How are businesses are affected by international competitors?
With the advent of globalisation process, a number of firms are entering new markets across the globe. This has led to the increase in competition and the businesses are influenced by the actions of international competitors. Today, due to technological advancements, the ease of doing business even in the remotest place is feasible. For example, IBM has its operating units around the world giving access to global markets.
Internet connections have increased the ease of doing business with the customers in any part of the world and this has further increased the stiff competition among businesses.
International competitors have the advantage of low cost as they achieve global economies of scale with setting up units in low cost destinations and operating world wide. These competitors deploy global marketing strategies, which reduces the cost for a larger base and hence develop global brands by sending out global messages. These businesses can target different countries across the globe with their global approach and hence affect the business of more domestic businesses who fail to achieve such high levels of economies of scale.
Domestic business can respond to the challenges of International competitors by carefully adjusting their business strategies to the need of the hour:
1. One of the ways is to increase the firm’s global presence by setting up operations in a number of foreign markets. Firms can achieve this by either, setting up manufacturing units and hiring overseas specialists directly or by forming joint ventures with local partners in the target country.
2. Another way to face international competition is to work towards development of powerful global brands. In such a scenario company should focus on the range of brands which provide the firm a high level of competitive advantage, and withdraw other brands, not performing well, from the market. This enables the companies to focus their energy on a narrower range of brands that are market leaders, into more and more geographical markets.
Companies should develop a global business strategy to face the challenges from international competitors. Failure to do so will put the competitor in the leading position and making you firm the second best in the market. Companies today understand the need off being market leaders in their sector rather than followers.