Week 8: STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETS

In The Name of ALLAH, The Most Beneficent and Merciful

Assalamu'alaikum w.b.t.

Peace and Blessings be Upon The Prophet Muhammad SAW, His family and friends...

 Not too late for me to wish you welcome the beginning of Muharram, the new year for Muslims all over the world. Keep the old "book", and open a new "book" with high spirits. Muslims who are believe are constantly renewing itself by good deeds. Make today better than yesterday. In Sha ALLAH :)

Let's take a moment to say Alhamdulillah for everything. All praises to ALLAH, with HIS blessings and love we are able meet again at for this week. 

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For this week, the topic is about strategies for competing in International Markets. I want to focus on five major strategic options for entering foreign markets. 

As the Founder and CEO of  business, we often find our self working with companies that want to develop a presence in various international markets. Before embarking on new territory, it's important to understand the specific country's culture, customs, needs, and unspoken rules that will be a better for that market.

WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS?

1) To gain access to new customers

2) To achieve lower costs through economies of scale, experience, and increased purchasing power

3) To further exploit core competencies

4) To gain access to resources and capabilities located in foreign markets

5) To spread business risk across a wider market base

WHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY-MAKING MORE COMPLEX?

1) Different countries have different home-country advantages in different industries

2)Location-based value chain advantages for certain countries

3)Differences in government policies, tax rates, and economic conditions

4)Currency exchange rate risks

5) Differences in buyer tastes and preferences for products and services

STRATEGIC OPTIONS FOR ENTERING AND COMPETING IN INTERNATIONAL MARKETS

Figure 1

Though that every strategies have their own advantages and disadvantages, which are:

 

Figure 2: Export strategies

Figure 3: Licensing and Franchising Strategies

Figure 4: Foreign Subsidiary Strategies

 #A greenfield venture is a subsidiary business that is established by setting up the entire operation from the ground up.

Figure 4: Advantages and disadvantages of Greenfield strategies

# Collaborative strategies involving alliances or joint ventures with foreign partners are a popular way for companies to edge their way into the markets of foreign countries.

# Cross-border alliances enable a growth-minded company to widen its geographic coverage and strengthen its competitiveness in foreign markets; at the same time, they offer flexibility and allow a company to retain some degree of autonomy and operating control.

COMPETING INTERNATIONALLY: THREE STRATEGIC APPROACHES

Figure 5: Three approaches for Competing Internationally

1) Multidomestic Strategy- one in which a firm varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. It is a think-local,  act-local type of international strategy, facilitated by decision making decentralized to the local level.

2) Global Strategy-one in which a company employs the same basic competitive approach in all countries where it operates, sells much the same products everywhere, strives to build global brands, and coordinates its actions worldwide with strong headquarters control. It represents a think-global, act-global approach.

3) Transnational Strategy- is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies.

Enough for this week, thank you :)