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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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  • Number of pages: 2

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International business strategy refers to expand business across national borders, from the domestic market into foreign market, set up various form of foreign organisations, configure the production factor of domestic and international, in one or several economic areas to implement the business strategy.

The company engaged in the international business should evaluate their own resource and business mission to determine company's objectives and have to plan how to achieve those objectives.Each international location has their own cultural, political, language and so on, it will increase the complexity of planning and formulating the strategy.So that, company must analyse their own capability and strengths and identify the competitors for increasing the competitive in international market.

2.1 Classification of International Business Strategy

 There are four type of International business strategy to compete in international markets.There are International strategy, multinational strategy, global standardisation strategy and transnational strategy.

International Strategy

The local subsidiaries of implementing the international strategy are autonomous like the multinational company.The local subsidiaries stress product have to meet the requirement of safety standard and approve by local governments and local marketing.On the other hand, the new processes and products of the new subsidiaries are very dependent on headquarters.

Multinational Strategy

Multinational strategy is according to the needs of local customer, customising the products in the local market.Parent company is mainly responsible for the overall strategy and business goals, target control and financial supervision on subsidiaries.Each oversea subsidiary is undertaking its own product and the development of company so that can respond quickly while the changes of local market. However, each subsidiary need to report to the parent company and the coordination between subsidiaries more difficulty.

Transnational Strategy

Transnational strategy in the context of global competition, formed based on cost-benefit and regional benefit experience, transferring company's core competency, bearing in mind the needs of the local market.In order to avoid the pressure from external competitive in the market, relations between parents companies and subsidiaries, affiliates and subsidiaries are bidirectional.The parents companies can provide products and technology to subsidiaries, even though the subsidiaries also can provide products and technology to parents companies.The feature of the transnational strategy is the diversification of business and market.

Global Strategy

Global strategy refers to company offering the same product using the same marketing strategy in all national market.Cost of those company are implementing global strategy will reduce.This is because the manufacturing of entire products will producing in a few optimal locations; the design of product is standard.Some companies adopt this strategy is to achieve cost leadership in the case of less cost pressure and specific local requirement, corporate globalisation strategy is beneficial. But request for products need local features on the market, this strategy is not appropriate

2.2 International Business Strategy Formulation

 Licensing

An agreement that allows one group to use a right to an intangible property in exchange for payment to the other group for a specified time period.If u want to enter a market, purchasing the license will be a useful strategy to the buyers because it has a relatively large market share in the market. Localisation is a complex issue yet licensing offer solution to most of the legal barriers to entry.However, the disadvantage of  licensing is loss of quality control, it is a major problem in a licensing situation.

Franchising

Franchising is a typical process for the expansion of rapid market. However, it is gaining traction from other parts of the world. Repeatable business model such as food outlets, that can be easily transferred into other market are perfectly suit for franchising. There are two caveats required when considering taking the franchise model. Firstly, the business model that you establish should neither have a very strong brand recognition that can be using it globally nor having a very unique characteristic company. Secondly, there may be a competition exist in your franchisee in the future.

Joint Venture

Joint venture is a kind of partnership that can create third independently managed company in a form.Two companies are able to create the third company if they agree to work together such as Sony/Ericsson Cell Phone.So that, the two companies will share equally either the risks or profits.

Even so, different management styles and cultures between two companies will cause poor integration of third company.

Piggybacking

Piggybacking is a remarkable solution to enter the international field.Through selling the specific services or products to big local company that are setting up in foreign markets, may approve that acceptability of your services and products for international market.Due to sell in local company  in essence yet the big company is helping promote your services and products into foreign market, the costs and risk will reduce.

2.3 Success factor of International Business Strategy

Customer

According to the Founder and CEO of Zappos, Tony Hsieh, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience.Then we let the customers be our marketing.”Customers are the main resource for any organisations, we need to maintain a good relationship with them.For example, asking their feedback, concerning what they needs and solve the problems they faced rapidly.Thus, asking the existing and potential customer what they need will improve the effective sales and marketing.With these, it will definitely develop the loyalty of customer and keeping competitors away.

Marketing Research Quality

The determination of success entry into foreign market is the quality of market research. First, the company should define the position of the product in market.Second, reduce the range of the market to some specific country.Thirdly, the company should do some research about the country's political, cultural and economic activities.Lastly, to make a more quality market, defining a targeted market and conducting successive researches is also an important step.Market research should be always performed, and also strategies adjusted accordingly with your researched information.

Local Partnership

Local partnership is necessary for doing business in some other countries.Local partnership is able to provide cost and risk sharing and also access to distribution or new market network.They can strengthen your potential in that country by providing access to local employees.Local partnership also can give a deep perception of making country specific changes to the product, as well as conduct translations ,accelerate regulations and make sure the packaging and safety standards meet the requirement.

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