Question

In: Economics

Identify the main International Business Strategies.

Identify the main International Business Strategies.

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Expert Solution

Using an international strategy means focusing on the export of goods and services to foreign markets or, conversely, importing goods and resources for domestic use from other countries. Companies employing such a strategy are often headquartered exclusively in their country of origin, allowing them to circumvent the need to invest in overseas personnel and facilities. Businesses that follow these strategies often include small local manufacturers who export key resources in neighboring countries to bigger companies. However, this model is not without significant business obstacles, such as legally developing local distribution and administrative offices in major international cities; handling global logistics involving the importation, export, and manufacturing of products; and maintaining compliance with foreign manufacturing and trade laws. The international strategy may be the most common despite its relative challenges, because on average it requires the least amount of overheads. Companies seeking international expansion may try a mix of strategies to see what works best for them in terms of logistics and profits

To adopt a multi-domestic business strategy, a business needs to invest in establishing its presence in a foreign market and tailoring its products or services to the local customer base. Unlike marketing foreign products to customers who may not recognize or understand them initially, companies are modifying their offers and repositioning their marketing strategies to engage with foreign customs, cultural traits and traditions. Multi-domestic enterprises often retain. Food and beverage companies largely adopt multi-domestic strategies. For instance, the Kraft Heinz Company is making a specialized version of its ketchup for Indian customers featuring a different spice blend to help match the culinary preferences of the country. These adjustments, however, are often costly and can incur a certain level of financial risk when launching unproven products into a new market. As such, corporations typically only use this growth strategy in a small number of countries.

In an effort to expand their customer base and sell products in more foreign markets, companies that follow a global strategy leverage economies of scale to boost their reach and revenue as much as possible. Global businesses are attempting to homogenize their products and services to minimize costs and reach as wide an international audience as possible. These companies tend to maintain a headquarters or central office, usually in their country of origin, while also establishing dozens of operations in countries around the world.

The transnational business strategy is one of the most complex methods companies can use when expanding internationally, and can be seen as a combination of global and multi-domestic strategies. While this strategy retains the headquarters and core technology of a company in its country of origin, it also allows a firm to develop full-scale operations in international markets. In these various markets, decision-making, manufacturing , and distribution roles are spread equally to individual facilities, enabling businesses to have separate divisions for marketing, research , and development to respond to local consumers ' needs.


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