Question

Success of a company investing and operating in a foreign country depends on the competitive advantage of the company.The entry strategy of a company in a foreign country could be technology based, quality based, or cost based. Explain what each strategy means in your own words.

Answer 1

In business,competitive advantage means that the firm has one attribute and factor which will make the firm outperform it's competitors.Such a factor can be anything ranging from superior technology,low cost skilled labor and innovation which leads to continuous product development and results in specialization through which the firm is able to achieve more than it's competitor.

The entry mode is a very important choice for all the companies that are thinking to expand their business to other markets.Some companies may find the domestic market to be too competitive and look for an innovation to enter the market and capture the share.Some other may penetrate the market by offering a far superior product at a low price to which there is no close substitute quality-wise such as One Plus or position themselves as the leader of continuous product development and seems to offering the highest quality and value even though the product is costly such as Apple.

Often the companies focus on their cost most while devising the entry strategy and their estimated revenue in the long-run to make the decision viable and at the macroeconomic conditions prevailing in the foreign country.Most companies in US often deals with markets who have a trade deal with U.S so that they can save their cost.

Also,while setting up manufacturing plants in such countries,the firms often look for cheap labor which is mostly abundant in developing countries such as China and which has proved to be a key factor for company like Apple to cut cost and enjoy high revenue.

For example, Apple has positioned themselves as the technology and quality driven company and has able to cut costs too and that makes it the market leader.It's products are far superior than the competitors and other firms follow what it does first and thus set an example for others to work for continuous innovation with repect to design and functions of the product while making it relatively cheaper to produce and finally make a product which seems to provide most value to the customers.The Apple's strategy has worked really well in this age of globalisation and it seems in whatever market it is present,it has able to maintain the same image everywhere.