Strategies for Competing in International Market

Assalamualaikum everyone ^^

How are you? Hope all of us in a good health. Now, I would like to talk about next chapter like stated above.  Alright, first of all, I would like to ask you. Why companies decide to enter foreign markets? I give you 10 second to think. Hehe J 10, 9, 8, 7, 6, 5, 4, 3, 2, 1.. Time’s up! Hihi OK, I think many answers you got right? ~Hopefully~ hihi OK! Let’s me tell the answers which are to gain new customers, to spread and wider their business, to achieve economies of scale and to gain resources and capabilities located in foreign markets. Next, we move on to the impact of government policies and economic conditions in host countries. There are two impacts which consists positives and negatives impact. Firstly, we look to the positives impact which includes tax incentives, low tax rates, low-cost loans, site location and development and also worker training. Meanwhile, for the negatives impact, there consists of environmental regulations, subsidies and loans to domestic competitors, import restrictions, tariff and quotas, and so on.

Alright, we proceed to the strategic options for entering and competing in international markets. Basically, there are several strategies. Firstly, export strategies. The advantages that companies can earn from this strategies are there is no distribution risk, no direct investment risk, and low capital requirements. However, export also has disadvantages which are the companies will loss of channel control, tariffs or import duties, and also will suffer transportation and shipping costs. Secondly, licensing and franchising strategies. This strategy also gives advantages nag disadvantages to the companies that applied this strategy. For the advantages, companies will get income from royalties and franchising fees, can rapid expansion into many markets, and will get low resources requirements. While for the disadvantages, the companies will loss of operational and quality control. Last but not list, the next strategy is foreign subsidiary. The advantages are the companies can avoids entry barriers, access to acquired firm’s skills, and etc. Other strategies are Greenfield strategies, joint ventures, and strategic alliances.

Besides that, there are three strategic approaches to compete internationally which includes multidomestic, global, and transnational strategy. Multidomestic strategy refers to a firm that offer various products and use competitive approach from country to country. While global strategy involves high coordination extensive activities dispersed geographically in many control around the world. Apart from that, this strategy also employs the same basic competitive approach in all countries where the firm operates. Lastly, transnational is a think-global, act-local approach that incorporates elements of both multidomestics and global strategies.

So, I think that all about from me. Sorry for the mistake that I did. Thank you^^