International Business Strategies: Advantages And Disadvantages

Different Strategies Used in Internationalizing Business

Discuss about the International Business Management for Internationalization.

The paper reflects on the international business and its strategies that used by the business to have a market outside the country. Discussions related to the strategies used highlighted in the paper and each strategy has its own advantage and disadvantages. The connection between the theory and real implementation of strategies been discussed here. The gap between the knowledge of international business strategy has clarified in further research (Vandina, 2016).

Before doing the research, I consider these business strategies used for the internationalizing the business is same in each type of business. The strategies are common for all and have to be applied as same as in every situations and circumstance. The strategies used for the internationalizing are found to be the one that can make the entry easy to the other country without and barriers. These strategies include franchising or licensing. These will make the business easy for the person who was to explore their business or entry into the new market while offering the new theme in its business.

The companies have used the strategies for internationalization to have the smooth working in the business. Smooth working in the business can reflect through the management of the supply chain. Some companies use the internationalization only to maintain their logistics and supply chain in another country. This internationalization in the business increases the competition in the market that will enhance the overall supply and demand in the world. These strategies are much important to implement in the business (Jensen, Nielsen & Waade, 2016).

However, after doing the research, I realised there are many benefits and disadvantages of using the internal business strategy in the business. Internationalization concept is broader than I think before doing the research.  International business is nothing but the study of the internationalization process of multinational corporations. MNC’s has a worldwide approach to markets, in terms of production and operation in several countries. The strategies used in internationalizing the business refers to the plans and policies that guide the commercial transaction taking place between the companies in different countries. The private sector or companies rather than the government use these strategies of internationalizing the business. The use of these strategies also lies in the level of high profit earned by the firm.

While doing the research it can be understood that the theory and practice of international business strategy. The connection is that both applied in the world while facing all the challenges and complication existing in the surrounding. The difference between both is that they found simple in theory but when it apply to practical life; it includes more complications and difficulties to handle.

Advantages and Disadvantages of These Strategies

These strategies can be applicable all over the world. One of the companies named Airbnb, which started its business in California in 2008. The company is providing the accommodation. At present, the company has expanded its business to not only UK or US but to the regions of India, Canada etc. using the international business strategies. In year 2015, to comply with current U.S. regulation, the Airbnb platform in Cuba is currently open to licensed U.S. travellers. Airbnb also used the international strategy like acquisition in the year 2011. Airbnb acquired Accoleo, a German competitor company providing the similar services like Airbnb. This strategy used in the country like Paris, Milan, Barcelona, Moscow, and Sao Paulo (HubSpot, 2018).

Another example we can take is Dunkin Donuts, has expanded its business stores in more than 30 countries outside the U.S. The company has started around 3100 stores with the aim to satisfy their global consumer with a sweet tooth (HubSpot, 2018).These countries include the main market of Asia and Middle East. This company has used franchising as the internationalisation strategy in its business. The company has expanded its business. The company has more than 18000 franchises and point of distribution (Market Realist, 2015).

From the reference of “Global strategic management” book, many examples for strategies for internationalisation can take. These examples range from large international organisation including Ikea, Google, and Ferrari to the strategies of business from emerging and developing the economies such as China, Poland, and Nigeria. Another example we can take is of Ikea, which is a Sweden based company dealing in furniture at very low cost while providing the large variety to it customer. Now company has planning to expand its business in China while using the international business strategy. Ikea has use strategy of joint venture to enter into the market of China, to know the needs of the local consumer and follow local laws. The company has made slight modification in its furniture to meet the local needs as Chinese apartments are small and customer requires functional, modular solutions (Oxford University press, 2018).

According to J George Frynas and Kamel Mellahi, there is other example of Ferrari. The Ferrari expansion had done using the strategy of acquisition or privatisation in Indonesia plants in the year of 2009. The Ferrari has German based company, which is famous for its well knows trademarks genuine issue. The company has used this strategy to have market in the country like Indonesia and acquired the plant in that country to achieve the economies of scale (The Jakarta Post, 2018).

Connection Between Theory and Real Implementation

The use of internationalization in the business done so that the differences in the culture can reduced by merging with the other companies. This will develop the understanding of the cultural and linguistic barriers exist in every country and found different in every country. The problem of understanding of the political and legal system of each and every country is found to be difficult to understand each and every aspect of the country so by using the concept of internationalization in the business. This problem can be resolved easily by using the internationalization in the strategies of business (Søndergaard, Oehmen & Ahmed-Kristensen, 2016).

Business can run on only two bases that include the global integration and the local responsiveness. If there is high, integration and high local responsiveness to the product or company found in the market with the product then the need for internationalization may not arise. However, if the business is not getting the responsiveness from either the market or integration towards the brands then the need for internationalization arise in the business.

In internationalization of business, a strategy used includes the global strategy, transnational strategy, multi-domestic strategy, alliances, exporting, and franchising, licensing, and international strategy. All these strategies have its own advantages and disadvantage in the business. These strategies are used by the business to increase their profits, lower the cost of the business by sharing the large fixed cost for the manufacturing the plants (Søndergaard,  Oehmen & Ahmed-Kristensen, 2016).

The businesses benefit from this, as the cost incurred by the business is too low. There will be a share of resources, risk in the technology used in the business which makes the work and operation of the business simpler and easy. Another benefit that the business is getting from the internationalization is that the companies have the desire to learn the other technologies and can set new examples in their existing market and international market. Some companies have the desire to participate in the evolution of the competitive activity in the growing global industry (Kim & Hemmert, 2016).

The disadvantage that can reflect on my research is that the companies have to take the decision while considering the global environment and factors rather than focusing on the home country or local market. Use of this strategy sometimes makes the existence of the company disappeared from the present or local market and can only explore in the other markets only.

Conclusion

From the above discussion, it can be concluded that the internationalizing the business strategy is good for the business to explore and grow more in the market. The learning I got after doing the research is that the international business strategies are as useful as expanding and diversifying the business activities. My learning includes that there are different ways to enter the global market and have its own advantages and disadvantages. The gap between mu understandings on internationalization is that it a wider scope than I think is and can benefit the organization in earning more profits.

References

HubSpot. (2018). 13 Businesses with Brilliant Global Marketing strategies. Retrieved  from: https://blog.hubspot.com/marketing/global-marketing-and-international-business

Jensen, P. M., Nielsen, J. I., & Waade, A. M. (2016). When public service drama travels: The internationalization of Danish television drama and the associated production funding models. The Journal of Popular Television, 4(1), 91-108.

Kim, J. J., & Hemmert, M. (2016). What drives the export performance of small and medium-sized subcontracting firms? A study of Korean manufacturers. International Business Review, 25(2), 511-521.

Market Realist. (2015). Dunkin-brands. Retrieved from: https://marketrealist.com/2015/04/dunkin-brands-franchise-heavy-company

Oxford University press. (2018). Global Strategic Management. Retrieved frohttps://global.oup.com/academic/product/global-strategic-management-9780198706595?cc=in&lang=en&

Søndergaard, E., Oehmen, J., & Ahmed-Kristensen, S. (2016). Extension of internationalization models: drivers and processes for the globalization of product development–a comparison of Danish and Chinese engineering firms. Production Planning & Control, 27(13), 1112-1123.

The Jakarta Post. (2018). Ferrari optimistic about Indonesian sales. Retrieved from: https://www.thejakartapost.com/news/2018/02/25/ferrari-optimistic-about-indonesian-sales.html

Vandina, O. G. (2016). “Just in Time” System in Construction Industry and Its Competitiveness. International Journal of Economic Perspectives, 10(4), 401-405.