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Using examples, describe and critically assess how key decisions relating to international strategic activity may be influenced by cognitive bias - Essay Example

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Since globalization of trade, global trade has given the chance to expand market among nations continentally and overseas there is on observation of growth in transaction and communication withwell-laid business strategies. However, despite liberalization of free trade…
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Using examples, describe and critically assess how key decisions relating to international strategic activity may be influenced by cognitive bias
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INTERNATIONAL BUSINESS STRATEGIES By s Introduction Since globalization of trade, global trade has given the chance to expand market among nations continentally and overseas there is on observation of growth in transaction and communication withwell-laid business strategies. However, despite liberalization of free trade internationally, international market growth strategies are influenced by cognitive bias on the use of modern information technology such as internet.
International Business Strategies and Effects of Cognitive Bias
International Market penetration
Efficiency in use of important resources available in a nation can be achieved by utilizing a penetration strategy that emphasizes on the existing customers available internationally who avails ready market for the goods or services exported from one nation to another. However, to influence international customers to purchase goods or services from foreign nation needs a well-developed marketing strategy to access them as a way to generate new growth. For example, since a business management cannot employ salespeople globally, it has to use modern communication means as a way to access foreign customers via internet. The literate level on internet use by small and medium enterprises (SMEs) of a nation influences the ability to communicate with customers in international markets to generate sales. Internet offers sellers and buyers an opportunity to interact internationally via business-established websites and e-mail in business activities easing business transactions of goods and services internationally at a low cost an over a long period compared to employing salespeople globally. Prominent customers can be obtained via the influence of online advertisements on the product offered by different businesses globally hence easy to create new market internationally(Aaker 238-241).
Moreover, an international business strategy on market penetration can be influenced by the ability of a business firm to conduct market research to identify its weakness and strength and concentrate on strengthening its weaknesses. However, cognitive ability of a business firm internationallyplays an important role on the success of market research. Market research helps to determine the pace and race in the growth of international market. For example, language barrier adversely affects communication and poor communication affects a business ability to influence customers to purchase their products. Therefore, the ability of a business firm to access the market field and come up with problems leading to poor performance in the international market and how to solve these problems depends on the knowledge, skills and expertise possessed by market researchers and procedure to capitalize on changing such a weakness to a strength(Aaker 350-360).
However, cognitive bias has negatively influenced international business strategies especially in the use of e-commerce. It has compromised sustainability such that, in case of any misleading information gets to a large number of customers and may decide to withdraw from buying products of a business thus making it very easy to lose adverse market instantly. This may be because of weakened performance such that it may take time to convince customers of a mistake once done, as it would be in a traditional way of face-to-face. Additionally, in e-commerce is expensive hence increasing cost of doing business. For example, due to stiff competition towards publicity, e-commerce involving similar businesses offering similar products worldwide such as phones has made business firms to invest heavily on publicity hence making international business strategies via online be a very expensive task. On the other hand, international business strategies involving e-commerce can render long-term planning obsolete. For example, it can lead to firing salesperson located in other nations to substitute them with the publication of the business by e-mails in online websites. Additionally, it has discouraged teamwork in business organization as most of business activities occur online with customers in foreign nations. For example, lack of teamwork can lead to poor decision-making since it does not include customers in foreign nations.
List of References
Aaker, D. 1998, Strategic Market Management. Fifth Edition. United States of America: Wiley Publishers.
Aaker, D. 2001, Developing Business Strategies. Sixth Edition. New York: Wile Publishers. Read More
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