Chapter 7: Strategies For Competing In International Markets

Assalamualaikum

This week I learn about Strategies For Competing In International Markets.

Many of the reason why companies want to enter in international market or foreign market. One of the reasons is to gain access to new customer. If we choose to compete foreign market, the company can find and get new customer from any other country around the world. It can make the company become popular such as mcd.  

 

The other reason is to achieve lower costs through economic scale, experience and increased purchasing power because when produce large amount it can achieve lower costs. Moreover, the reason why companies want to enter in international market is to further exploit its core competencies, to gain access to resources and capabilities located in foreign market and to spread its business risks across a wider market base.

Moreover, the effect of exchange rate shift that occur when the exchange rate falls, demand for goods will increases and when the exchange rate rises, demand for goods is decreases.

How to enter the international market?

1. Maintain a national (one-country) production base and export goods to foreign markets. License foreign firms to produce and distribute the firm’s products abroad. Give license other distributor who want to produce their product such as textile and Microsoft.  
2. Employ an overseas franchising strategy such as kfc
3. Establish a wholly-owned subsidiary by either acquiring a foreign company or through a “Greenfield” venture. Greenfield venture is do a newly project that particular country.
4. Rely on strategic alliances or joint ventures with foreign companies. 

Furthermore, this chapter also focuses on three strategic approaches which is multidomestic strategy, global strategy and transnational strategy. Multidomestic strategy is a think-local, act-local. Each of the country that company enter based on the particular company and any decision of management will decentralized to subsidiaries.

Besides that, global strategy is think-global, act-global. This strategy exist and same in every strategy but nowadays, it is difficult to do a same strategy especially if company want to enter a different market. Last but not least, think-global, act-local known as a transnational strategy. It incorporates elements of both multidomestic and global strategy.