Critical Analysis Introduction: The article of Pankaj Ghemawat, “Managing Differences” mainly focuses on how business organizations or in particular Multinational Companies (MNC) can come up optimal strategies, when they decide to enter foreign countries or newer markets, particularly in the current globalized world…
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Extract of sample "International Business Strategies in Action"
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Ghemawat discusses three main strategies that can be implemented by the organizations during their foreign operations and also in response to globalization. The three strategies are categorized as adaptation, aggregation, and arbitrage. The article in a way aims to differentiate how business strategies are formulated based on the origin and nature of a business or an organization, and importantly based on their operations, particularly international operations. The basic premise of this article is how the organizations have to focus on the different business factors that needed to be considered in the foreign country of choice, and how strategies continuously needs development over the years as the business or organization grows in the country of choice. It also gives us a view of how these strategic factors change over the years and its significance in putting an international business strategy in action. An international business strategy is formulated based on different factors you can gather in the target market. This is also one big reason why a strategy formulated for a particular country or market would most probably fail in other countries. Summary Author Ghemawat focuses on the international strategies through the three A’s strategy categories of adaptation, aggregation, and arbitrage. ...
In that direction, the entering firms will set up local units, as the unit and its employees will maximally know about the local market and can function accordingly and effectively. These country specific strategies could work in certain countries and for organizations in certain sector. “According to the article, companies that utilize an adaptation strategy most likely have a country-centered organizational model.” (mendeley.com). Aggregation strategy provides the organization the option of running their regional operations as part of their global operations itself. “Aggregation attempt to deliver economies of scale by creating regional, or sometimes global, operations, it involves standardizing the product or service offering and grouping together the development and production process.” (Ghemawat 2007, p.60). Thus, according to the author, this strategy can be applicable in this current globalized world, as many organizations are operating across borders. “Operations that are designed to function across borders are more likely to be employed if aggregation is the strategy.” (mendeley.com). The strategy of Arbitrage can also be practiced by MNC, if they have a widespread reach and network. That is, organizations following this strategy can set up operations in different parts of a country or even in different countries, where there is apt resources including human resources. “Arbitrage is the exploitation of the differences between national or regional markets, often by locating different parts of the supply chain in different places.” Examples include call centers in India, factories in China, and retail shops in Western Europe. (Ghemawat 2007, p.60). All these three
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