A business strategy
A business strategy has always been used as a guideline for various business operations in both the local and international market. It provides a means through which the business objectives can be accomplished. Companies that participate in international business execute their operations in foreign countries with the aim of maximising their profits. Global business performance is influenced directly or indirectly with the strategies practiced by different firms in the market. The approaches will determine the activities of various businesses together with their profitability. This research paper aims at providing a more in-depth understanding of policy and international trade and the factors influencing their implementation process.
Acknowledgment
Completing this study would not be possible without the assistance of some individuals. First, I would like to express my sincere appreciation to my professor, whose vital experience and knowledge enabled me to tackle this work confidently. He gave me the necessary support and advice in each step which encouraged me to move forward and search deeper. I would also like to appreciate the individuals who participated in the research interviews because they provided me with the necessary information in my study of international business and strategy.
Introduction
Individuals engage in various practices every day to make income and obtain sustainability. Most of the time individuals come up with different business ideas to participate in both local and international trade (Oscar et al. 2016 P.289). On the one hand, local businesses are those commercial activities that take place within a particular country but not beyond the country’s boundaries. Their primary objective is to avail goods and services to individuals within the country, and that is how they acquire their profits. On the other hand, international business involves industrial activities that go beyond the borders of a state. The aim of the enterprises aim is to satisfy the needs of the individuals in the global scene by providing commodities that fit the international standards.
Moreover, licenses are always availed to the firms that wish to participate in international markets to allow the companies to cross the borders of different countries. Corporations which practice international businesses still compete with other organisations to provide similar products at the local and global levels. Thus, firms operating in international markets always find themselves in an environment which is very strict. However, the market provides reasonable levels of competition which help them in gaining profits in every business activity the practice. According to investors, the primary aim of business gets profit by availing goods and services that meet international criteria.
Consequently, the managers in various organisations ensure that there is an accumulation of high profits with the available resources to prevent the wastage of any merchandise. The market and competitors are some of the factors that can influence the amount of profit accumulated by different companies while doing business. The market always involves the customers and suppliers or individuals who surround the business organisation (Croteau et al. 2001 P. 56). It’s the role of any firm in business to ensure that the needs of the individuals around the market are satisfied. Subsequently, all the organizations in the world observe specific policies to deal with various issues or disciplines and ensure an appropriate system of management to fulfill the role of satisfying the clients. Therefore, business strategies are the guidelines, plans, and directions that the organisations adhere to ensure they get their returns and both local and international business organisations always adopt them.
International business and strategies comprise a wide range of activities and issues which commercial organisations engage in to survive in the market. The study of strategy and international trade is referred by investors and professionals to be multidisciplinary due to the numerous factors of study it contains. Management and managerial activities are among the issues considered when dealing with global marketing and policy. The type of leadership used within the organisation will determine the level of efficiency and standards of the products the organisations produce. For instance, a company with a democratic leadership, open door policy will be practiced to enable proper decision-making and facilitate the sharing of information that is crucial to the success of the organisation. The policies adopted by firms when moving into the international market are relevant because they determine the success of the cooperation. Also, different firms take different types of strategies depending on their targeted commercial deals and the product accessibility tactic to their consumers. This study provides a deeper understanding of global business and the policies adopted by international companies. It also analyses the findings obtained from a search performed on internationalisation, and the methods used to collect data.
Scope
Mission: The research aims to collect and analyse the data to provide information on strategy and internationalisation. It will mainly focus on the different types of strategies and their effects. Additionally, factors that promote international business and the importance of internationalisation will also be examined. The qualitative analysis which constitutes interview will be used to obtain the required data from various individuals, managers, and employees. Results obtained will be documented and presented to the right authorities.
Assumption: The researchers will acquire their data randomly and assume that all individuals are aware of the meaning of strategy and internationalisation.
Communication: Researchers will meet daily with a group of individuals who will volunteer for the interview. Communication will be conducted through a face to face interaction, and the interviewee’s confidentiality will be highly respected. Hence, any form of information provided by participants during the interview will be considered by private information, therefore, the source's identity won't be mentioned. Communications will also be performed via social media and through the use of telephones.
SMART Objective
Specificity
The research will focus on obtaining data or information on strategies and international business because it is the main topic of discussion. Different researchers will be assigned different sub-topics to focus on. Subtopics such as the effects of strategies to the international businesses, how international trade affects the society and the impact of internationalization on workers will be the centre of focus. The information obtained from the search will be considered as the required information if they are acquired from the appropriate source; and if they are supported by other sources that will be used during the study. Thus, the research aims to provide information which is detailed, accurate with supported data as the final results of the investigation.
Measurement
The objective of the researchers will be to ensure that the acquired information meets the required standards for the research since the research aims at obtaining information from various sources. Thus, before presenting the results of the received data, the information will be examined with the help of other experts. The knowledge of the professionals will help in the removal of biased data to maintain the authenticity of the information. The facts obtained will be compared with those from previous research performed to determine their eligibility (Ma, 2009 P 135).
Achievability
Given the time frame of seven weeks and the access to various individuals within the country, obtaining the required information won't be a problem for the researchers. It is because the researchers who will be performing the interviews are well informed and educated. They are aware of the most effective and appropriate way to obtain information from individuals. The resources that will be used during the research are easily accessible, and this will increase the success rate of this research. It will also increase the chances of completing the study within the stipulated time frame.
Realistic
Over the years, countries have encouraged internationalisation and investors have grabbed the opportunity of using the business strategies of internationalisation. Most of these individuals focus on the profit-making part of the business, and they forget the negative impacts the approaches might cause to countries, individuals and societies. The performance of this research will provide a clear understanding of the harmful effects, linked to internationalisation and its strategies. Hence, the paper will highlight why a lot of factors should be considered before starting up international business.
Time Frame
To obtain the appropriate data the research will require a time frame of 7 weeks. The researchers will be allowed to collect data from their sources for six weeks. The data obtained will be analysed and screened on the 7th week to enable the presentation of the obtained results.
Literature review
Overview
In this current century, every business organisation aspires to engage in international business across the world. Individuals always target huge profits while doing business, thus, international business gives investors a considerable amount of benefit (Mohr et al. 2018 P.21). The global market always creates a platform for organisations to achieve greatness and a bright future. The opportunities to participate in the international trade market always open when the investors can accomplish the international markets requirements or standards (Ansoff, 1965 P. 49). The market has rules and regulations to ease the movements of products and services which will guarantee the satisfaction of every customer in the market (Luthans and Doh, 2018 P. 62). It means that an organisation planning to trade in the global market must be ready to compete with other companies and this will force the firm to meet the standards for the products required in the international market for consumers to purchase (Mohr et al. 2018 P.22). There is product specificity in the market to prevent the delivery of goods and services which cannot meet the clients’ needs. It helps in making the international competition fair for all the organisations involved in the business (Schlitzer, 1996 P.670).
Additionally, internationals business adopt particular guidelines to help them attain the required standards, and these procedures are called strategies Luthans et al. 2006 P. 67). Strategies are essential to the business because it acts as a guide and provides an insight on how the objectives of a company can be achieved (Mohr et al. 2018 P.23). Therefore, international organisations should conduct their activities according to the laid down organisational strategies provided they meet the required standards of operation by both the global and local markets (Teece et al. 2010 P.171).
Furthermore, organisations and the general surrounding are viewed to be conglomerates that determine the various business situations. Internationalisation which is the performance of business activities across the borders has been made possible by the present comparative benefits between multiple countries found in the world (Fayerweather, 1982. P. 13). The desires to grow economically and increase the level of employment inflict the urge of growing establishment of various types of organisations within the states. Internationalisation of the business involves the desire to meet the requirements of clients all over the world, hence, restricting the organizations towards the compliance with the required international standards for products that they deal on regardless of the size of the business organisations (Coviello and Munro 1997 P.370). The development of these firms across the globe and the attainment of their objectives can be achieved through the formation of an appropriate business strategy. From the worldly business, perspective strategies are ways which firms or organisations meet their goals and visions while increasing their profitability and ensuring that there is no wastage of the organisation’s resources (Luthans et al. 2006 P. 59). Every day new businesses emerge from each corner of the globe, and some of these businesses maintain their local ground while others operate in the international market. Organisations have always considered the implementation of a clear and well-outlined strategy to help them in their day to day commercial activities. The application of the outlined plans is considered to be a managerial function, and the success of the business always depends on the firm's management. Therefore, a form of management within an industry is considered to be an essential factor towards the attainment of the objectives of an organisation.
Various factors are considered while discussing the topic of strategies and international business there are various factors of importance that are always considered. Strategies are essential to various business organisations, and this necessitates the need for having a deeper understanding of policies and types of strategy (Luthans et al. 2006 P. 51). It is also essential to provide a clear understanding of the world international business, what it means and the factors affecting its existence (Zikmund et al. 2013 P. 19). The particular sub-topics will bring emphasis to all the individuals who have the desire to know about international business and strategies. Hence, this paper will discuss the main topics by looking into the contextual features of strategy and international trade.
Writers key ideas
Strategies
Both local and international business strategies aim at fulfilling the objectives of various firms. The global business strategies are necessary because they increase the urge by different firms to target larger markets with varying types of demand (Hamel and Prahalad, 1985 P. 14). The plans are made to help the firms perform business operations with other international organisations without causing interference in its objectives. There are three primary forms of strategies adopted by the international business to control its activities with the foreign states. The global strategy, the multi-domestic strategy, and transnational strategy are among the leading international policies used by global firms (Morgan and Katsikeas1997 P.70). Organisations can also develop international marketing strategies, which influence their entry into the foreign markets which comprise the licensing strategy, franchising strategy and direct exporting strategy.
Transnational approach: organizations that follow this strategy have an exceedingly globalised presence. The organisations ensure that they provide a positive organisational image to the external environment like the suppliers and consumers within its area of operation. (Peng et al. 2008 P. 922). Additionally, an organisation operating on transnational strategy have their operational headquarters in their original countries, which monitors the function and progress of other subsidiaries branches in other countries (Wai-chung et al. 2005 219). The subsidiaries networks provide goods and services to the clientele within the regions and also ensure the laws of the states and the culture of individuals are maintained.
Global strategy: Organisations that have adopted this strategy consider both responsiveness and efficiency as the tools for success. These organisations usually practice the act of responsiveness by providing goods and services to the local customers in their markets to emphasise their level of products or services efficiency (Ansoff, 1965 P. 51). The strategy is different from the multi-domestic strategy which allows the supply of less modified products and services, to its customers within with the global markets.
Direct exporting strategy: export as a strategy for entry in the international market is classified into two categories; direct and indirect exporting entry strategy. Direct export entry strategy enables the business organisations to sell their commodities directly into the international markets of their interests (McDougall et al. 1994 P. 469). Consequently, the organisations have direct contact with their respective markets. Through the direct contact, the firms gain control over the foreign markets which facilitates the supply of its brand to the international markets. The commonly known form of direct entry exporting is consortia, a situation where small or medium business organisations target the platform to market their related products in the international market.
Franchising: it is considered an international market entry strategy whereby a single firm is allowed to supply other firms with intangible products (Peng et al. 2008 P. 932). Franchising is mainly practiced within the service industry where firms deal with products such as car, rentals and hotel services. The strategy is known to work in companies with reputable business models like food exits which can be moved quickly to the other marketplaces.
Importance of International Strategies
Organisations are usually affected by the global events, and the rate of competitions that take place in various parts of the world since most of the organisations sell output and obtain suppliers from overseas (Teece et al. 2010 P.172). Organisations involved in the international businesses practice engage in the exportation and importation of products. Companies always form a well-structured plan or strategy to secure its resources and ensure they are available at all times to avoid incurring losses. Thus, the formation of policy by international organisations is essential in many ways.
For instance, the global performance of a business is necessary because it allows the firms to have access to a broader market. It also enables the industries to be recognised worldwide concerning the products they offer. Positive recognition also allows firms to bring up new types of products to the international market without undergoing any difficulty (Dunning, 2013 P. 20). The firms will always incur fewer expenses regarding the advertisement and the promotion of their new goods and services to the consumers. Also, corporations that adopt the international strategies have an added advantage during the production of their commodities (McDougall et al. 1994 P. 472). They have access to low labour and cheap raw material since they are decentralized to allow the firms to obtain both human employment and raw material from countries producing the goods at a lower cost. For example, it would cost 25$ to manufacture a particular product in a developed country like the United States of America and may cost 50$ dollars to produce the same product from countries within the African continent.
Moreover, strategies facilitate the expansion of business because most of the international strategies mainly contribute towards the growth of the organisations using those approaches (Seybold et al. 1998 P. 34). Once a business adopts a global strategy, it establishes a worldwide market to operate on and sell its products which lead to more sales by the firm to increase their profitability. Organisations can also come up with new ideas especially when entrepreneurs meet in the global markets to sell out their products. The opportunity to interact and exchange facilitate massive production and profitability (Leonidou et al. 2015 P. 807). Subsequently, the firms which have not upgraded their systems will realise the modern method of production and technologies for organisations.
Additionally, International strategies develop a sense of direction because they clearly define the aims and the goals of various firms which help them achieve operational capabilities at international level. The company’s management and workers will adhere to their duties with the aim of achieving the outlined objectives (McDougall et al. 1994 P. 474). Also, the strategy allows each of member of the organisation to know what is expected of them at the end of every operation. International business strategies like the global strategy enable the organisation to achieve a broad economic objective, such as a higher amount of income from the foreign trade. There has been increased entry into trade agreements between countries leaders which opens new market opportunities to organisations internationally due to the changing rate of governance globally.
International business/ internationalization
When a business moves its operations from the domestic ground to other nations, the firm is considered to have gone the international competition arena which has all types of businesses. The operations and the standard of the products required differ from those in the domestic market (Ramdhani et al. 2017 P. 740). Internationalisation is the process through which firms participate in the international markets and compete internationally, and it has been embraced by various organisations of different sizes all over the world (Rugman et al. 1998 P. 819). Factors like the removal of trade barriers between different countries and good political relationships have facilitated the whole process to benefit many companies (Noe et al. 2006 P. 42). Hence, this chapter of the article focuses on the factors that promote internationalisation and the advantages and disadvantages of internationalisation.
Reasons for internationalization
Internationalisation expands the businesses to access the foreign markets in the developed and developing countries (Kano and Verbeke, 2018 P. 159). The decision to go global have a tremendous effect on the firms’ internal and external operation, such as the organisation management and distribution of products (Lindner et al. 2018 P.3). The rate at which firms go global is increasing, therefore, it is essential for each corporation to determine its reasons for joining the international market. Some of the reasons for internationalization among firms are:
To attain a different growth rate: Different markets have a different rate of growth, thus, most firms in lowly developed countries prefer internationalisation since it provides them with access to countries which are developed (Mohr et al. 2018 P. 22).
Large market access: most firms consider internationalisation because it provides the entrance to a broad market in the domestic countries. Thus, the firms will generate profit by going international (Schwens et al. 2018 P. 736).
Incentives: Some firms do not go international because they desire to make higher profits or have access to a broad market. It is because the government provides them with the incentives to export some of the locally manufactured products to the foreign markets (Knight et al. 2018 P. 4). The incentives offered by the government to help the firms access international markets which they could not have obtained if it was up to them (Borda et al. 2017 P. 107).
Theories of entry into the international market
Businesses studies have for an extended period focused on the economic methods that were formed during the 19 centuries. To understand the reason for entry into the international markets many theories have been formulated (Beugelsdijk et al. 2018 92). The approaches provide a clear and deep understanding of matters of internationalisation. They include:
Eclectic Model: The theory was formulated and proposed by Dunning, and it gives more information on the international production of good and services. The method describes the pattern, type, and level of the output of merchandises internationally. The argument is created on the particular advantages that investors aiming to produce their products in the foreign markets strive to achieve (Morgan and Katsikeas, 1997 P. 69). The theory is also based on the internalizing of goods and services across different country bounders markets and the rate of demand for the products into the foreign markets. The theory focuses mainly on analysing the reasons behind the ideas on the organizations' locations, management, ownership and the advantages of internationalisation (Ramaswamy et al. 1996 P. 168). The ownership advantages obtained by the firms are considered to be unique as they are based independently on specific firms that exploit the new foreign markets. The benefits that come out of internalisation are more accurate from the original country of the firm.
Transactional cost Model. The theory refers to the cost that the firms incur when developing commercial trading in an international market. It involves all the costs that firms incur immediately they start a business. The theory can be referred to as a collection of expenses incurred by a company when developing a new market in a foreign state. The entry cost incurred mainly affects the firms entering the market and its customers (Cuervo-Cazurra et al. 2007P.712). According to Dunning, the strategy of entry into the international markets should be taken as a very critical issue since the transaction cost plays a significant role in the operation of the firm. Hence, the analysis of the price is essential in determining whether an organization should establish subsidiary firms headquarter in a foreign country (Knight et al. 2018 P. 47). According to the theory, firms had interaction with its customers, suppliers and distributed in the form of an interconnected network (Eriksson et al. 2015 P. 42). Consequently, the system resulting from the interaction between the firm and its customers will be influenced mainly by the strategy adopted by the firm. It is because the approach determines the cost incurred in the various contracts, which will affect the princes of its products (Wiedersheim et al. 2017 P. 128).
Importance of internationalization
Foreign exchange- Internationalization promotes international trade between different States. The development of a relationship between states enables the organisations to continuously interact with each other through the exchange of particular goods including raw material or manufactured goods. The nations can acquire those products that they do not produce straightforwardly.
Market expansion- Participation and allowing of exchange of goods and services between countries bring about development in markets. Firms are allowed to sell products to individuals within their countries and outside their countries (Leonidou et al. 2015 P. 790). The development in the market enables the organisations to sell their products effortlessly, thus, increasing the profitability of various firms (Arnoldand Quelch, 1998 P. 7).
Optimum utilisation of resources- Resources mainly entails labour and raw material available within different states. International business will bring the full use of these available resources because the market to sell the produced products will be readily available (Hill, 2008 P. 9). Areas in which individuals skills can be exercised will be available to enable appropriate skills to be used in the production process. Internationalisation will open access to the utilisation of the resources available within the countries, which cannot be produced due to lack of appropriate technology and high amount of finance required and this will help the foreign companies with the required capital and technology to mine the raw material instead of wasting it (Higgins et al. 2015 160).
International business improves the efficiency of various business organisations through active participation in the global market with other corporations. Firms are also in a position to increase their ability to prevent unnecessary errors that may lead to losses or legal problems with their contractors (Luthans et al. 2006 P. 57). The international standard of competition makes the managers of particular local businesses keen in all their actions to ensure that the goods and services offered by their companies are efficient and meet the required international standard to enable the firms to compete effectively in the market.
Relevant research areas
The main aim of performing the study on international business and the strategies is to acquire data that can help to make an important decision on the performance of the international organisations. Many authors have provided their ideas on the understanding of the issue of international business and strategies. However, a good part of the information mainly consists of the advantages of the approach and the global market (Ohlin, 1952 P.40). Thus, it would be essential to acquire some of the critical ideas from the information provided by the writers to emphasize the meaning of policies and international business. Some of the crucial parts to be discussed during the research include:
The different types of strategies: it is important to review this section because it is broad. There is a high possibility that the strategies which are viewed as essential business approaches are disadvantageous (Ball, 1967 P. 6). It is important to study this area during the research to enable researchers to obtain more information on strategies that haven’t been included by the writers.
Internationalisation: It is the process that leads to the formation of the international business, and a more significant impact lies within it. The ability to start a global trade and the reasons for starting the business, all lies within this particular section. Thus, to obtain the effects of internationalisation, it would be crucial to use writers’ view to analyse this section.
Theories of internationalization: They are the models or manner in which internationalisation exist. Assumptions are made up of factors that promote the existence of internationalisation (Ghemawat, 2003 P. 142). It would be essential to consider this section as an area of study to obtain answers on the research question on factors that would contribute towards the continuous existence of international companies.
Fresh insight areas
Sometimes, the information derived from authors sometimes is not enough because they provide incomplete information. Thus, it is up to the researchers to identify missing information from other areas to complete the study. After looking at the writer's review, it was discovered that crucial information is missing in particular areas. Some of the areas that will be discussed in the new insight include:
Factors influencing internal business: A lot of information was provided in this area by the writer. However, the authors mainly focused on the issues that contribute towards the establishment of the international business (Ohlin, 1952 P.43). Information on factors that may hinder the establishment of these businesses was not discussed, hence, the research will add more information in this section. There will be clarification on how various issues prevent industries from accessing the international markets.
Importance of international business: Most of the authors talked about the significance of the international market to the community and the country as a whole. The information on how global trade contributes negatively towards the government and the society at large was not highlighted by most writers (Ball, 1967 P. 5). Hence, it is the responsibility of the researchers to gather necessary information on how the practice of international business affects the individuals within the country negatively.
The effects and factors influencing international business and the strategies have a broad classification, and the authors may not be able to gather all the required information on the topic (Barney, 1986 P. 1230). At this point, the researchers have the task to correct the areas which contain wrong information. Thus, this res
