Global strategy is the guide of an organization that leads to globalization. Traditionally the term global strategy was defined as ‘regarding many countries together as a global market’. But now the concept has grown beyond this definition. The main focus of global strategy is to increase the profits of an organization by reducing costs and also to improve the performance by increasing sales and marketing. A good global strategy can help an organization get competitive advantage. The organizations adopt global strategy to get more customers from different parts of the world. Now the organizations have to function according to the customers’ choices. Only then their business will function smoothly. For example, P&G has Wal-Mart as its major customer. When Wal-Mart became bigger, the P&G was required to grow larger.
Obtaining a competitive advantage is very important for the success of a global strategy. A firm needs to evaluate several factors while developing a global strategy. It needs to consider the design of business, growth of the business, strategic relationship, market vision, developing of good brands etc. Global strategy should consider the factors such as resources, institution and industry to be effective. In resource based view it deals with the difference of one company from the other in the case of resources. For example, Southwest Airlines fly throughout a year without any problems due to the unique resources and capabilities it has. Institution based view is concerned with the rules in the institution. For example, if a company in UK wants to acquire a company in US, the UK Company should know the rules of US. Setting up of business in other countries is possible only after understanding the rules and regulations of the country. Industries can be of different types like high-tech, low-tech etc. For example, the customers expect only semiconductor chips from a semiconductor industry. The developing of global strategy on the basis of these factors is thus very important for the development of an organization.
- Assume that you work for a small high-technology firm that is considering expanding into international markets. Please write a report to your chief executive describing the main types of risk that the firm is likely to encounter as it internationalizes and suggest recommendations that you believe will help alleviate those risks.
Small high-technology firms are playing an important role in a country’s economic development because small high-technology firms are providing various employment opportunities for the people. They have to face various risk factors when it is entering in to an international market. The major cause of risk is the capital investment of small high-technology firms. In order to withstand its position in the international market, high capital investment is necessary. By proper risk management method every firm has to identify its risk and try to reduce the risk through proper insurance method. But these insurance policies and terms highly influence the small high-technology financial supporters to invest more money in the business. Also, they are not ready to accept the legal responsibilities of the product that they produce. Small high-technologies insurance does not have perfect insurance environment and the entrepreneurs are not ready to follow the conditions of insurance agencies. As a result of this, they can’t get suitable capital to raise the business in global market. Sometimes these firms can’t get potential customers in the international market. Barriers of entry like different government policies, switching cost etc are also the main risks of small high-technology firms while entering in to international market.
To overcome all these risks, the authorities can have better care about some major risk areas. They have to analyze the entry barriers of international market and try to meet all that barriers for successful entrance into global market. They should try to satisfy all the requirements of international market to keep the customers as their regular customers and give more care about their wants. But one important factor of risk is capital in the business. To expand the business in to global market, first they have to identify whether the capital is fitting to enter in global market. If not, the first risk reducing step is to search to find a better financial source to survive in the market and also provide proper management for the business process for running it effectively.
- Assume you have been employed by a high-technology firm which is considering expansion into international markets. Please write a report to your chief executive explaining the main market entry strategy available for entering foreign markets and provide guidance for assessing the appropriateness of the various strategies.
When the organization is entering into an international market, the main market policies to enter the global market have to be decided first. There are various procedures which are to be considered while establishing a firm in international market. The money needed to enter in to global market, the counties for exporting and importing their products, the problems in business when it is established over the globe and the degree of management needed in this process are the most important policies. When a firm is entering into international market a lot of money is needed; so how much a firm can invest and how much it can earn through establishing the firm have to be decided. And the tax obligations and other legal regulations needed to be performed should be understood when a firm is exporting its products to other countries. There are many methods for exporting and the direct and indirect methods are the easiest way of exporting because there is not much risk in these methods. The increase in demand for the products in other countries is mainly based on their quality, so that the firm should concern to provide the best quality products without any damage and it should provide the required products at the required time. The target market should be selected after analyzing their need and taste, so that the firm can increase the sale of its products in the countries where there is high demand for their products. There are many risk factors that an organization has to face when it enters international market; so there should be efficient and skilled managers to control the overall business and to deal the business in successful manner.