A company that does businesses worldwide or provides services to consumers or other countries is known as an international company. An international strategy is commonly the first approach most businesses take with international expansion. The international business strategy focuses on selling products and services to foreign markets. It guides commercial transactions that take place between entities in different countries. Generally, a strategy for business expansion globally refers to the plans and actions of private or public companies rather than governments. The primary objective of this strategy is to increase profit. To write an International Business Strategy Case Study, students need to be aware of strategies conducted while doing business globally.
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Understanding the international business strategy
An international strategy is a strategy through which the organization sells its products and services outside the domestic market. The international market creates plenty of opportunities for your business to grow internationally. With an international business strategy, your business may have:
- Enlargement in market size and emergence of new market
- Competitive advantage by location
- Greater return on investment
- International customer satisfaction
- International business recognition
Conducting international business can give you huge benefits that do not mean it is risk-free. One needs to consider some risks when adopting an international business strategy consisting of increased costs, barriers to trade, and lack of sensitivity to local demand. Choosing an international business strategy gives you various advantages such as:
- An international standardized brand that is immediately recognizable
- More effective and efficient processes and consolidated management with economies of scale
- Low cost with centralization and streamlined operation.
- A simpler product portfolio
However, there are some challenges that international businesses face are mentioned below:
- High taxes and tariffs for import and export
- Customer service, especially with time zone, languages, etc
- Localization and translation
- Driving demand and awareness
Four types of international business strategies
International strategy: This type of business strategy focuses on exporting products and services to foreign markets while managing production headquarter at home. It states that enterprises avoid investing in employees and facilities abroad. This business strategy’s primary objective is mainly towards the home market, but with some relating to the international market. Generally, small companies use this strategy to deliver goods and services to larger companies in neighboring markets. Some of the key features of international strategy are:
- Competitive advantages and business objectives relate primarily to the home market.
- Products are produced in the company’s domestic country and exported across the world.
- It is usually referred to as an exporting strategy.
Moreover, a general challenge that comes in this strategy is managing global logistics, conforming to foreign regulations, setting up overseas offices, and more.
Multi-Domestic Business Strategy
Multi-domestic: The multi-domestic business strategy focuses on establishing a presence in the global market and tailoring its products to the local market. Organizations adapt their products and offerings and make their marketing strategies to engage with a foreign audience. With this strategy company, headquarters are generally maintained in the country of origin. However, the company can establish localized headquarters overseas from which they can easily manage relations with foreign customers. Such a strategy involves some financial risks because companies make large investments in adapting their products and services to the local needs. Key features of the multi-domestic strategy are:
- Focus on having a presence and tailoring products to suit the new market.
- Competitive advantages are determined separately for every country.
- This strategy is largely used by food and beverage companies.
Global: When companies adopt an international business strategy, they treat the world as one market and have economics of scale to boost reach and revenue. Commonly these companies have headquarters in their country of origin while establishing operations in foreign markets. Global companies have some local variation because products and services are homogenized to reduce costs while reaching most people. Some of the features of global business strategies are:
- An integral and inevitable approach in different countries
- Small adjustments are required to break into international markets
- Homogenized products to reduce costs and reach a broad audience
Transnational Business Strategy
Transnational: The transnational business strategy joins elements of global and multi-domestic strategy. It states that business still operates from its headquarter in its country of origin; however, it allows the organizations to expand with full-scale operations in overseas markets. Transnational companies sell their products and services to several companies across the globe. The key features of transnational companies are:
- Such companies have separate development departments and marketing research to respond to the local customers.
- Combination of global and multi-domestic strategies
- Allows the operation of full-scale operation in foreign markets
- Product and services are similar for different markets