efficiency of all the members need to be reviewed effectively. References Hitt, M. A., Ireland R. D., & Hoskisson, R. E. (2011). Strategic Management – Competitiveness and Globalization, 9th Edition. Boulevard Mason: Cengage Learning. Jansson, H. (2008). International Business Strategy in Emerging Country Markets: The Institutional Network Approach. Massachusetts: Edward Elgar Publishing. Kleinemal, M. (2007). International Business: Foreign market entry principles. Munich: GRIN Verlag. Lou, Y. (1999). Entry and Cooperative Strategies in International Business Expansion. Westport: Greenwood Publishing Group. Tricker, B., & Tricker, R. I. (2012). Corporate Governance: Principles, Policies and Practices. Oxford: Oxford University Press. Read More