Question

Discuss how internationalising firms can gain and sustain competitive advantage

Answer 1

For a firm to grow and expand moving to internationalization is the priority and also a challenge. The effect of globalization has increased the potential market for the company not just to earn profit but is dire need for sustaining. Globalization has opened the doors for new opportunity and cut throat competition. The business ability to launch new product and services and how they position it can bring competitive advantage and in long run unleased profit through proper planning and strategic advantage.

There are certain criterion which can be worked on for gaining and sustaining competitive advantage-

Economic Strategy

Product and Service- Create differentiation

Innovation

ECONOMIC STRATEGY- Business needs new plans and strategy to secure return and profitability .Internationalization is a great opportunity to open up to new customer base and can unleased the good chance to position in the market with offering .This can also pull profits from new market which is now stagnant because of exhausting the market already been operated. This could increase the profits for the company which can used as capital to gain and sustain the company require capital for its operating cost and other financial challenges.

PRODUCT AND SERVICE - The market which has already created space for the product and making good profit, it’s difficult to enter the market and stabilize. For this the new product or service entrant has to have some differentiation, we can also call it Unique Selling Proposition. A strategic depth to add value to customer experience with offering a product with some USP. This can assure competitive advantage. If a company successfully launch its product or service with some extra or different which is already existing in the market. When the product goes in demand the reduces production cost and improved margins can bring economies of scale and can stabilize the expansion phase. Creating a niche market or offer which is different and can derives value. The effective marketing can create brand awareness which is important when a business enter a new market.

No matter how good the product is if it’s not effectively communicated can be a big turn off. The company who is trying to enter new market has to keep this in mind that the USP or Differentiation in product and service needs fair advertising.

Knowing the competition- To have an extensive research about the market and the consumer behavior plays a pivot role for expansion and stability in new business landscape. What the competition is offering and how the product offered can be different can change the game for the new entrant.

INNOVATION- A business spends almost double, when it has to start operating in a different market, to understand competitor offering, market trends etc. The best and safe idea is to innovate the product to stay and perform in the market. As business consider the PLC curve, the product needs innovation to stay up in the PLC curve. The innovation brought and fulfilling the promise made to the customer can make the business gain and sustain.

Entering the Business with a partnership with already existing brand in the market can help the business strategically as the risk can be minimized, when the business experiment. The company can leverage the existing customer base. This also helps the company to enter the market with a familiar name and can also use the credibility of the existing brand. This strategy makes the new entrant less vulnerable for a new market force.