Global Business Strategy

This document discusses the concept of global business strategy, including the nature of international markets, theories and concepts of strategy formulation and development, and the challenges of internationalisation. It provides examples and insights into developing an effective global business strategy.

Global Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Nature of international markets..............................................................................................1
Current and extant theories and concepts of strategy formulation and development in the
international environment.......................................................................................................2
Development of global business strategy as per challenges of internationalisation..............5
Example of global business strategy......................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Global business strategy can be identified to be the set of competitive moves that are adopted by
an organisation while taking into account the different types of national contexts to be effective
in each and every market place. This can be identified to be as a type of strategy that provides
assistance to an organisation in carrying out expansion within the confines of global market.
Global business strategy is central to the success of an entity in international market. It is aimed
at inflating the scale of operations of a company. Also, its formulation is intended to enhance the
profits and revenues of the entity in the long run. The present project seeks to identify the
concept of global business strategy which is developed while taking into account certain theories
or frameworks. Further, it consists of drivers that facilitate the development of global business
strategy. Lastly, the development of global business strategy to deal with the challenges associate
with internationalised are covered.
Nature of international markets
International marketing is termed as a performance of business functions that are design
to promote, plan, price and direct the flow of organisational product and services to user in more
than one country for profit motive. In addition to this international marketing is also defined as a
process of identifying and offer satisfaction to global consumers in a best effective manner.
Nature of international marketing include, availability of broader market, intense competition,
involvement of high risk and challenges, broader competence like special management skills and
more. International marketing is most important segment through which entities can expand the
target market and can post their plant reputations in order to ensure future opportunities.
In addition to this there are number of forces and drivers that interface with the
development as well as implementation of international business strategies. These drivers
stimulate business opportunity of development and further impact upon their growth aspect.
Some of the certain drivers include, Cultural differences this factor play significant role in
implementation of international strategy, as it has been evaluated that every geographical
location have different culture, social values, conduct pattern of individuals. It interfaces in the
implementation and development of international business strategy. In addition to this,
availability of skill skilled labour is also a driver that has impact upon organisation international
business strategy. This is one of the most critical interface as in this entity is required to fill their
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overseas workplace structure with competent and qualified employees through which they can
effectively able to conduct their day- to-day business activities and business operations in
effective manner. In addition to this, political environment is also included in forces that
interface international business strategy development and implementation. As it has been
evaluated that, in many foreign markets political environment facilitate business growth and
many other opportunities with relaxations in policies like taxation. This is having significant
impact of international business strategy of entity. In addition to this political environment
strategy is also acts as interface in which organisation can get influenced by political
environment of other country. In this element like taxation policies, labour laws, infrastructure,
improvement and more can have significant upon long-term for benefit strategy of organisation.
Further technology is also acts as a driver that interface development and implementation of
business development strategy, as this factor play a crucial role in shaping global trade, as it has
been evaluated that now a day’s many countries undertake use of high- technology this can
increase overall profitability of organisation and further accomplish their mission to gain
significant benefit from international trade. In addition to this, flexible technical regulation,
testing and certification can increase competition rate and can significantly maximise business
growth of entity.
In order to ensure international growth it is essential for organisations to have proper
understanding of all the possible factors that can affect and assist the international business
strategy in some manner. This can significantly influence business growth development and
international profitability. Along with this it provide business opportunities through which entity
can not only maximize their market share but can also serve large base of consumers while
connecting with larger workforce, new vendors etc. It has been identified that European
organisation by making their investment in developing countries like India, Japan can develop
effective programs that further aid them in shaping their international business strategy.
Current and extant theories and concepts of strategy formulation and development in the
international environment
Strategy can be defined as the set of competitive moves which are undertaken by a
company with an aim of attaining a competitive advantage at market place. It is important for
each and every organisation operating within the confines of market to formulate and develop a
strategy which can provide aid to the company in ensuring its long term sustainability within the
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concerned industrial sector. Strategic management is a concept which encompasses the
formulation as well as development of a strategy. Through the execution of this process, an
organisation intends to attain an edge over the rivals prevailing within the periphery of same
corporate sector. In this relation, it has been identified that this process specifically gains
significance in context of operating within the international environment. When a company seeks
to gain entry into one or more global markets, it needs to take into consideration certain concepts
as well as theories before formulating a strategy which can assure the success of business
operations of the organisation within the confines of new territory. Such concepts are theories are
explored one by one beneath.
Micro environmental analysis can be said to be a concept which is implemented by
corporations with a view to gain knowledge of the internal environment of the company. This
renders aid to the corporation in ascertaining the probable opportunities and strengths that can be
leveraged by it for dealing with the weaknesses and threats. In this relation, it has been identified
that a number of models, theories and frameworks are applied by the corporations seeking to
operate in an international environment to carry out micro environmental analysis. Such theories
and models include SWOT analysis, value chain analysis, MOST analysis, consumer insight
research, competitor analysis, VRIO analysis, Affiliate analysis and many more. In this relation,
some of the most prominently used theories and frameworks for doing the analysis of micro
environment of a company are SWOT analysis, VRIO analysis, competitor analysis and value
chain analysis.
With respect to this, SWOT is regarded to be a theory or framework within strategic
formulation which provides a company with knowledge of its internal aspects by categorising
them into 4 categories namely strengths, weaknesses, opportunities and threats. In addition to
this, VRIO analysis provides assistance to a corporation in gaining knowledge of the
organisational resources as well as capabilities. Further, value chain provides a description of the
primary as well as support activities of an entity which renders aid to the company in generating
and enhancing the value it produces. With the help of execution of competitor analysis, an entity
is able to compare its performance with direct, emergent and indirect rival firms in terms of
products, services, marketing, revenues, market share, market positioning, benchmarking etc. By
effectively carrying out micro environmental analysis through the application of theories, an
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organisation lays the foundation for formulation and development of a strategy while operating
at an international scale.
Apart from micro environmental analysis, an organisation also needs to undertake macro
environmental analysis. This can be referred to as a concept which is executed by organisations
with a view to take into account the factors belonging to the external environment of a business.
Such factors comprise of GDP, inflation, employment, consumer demographics, monetary
policy, fiscal policy, laws, legislation, purchasing power of buyers, disposable income and many
other aspects. In this relation, a company may apply a number of theories and frameworks for the
purpose of effectively carrying out the macro environmental analysis. In this relation, it has been
acknowledged that some of the widely used for the screening of macro environment of an entity
are PEST / Pestle analysis and Porter Five Force Analysis. These help the corporations in
analysing the external environment so as to make sure that they do not have to face adversities
while functioning within the international context.
In this respect, PEST / Pestle analysis is a strategic management theory or framework
which is put to use by the companies to gain knowledge of the facets of external environment of
a business that tend to place an impact over the operations as well as the functioning of the
company. Pestle analysis is acknowledged to be a composite of 6 factors named political,
economic, social, technological, legal and environmental. Hereby, the political factors determine
the extent of government intervention within the operations of an enterprise. It consists of
aspects like political stability, corruption, taxation laws, foreign trade policies, labour laws, trade
restrictions and so on. Besides this, the economic factors constitute those factors that define the
economy of a nation. This includes aspects such as purchasing power of consumer, disposable
income, economic stability, development, inflation rate, unemployment rates, and exchange rates
and so on. This is followed by social factors which comprise of the lifestyle and attitude of
people pertaining to market place. This tends to include aspects like culture, age distribution,
demographics, health consciousness, population growth rates, consumer lifestyles, patterns,
preferences and demands. Next in the series come technological factors which define the extent
of technological advancement or progression of a market place. This encompasses a number of
facets like technologies, level of innovation, automation, research & development, and so on.
The technological factor of PEST analysis is followed by the legal factors which lay
down the legislations that are enforced within a nation and have to be followed by all the
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organisations functioning within its confines. This consists of factors such as antitrust laws,
discrimination laws, employment laws, consumer protection laws, health and safety guidelines,
copyrights, patents and many more. The last factor completing this framework is environmental
which is based on the premise that an organisation needs to function in the interest of nature as
well as the society. This tends to consist of elements such as climate changes, environmental
laws, weather, carbon footprints, and corporate social responsibility. By gaining knowledge of all
of these factors, an entity can run successfully within the context of international environment.
This will provide assistance in stipulating effective strategies that are competent enough to
provide an edge to the company over the rivals prevailing within the confines of international
market place. Besides Pestle, industry analysis is carried out by an entity with the help of Porter
Five Force analysis. This theory or model is used by the companies with a view to determine the
extent and nature of rivalry prevailing within the confines of an industry.
The development of the global business strategy for a company thus takes place after
carrying out the micro as well as macro environmental analysis for the firm. This helps the entity
in identifying the positives as well as negatives in context of operating at an international context
with stiff competition all around. The global strategy thus formed is developed taken into
account the state and host nation contexts of the wide range of markets in which the company
functions.
Development of global business strategy as per challenges of internationalisation
Internationalisation is a concept whereby entities seek to operate within an international context
with a view to inflate its revenues as well as profits. However, this concept holds a number of
challenges that need to be addressed by the global business strategy developed by the companies.
In this relation, one of the biggest challenges is acknowledged to be the presence of cultural
nuances. Another prominent challenge that is encountered by the organisations while gaining
entry into international markets via internationalisation is acknowledged to be the availability of
funds to move to a new country or market in the pre defined time frame. The third significant
challenge of internationalisation is to select a market entry by making critical analysis of all the
modes to internationalise. In this relation, it has been identified that there are several companies
which failed in one or more of the international markets owing to an ineffective or incompetent
market entry mode. One of the biggest examples of this challenge is Amazon which could not
succeed within the confines of some new countries because of ineffective market entry mode.
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It has been identified that there are different type of challenges that are prevailing in
international and domestic market place and have significant impact upon organisation activities
and functioning. All these challenges can positively and negatively impact upon functions of
business. Thus, it is essential for organisation to understand those challenges and consider them
while developing global business strategy. In addition to this entity is also required to effectively
respond towards challenges of internationalisation in both domestic and international aspect as to
ensure strategic growth. It further allows company to maximize their profitability at great extent
and increase overall organisational growth in a well defined manner. In addition to this managers
of company are required to take advantage of effective strategies in order to effectively
understand impact of changes and challenges on business operations and activities. Further this
has been evaluated that entity is required to have their main focus upon new technical
capabilities and network structure and further develop strong alliances, as it further allow
company to stimulate their business growth and capabilities and expand their business growth. It
has been evaluated that there are different type of challenges like limitation of skill and
capabilities, complexity and uncertainty that can impact upon management global business
strategy. In this entity by taking assistance of change management strategies can facilitate
competitive advantage and can overcome rapid changes in a significant manner and encourage
business functioning. Along with this it has be evaluated that by recognising the possible
changes and taking consideration of them in developing business strategy can benefit entity to
build strong relationship with customers as it allow them to fulfil needs and demand of
customers in a very effective manner as per according to current prevailing trend, innovation and
technology. Thus, it is essential for an organisation to considered challenges and possible
changes by making global business strategy in terms of domestic and international business
environment as it not only allow them to integrate their business operations in an effective
manner but also further direct them towards ensuring more competitive advantages with the help
of new knowledge experience and discovery of information and capabilities.
Example of global business strategy
Global Business strategies are defined as business strategies that are being undertaken by
organisation when they are looking forward to expand their business in global market. It
encourage entity to effectively expand their business services while fulfilling requirement of both
host country and business vision. In this an organisation by taking assistance of strategic
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management process can ensure effective interference among Multinational Corporation and the
nation-state (NS). It has been evaluated that both entity and nation- state is having unique set of
interest, goals, shared values and structure. Both of these are further linked with each other in a
form of synergistic relationship. Thu, it is essential to ensure formative interaction. Furthermore
both the MNC and NS is having their own shared, values, goals and interest and are totally
different from each other. In addition to this it has been evaluated that it is essential for MNC to
ensure continuous connectivity with their stakeholders and are required to effectively satisfy
them under any condition. While on the other hand, in terms with NS it is essential for them to
ensure that interaction with MNC did not affect their ultra stability with state stakeholder like
pressure group, citizens and nature.
Figure 1: The MNC-NS Synergy
It is essential for organisation to ensure general interest of nation-states and environment
along with business vision in order to effectively ensure attainment of each and every goal. In
this it has been identified that key corporate interest in overall profitability, equity position, right
to minerals, land etc, safety and comfort of employees, staffing capability, ability to import and
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export, access to raw material, access to new market, access to technology and more. While on
the other hand national interest includes limited harmful pollution, effective organisational
culture, global reputation of company, ability to fulfil commitments and more. It has identified
that it is essential for European organisation to ensure proper government- corporate interest, as
each one of them have their own set of goals that are required to be fulfilled by them. This can
only accomplish with the help of proper interaction with each other in order to overcome the
impact of unnecessary conflict while ensuring maximum cooperation.
State A: Convergence: Suppose manager of organisation undertake decision to invest in NS
as to increase their growth. In this, if NS consider this interaction as a measure through which
they can accomplish their goals of development of increase in GNP, saving foreign exchange for
import and employment then this corporation will provide and ultimate result for both of
organisation and government. While if it is talked about, State B: Divergence: In this, if
European organisation pay wages to their employees which is far more higher than local wages
the MNC's decision to invest in the NS might be perceived as conflicting with the NS's goal of
price stability. By the same gesture, the NS's decision to stimulate domestic business activity
might be perceived as hindering the MNC's strategy of exporting to the NS. The ultimate
outcome of this state of divergence would be conflict.
Thus, according to the evolution it has been evaluated that in order to ensure maximum
growth European organisation is required to undertake the advantage of this global strategy by
eliminating unnecessary dictatorial actions and the same is required to be ensure by NS as to
ensure formative cooperation and interactions in order to ensure maximum advantages of lowest
labour, economics of scale, economics of scope and more.
CONCLUSION
According to the above mentioned report it has been concluded that, Global business
strategy is a set of practices and policies that are being undertaken by organisation if they are
looking forward to expand their business in global or international market. With the help this
strategy entity can develop effective plan and can serve target set of customers effectively. In
order to develop global business strategy organisation is required to effectively analyse nature of
international market and considered wide range of theories and concepts in order to formulate
their strategy in order to ensure economic growth. Along with this it has been identified that with
the assistance of analysing the main challenges of internationalisation business organisation can
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effectively ensure accomplishment of organisational goals in a well defined and effective
manner. Furthermore, it has been evaluated that by considering changes and challenges of both
international and domestic business environmental aspect entity can increase their profitability at
great extent.
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