International Business Strategy: Economic Theories, Business Model, and Global Competition

This report discusses the economic theories used in international business, the click and mortar business model used by Samsung, and the impact of global competition on the business model. It also covers the characteristics and risks faced by companies when entering international markets.

INTERNATIONAL
BUSINESS
STRATEGY

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Table of Contents
Introduction...........................................................................................................................................1
Economic theories.................................................................................................................................1
Business model......................................................................................................................................2
Ways in which business model would be impacted upon by global competition...................................3
Characteristics of the country to be entered, their risks and mitigations required within the business
model.................................................................................................................................................4
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6

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Introduction
International business strategy refers to a plan that deals with commercial transaction
take place between different countries. It is a set of actions or plans that are taken by
government rather than some business with the motive to increase the profit. The companies
think of expanding their business by making place in the international market. There are
various barriers faced by the company while establishing the business in the international
market due to different method of doing the business. The complexity in eth international
trade is related to the linguistic factor, political as well as legal system. The firm that have
business interests that cut across national boundaries, often focuses on importing and
exporting goods or services, and operates production and marketing units in other countries.
They also face various political risks like probability of making decisions regarding the
events in other country. There are chances of foreign conflicts as they are dependent on the
degree of hostility that one nation expresses to other (Tisdell, 2014). The company that is
considered from this for this Samsung, the group is diversified into many areas from food
processing, textiles, insurance, securities and retail. The company was found in South Korea
in 1969 and is a low cost manufacturer but now it is a largest IT company with many market
share and around 2 billion sales. The company has more than 17.2% and 14.7% of the global
market share in terms of value and unit. It performed well in the emerging market by
occupying the market place; the reason of success is innovative corporate culture so that
products can be created with new concepts. They bet the competitors by keeping the products
price low as compared to other companies (Burt, Johansson & Dawson, 2015). The pricing
strategy is a useful tool as it helps the company to make the place in the global market.
Economic theories
There are various economies theories used in international business. These theories offer
wide advantage in terms of cost and market expansion. It increases the trade and offer special
benefits to the foreign brands. Some of the modern economic theory that is used is:
 Mercantilism is one of the economy theories that hold the prosperity of the nation and
it is dependent on the supply of capital and volume of international trade. It suggests
that government should make advance goals so that exports increases and imports
decrease (Liang, Varma, Brown, & Park, 2018).

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 The other economy theory is absolute advantage theory that is the ability of an
individual to produce goods and services with the limited resources. It is very useful
as it produces goods at very low cost.
 In economics, comparative advantage theory is refers to the ability of a country to sell
the product at a lower cost than other countries. It offer value to both the parties and
also helps in gaining profit from the trade (Liang, Varma, Brown, & Park, 2018). This
strategy support in gaining customers by offering services at low price.
 The theory of factor endowment is basically used in cases where large production is
required. It is used by countries to export their services in abundant amount and
importing the products also in large amount (Shukla, Carney & Gedajlovic, 2014).
In the economic theories they consider four variables, demand condition, factors
conditions, supporting industries and firm strategy and the rivalries. In case of
Samsung, the Uppsala model is used for internationalization process. It increases the
foreign market commitments as it requires n regular export activities as it is done by
independent individual. It increased the contribution of Samsung in the international
market (Metcalfe, 2018). By using this theory, Samsung selected the target market
that they want to capture and then started with the country that have the lowest
distance with the home County then slowly moved towards the countries that are at
higher level. In the combination of this they also make use of mercantilism and theory
of comparative advantage. They produce services and offers at a lower cost as
compared to other firms (La Rocca & Snehota, 2014). They expanded the market in
international market by offering special services at lower price so that customers
could be captured. Using economic model increases the relationship and brand image
of the company in the international market (Radlo, 2016). There are some issues
associated with these economic models as they make assumptions that are not
realistic.
Business model
Samsung make use of various business models as the company has various divisions
that are operating widely in many different areas. There are various business models like
direct sales, advertising, franchising and brick and motors. Samsung make use of click and
mortar model that combined physical presence with online presence (Verbeke & Kano,
2015). In case of Samsung, they offer their product and services offline as well as online.

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This model is used to fulfil the need of clients by offering services at the competitive price
and sustainable cost. The model is made in such a way that it can reflect to business
environment and make changes according to the market demand (Hacklin, Björkdahl &
Wallin, 2018). Click and motar is business models that allow customers to shop online
through retail website. It provides a shopping experience to the customer by increasing their
online transactions as well as face to face interaction. It also allows customers to check the
retail store and then buy accordingly. The business model that is used by Samsung is click
and mortar that offers benefits to customers by allowing them to make fast transactions and
also get face to face service (Hacklin, Björkdahl & Wallin, 2018).
It offers sense of trust and reliability to the customers by allowing them to increase their
brand retail stores (Saeed, Nematiyan & Albonaiemi, 2016). This model allows customers to
improve their shopping experience by offering them many choice and greater flexibility. It
improves the customer relation with the company and also allows Samsung to expand in the
global market (Steinberg, Horwitz & Zohar, 2015). In the electronic field, customers look at
many options then compare with other products before purchasing it. They offer benefits to
customers by allowing them to buy services from online store.
Strength Weakness
Brick and mortar channels also offer various
benefits to the company by creating channels
through which products could be distributed:
 It offers access to wider market by
making the services available to
customer 24/7.
 It also helps in improving the trust.
 Click and mortar enables companies
to expand their market by reaching to
larger audience and removing
The companies using brick and mortar model
also faces various challenges.
 The rent of maintain the offline stores
are high sometimes (Yun, Won,
Jeong, Park, Yang & Park, 2016).
 The employee cost for maintain the
offline business is quiet high.
 Click and mortar businesses can reach
to many customers only when they
are major player in their industry.

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restriction and limitation regarding
location (Steinberg, Horwitz & Zohar,
2015).
 It also saves the overall time by
enhancing the speed of process.
 Better services after sale are offered.
 There is no such negotiation process
Recommendation
It is suggested that in instead of dealing eth channel conflicts, one platform need to be
selected. It is suggested that if online stores are working pretty well the focus of attention
should be on online business by neglecting the physical stores. In this case, the company
might loss some of the loyal customers that are comfortable with offline shopping. It is also
suggested that company should make the online business successful by making it
technological efficient (Yun, Won, Jeong, Park, Yang & Park, 2016). It is recommended
that Samsung should make their own market place by concerning product innovation and
dividing market segment.
Ways in which business model would be impacted upon by global competition
Samsung has various competitors like apple, Huawei, xiaomi, vivo, Sony and many
more. Samsung is one of the leading competitors in the market. They follow few approaches
through which they can overcome the competitiveness in the global market. They build layers
of advantage so that continuous expansion takes place (Cao, 2014). They acquire advanced
technology so that market area could be captured and invest in making production system.
The product readiness fills up the gap between the expectation of customer and actual product
(Lo’ai, Mehmood, Benkhlifa & Song, 2016). While using click and mortar model, the
company might face various issues as there are various competitors that are offering the same
service online. Thus, for this go to market strategy should be used, it helps in in
differentiating the propel market so that growth and revenue market could be accepted. The
sale should be determined by checking all the constraints may be direct, indirect or hybrid
(Angeli & Jaiswal, 2016). The business model might get impacted as the competitors also
offer the same service on the online platform. This would create options for the customers to
choose one company. Thus, for this Samsung should come up with additional offers so that

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customers choose it rather than other companies (Shvetsova, 2018). The other competitors
will definitely impact the sale and profit margins of the company. Thus, it is suggested that
business model should be modified according to the market demand (Chae & Hedman,
2015).
Characteristics of the country to be entered, their risks and mitigations required within
the business model
There are some countries that offer special benefits and there are risks associated
within the business model. One such country is United Kingdom, the GDP growth is around
1.8% and population is also 66M. It offers tax benefits as employees make the country
attractive from financial point of view. The other country is Singapore that has strong labour
force so it will be beneficial to open up offline store (Chae & Hedman, 2015). It is also easy
to register and start up business online (Campbell-Kelly, Garcia-Swartz, Lam & Yang, 2015).
The online store will be difficult as the labour is not skilled. While entering in the country
like Hong Kong, new work it would be profitable as the workforce is skilled and will
understand the new trend. There will be various risks that would be faced by the company as
there are other competitors (Yang, Trimi & Lee, 2016). To make the place in the market by
beating the already present companies would be a tough task.
From the research, it was found that it is very easy to start a business in Mexico as
they have very easy and legal running policies that allow company to run their business. They
also offer free trade agreement with many countries by allowing them to open enormous
market in the country. Switzerland is undoubted one of the best countries in the world that
have a highly skilled workplace and they are ready to work and help the business to occupy
the market (da Cruz, Rodrigues, Al-Muhtadi, Korotaev & de Albuquerque, 2018). There are
various challenges and risk that are faced while stepping in the new market. The size of
market plays an important role as it becomes difficult to estimate the sale or failure, if market
is analysed properly (Basole, Russell, Huhtamäki, Rubens, Still, & Park, 2015). There are
various fluctuations thus, it is important to deal with such situations and make sure that
organisation have hedge towards risk (Bärenfänger & Otto, 2015).

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Conclusion
It can be concluded from this report; there are various economic theories like
mercantilism, absolute advantage theory, comparative advantage theory, factor endowment
and various other models. It makes use of click and mortar business model and also make use
of Uppsala model. The ways in which business model would be impacted upon the global
competition is discussed, the characteristics and risk faced by the company when they
encounter in international market is discussed. Thus, from this report the difficulties and
barriers that are faced by the Samsung is listed and various models are strategies are listed.
The business model that is used by Samsung is click and mortar that offers benefits to
customers by allowing them to make fast transactions and also get face to face service. It
improves the customer relation with the company and also allows Samsung to expand in the
global market.

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