International Business Strategy: Challenges and Formulation

This report discusses the challenges and formulation of international business strategies. It covers topics such as the impact of globalisation, cultural differences, political risk, supply chain complexity, and currency rate fluctuations. It also explores the importance of strategic choice and international accounting. Suitable for students studying international business strategy.

INTERNATIONAL
BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
REFERENCES................................................................................................................................8

INTRODUCTION
International business strategy termed out as focussing on exportation of the products and
services to abroad market and import good and resources from other countries for domestic use
(Teagarden, Von Glinow and Mellahi, 2018). International business defined as business
transaction that take place crosswise the national borders. In terms to spread out their customer
base and to deal commodities in more international market, firm is following global plan of
action purchase economies of scale to boost reach and profitability.
The present report is based on formulation of business strategies in response to
challenges of internationalisation and how this affect the changes within the both domestic and
international business environment.
Critical analyse and evaluate the key issues within global business plan of
action International business plan of action-
International business strategy:
International plan of action termed out plan of action that created by a firm to do business within
the global markets. One of the main key issues in international business strategy is strategic
dilemma between local representatives and global integration specifically in terms of doing
business in emerging markets (Castellani and et. al., 2018). It is a well- known fact that products
and services sold by MNC varies in different world market. This variation is due to varying
market demand. There are various kinds of examples that can be used to explain this issue in a
detailed and specified manner. one of the case studies that can be used to explain this issue is
Case of Spanish MNCs in Latin American Countries in which Spanish MNC was facing various
kinds of issues in operating their business in different national context (Campos-García, Olivas-
Luján and Zúñiga-Vicente, 2019). In order to resolve this issue, an international plan of action
requires to undertake the depth analysis of global market, studying resources, defining the goals
and to understand the dynamics of market and develop offerings (Teagarden, Von Glinow and
Mellahi, 2018). In addition to this, international business strategy is termed out as highly global
integration that have the main objective is to reduce the cost as much as possible by creating the
economies of scale through more standardised product offering in the worldwide. Due to
enhancement in the globalisation in the past decades, the smaller firms have been able to conduct
business with cross national boarders and also conduct the business at abroad level. Therefore, if
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firm adopts the international business than it can be possible to have continue growth within the
market. In order to prepare the international business strategy the five step model needs to be
followed and this is defined in below presented manner as are-
 At the very initial and first stage the formation of international plan of action is to analyse
the market and this will also inclusive of general micro-economic data, trading partners,
balance of trade and per capita financial gain etc.
 At the second level, the entity should take initiatives to determine the resource for its
international enlargement. Henceforth, Greater net income, resources with higher
competitive advancement must be superior.
 At the third step within the international plan of action is to set out the global objectives.
In order to set up the international business in effective manner there is need to undertake
the market analysis effectively and efficiently (Aguilera, Henisz, and Shaver, 2019) .
 In order to take entry in international market, the firm select path like propulsion of a
brand new commodity or undertaking collectively another willing partner firm that has
already present within market.
 The final step within the international plan of action process is to bring out the
development of service offer which can assist to embrace the details like pricing,
commodity and distribution.
To understand the international business, this is crucial to have conceptualisation of
understanding of why trade and investment takes place the across the national broader. This is
termed out as to gain comparative advancement of nations. In contrary to Hamilton and
Webster, (2018) stated that international strategy is termed out as worldwide plan that is
specific to firm in which model for global enlargement and commercialism is one of the supreme
goal. International plan of action is termed out as action that occurs across the multi-national
corporation within the private sector. There are several international marketing plan of action
that can be applied to the different world market and cultures.
In order to bring international market strategy , the global strategy can be defined as one
of crucial part in international marketing as this can be appropriate with the strong pressure
level for cost decrease and weak pressure for local responsiveness. It allows the enterprise to sell
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out the standardized commodities at the worldwide level. Global strategies highly require firm to
tightly coordinate their commodities and pricing plan of action across the global market and
locations (Hamilton and Webster, 2018). This is one of the effective way that aids to streamline
the business functions effectively and efficiently.
The another strategy that can be useful is as individualized marketing strategy. This put
consideration over target market in particular that definite quantity to get the extensive amount of
research data (Cabral, Hékis and Sidrim, 2018). In order to keep the balance between the profit
and cost caught up in that research the effective plan of action needs to be undertaken to carry
out the things in effective and efficient manner. It is one of the effective way that helps to revise
the version of commodity that is created to match the necessarily of all individual markets that
helps to keeping the economic, political and social factor in notice.
The multi-domestic business strategy also termed out as establishing its presence in the abroad
market and adapt its commodities and services to the local consumer base. Therefore, multi
domestic business enterprise often support their enterprise headquarters in their country of origin
but they usually set up abroad headquarters. In addition to this, Reuber, Knight and Zhou, (2018)
stated that multi-domestic plan of action aim to meet the necessity and requirement of the local
markets world-wide with help of customizing the trade of their commodities and services across-
the-board. It is defined as plan of actions that change the commodities to local taste that offering
contrary commodities within various market. For example- Nestle utilization of the unique
marketing and sales formulation for each of market in which they operate their business
functions.
To undertake evaluation about the issues in international business strategy-
Expansion of business at the overseas means to reach the new customers and also help
potentially to boost the profits. This expansion of business is the main reason due to which
strategic dilemma between local responsiveness and global integration issues occurs in
international business strategies. Afterwards the all uncertainty of 2017, and the challenges that
have yet to disclose all these things are impacting the growth of enterprise. Other than this there
are various kinds of other issues that are associated with international business strategy inclusive
of accounting practice, cultural issues, political risk and cultural issues. These issues mainly
occur due to many reason some of them have been explained below:-
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Globalisation within global business environment-
Globalization is termed out as increasing economical interdependency within the
countries that is mirrored as accelerative the cross-border flows of three type of things such are
as goods, services, capital and know-how. Therefore, the closer integrating of services of the
countries and people of the world brought the tremendous diminution within the cost of
production and communication. As per the view of Child and Lu, (2018) stated that
globalisation is mainly divided within the globalisation of market and globalisation of
commodities. Globalisation of the producing the commodities will continues to suffer from the
things as cost of transportation, barriers of trade, social, economical and political risk that are
impacting the growth of the enterprise in vital aspect. In contrary to Odiko, Ogutu and Omar,
(2018) stated that globalisation has important effect on the business environment, this also
prompt the evolution of multinational enterprise. Globalization has increased competition both at
local and international level. Due to which conflict within strategic dilemma between local
responsiveness and global integration occur which further makes it difficult for international
organizations to adopt same strategy for doing business in different market places. As a result
many MNC’s bring variation within their product features, quality, prices as per the local market
representatives and need of the market.
Strategic choice for international business-
Under the global plan of action of the framework the global business is not undertake as
core interest of enterprise. Thus, entity needs to simply decides to opt for the go global and also
sets up the global division that deals with the non domestic business. As per the view of Ardley
and McIntosh, (2019) stated that at the time when internal business develops the firm may also
decides to source some element from the globalised market and this also standardised some
product and services. As the firm international presence enhances and multi domestic and
localisation scheme develops. The plan of action the entity use to set the subsidiaries within the
respective countries that tends to operate business activities severally from each other. It is the
kind of the strategy that mainly put focus on local responsiveness and this is frequently achieved
at the disbursal of cost and possible attribute.
Culture, communication difficulties and cost of undertaking business activities-
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Culture is the elusive and this can have wide impact on the international business
strategies as this differs everywhere. As per the view of Priem, Wenzel and Koch, (2018)
stated that dimension of the culture impacts the work practices in different countries. Cultural
deviation can also determinant the demand for the commodity and services within the market.
Power distance, individualism vs collectivism, uncertainty avoidance and masculinity vs
femininity, long vs short term orientation etc.
As per the view of Ardley and McIntosh, (2019) stated that national culture framework
and large power can translate within the potential corruptive practices. Therefore, high power
distance society people attend to view the immoral exercise as acceptable. In addition to it,
uncertainness of the avoiding countries tends to have the legal framework and strict rules of
doing the business. This highly impacts the operational performance of the enterprise. Therefore,
the individualism vs collectivism termed out as crucial characteristic that highly influence the
business cost (Teagarden, Von Glinow and Mellahi, 2018). Collective is connected with
unethical behaviour and corruption. On the other hand, masculinity tends to highly influence the
cost of the business. For example- If any counties has the high masculine cultures than this will
be connect with the unethical business practices. In addition to this, feminine cultures also results
in the higher secrecy and conservatism within the accounting and finance.
In contrary to Aguilera, Henisz, and Shaver, (2019) stated that religious belief has an
essential impact on work practices of business. In the international business, the people come
from the varied place and sometimes it becomes typical to cope with and it brings chaos. Thus,
to get overcome with it the firm needs to adopt suitable strategy that can helps to bring effective
and efficient business practices. Good communication can be termed out as the heart of
internation business plan of action. Henceforth, the communication across cultures is defined as
very challenging and this develops cross culture competence and communicating skills defined
as centre focus.
Impact of political risk-
As per the view of Hamilton and Webster, (2018) stated that political challenges highly
faced by the investor that results into legal action and sometime inactivity. Henceforth, political
risk leads to have negative business consequences due to action of legal authorities and public
sector enterprises. In many of the countries political situation are not favourable and this highly
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affects the working of the enterprise. Thus, political risk can also be translate with the change in
tax barriers and this is the things that makes the firm more and less competitive globally. In
addition to this, Reuber, Knight and Zhou, (2018) stated that intellectual property rights as
political risk termed out as judicial framework that s different each country.
Therefore, political risk within the global business effect from the various components
that highly affects the income of the firm and also complicates the business strategy of the
enterprise. These can also include the issues of macroeconomic such as high interest rates and
social issues. According to the view of Cabral, Hékis and Sidrim, (2018) stated that political
risk for the international businesses inclusive of nationalisation and attack of the assets, act of
terrorism and failure of local regime that enforce the contracts in the region. Thus, stable
political condition helps to bring out the streamlined business functions.
Supply chain complexness and risk of labour development-
From the overseas management of the suppliers and supply chain can be termed out as
the difficult procedure. Unfortunately, the duration and supply chain enhance the chance of
working with the suppliers that has immoral and ethical business practices. As per the view of
Odiko, Ogutu and Omar, (2018) stated that to increase the consciousness and assist the local and
international business react more efficaciously to this kind of issues. Thus, rates of the supply
fluctuates and this makes harsh impact on the working policy of the enterprise.
Currency rate-
Currency rate fluctuations is biggest challenge for operating the business activities at
some other place. Monitoring the exchange is one of the significant strategy for the international
businesses. As per the view of Child and Lu, (2018) stated that global economic excitableness
can make prediction about the profit especially typical at the time when rates fluctuates at the
unforeseeable levels. Thus, the major fluctuates can seriously effect business activities, expenses
and profit. In addition to this, justify the risk for the unforeseeable monetary system rates can be
setting up a progressive contract.
International accounting-
The judicial areas that has to be focused when its about commuting the international
business is known to be tax compliance. In addition to this, accounting is one challenge to the
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multinational business that are apt to pay the corporation tax at abroad. As per the view of Child
and Lu, (2018) stated that Contrary tax systems, rates, agreement necessitate and this all can
make the accounting function of the organisations importantly difficult. Therefore, accounting
plan of action can be defined as key to maximise the profitability. With help of justify the risk of
multiple layers of tax income makes the good business sense for the any enterprise that trading
abroad. In contrary to Aguilera, Henisz, and Shaver, (2019) stated that the national account
system principle desire to getting the respective economical condition of the country.
World wide environment issue-
The risk relate with the environment impact of changes in climate that are the becoming
one of the crucial term. Therefore, sustainability is one of the top agenda various global
corporations. As per the view of Priem, Wenzel and Koch, (2018) stated that beyond ethical
incentive becomes more Eco friendly, this establish environment conscious business practices
that supports to attracts the consumers. Due to the world wide environmental issues the
production technique may also led to impact the local legal authorities through waste and
pollution.
CONCLUSION
Hereby, it can be concluded that international business strategy said to be as plan that
guide the commercial transaction of varied organisation within different countries. In addition to
this, global strategy of business termed out as plans and actions of private firms rather than legal
regime whose main object is to as such increased profit by undertaking expansion.
The present report has covered the aspect of internation business strategy. Therefore,
study has also laid emphasises on challenges of internationalisation and this has also determined
its affect that changes the both domestic and international business environment. Working
practices.
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REFERENCES
Books and Journals
Aguilera, R., Henisz, W. and Shaver, J.M., 2019. Special Issue Introduction: International
Strategy in an Era of Global Flux. Strategy Science. 4(2). pp.61-69.
Ardley, B. and McIntosh, E., 2019. Business strategy and business environment: The impact of
virtual communities on value creation. Strategic Change. 28(5). pp.325-331.
Cabral, M.A.L., Hékis, H.R. and Sidrim, M.L., 2018. Product Innovation, Strategy and
Exporting Performance: a Study in a Candy Confectionary Company. Product:
Management & Development. 15(2). pp.92-100.
Campos-García, I., Olivas-Luján, M. and Zúñiga-Vicente, J.Á., 2019. Managing Gender
Diversity in Companies Operating in Different National Contexts: The Case of Spanish
MNCs in Latin American Countries', Diversity within Diversity Management (Advanced
Series in Management, Volume 22).
Castellani, D., and et. al. eds., 2018. Contemporary Issues in International Business: Institutions,
Strategy and Performance. Springer.
Child, J. and Lu, Y., 2018. Management Issues in China: Volume 2: International Enterprises.
Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hsieh, C.C., Ma, Z. and Novoselov, K.E., 2019. Accounting conservatism, business strategy, and
ambiguity. Accounting, Organizations and Society. 74. pp.41-55.
Odiko, S.Y., Ogutu, M., Yabs, J. and Omar, M., 2018. International Marketing Strategy and
Firm Performance of Tour Firms in Kenya. Journal of Marketing and Communication.
1(2). pp.42-67.
Priem, R.L., Wenzel, M. and Koch, J., 2018. Demand-side strategy and business models: Putting
value creation for consumers center stage. Long Range Planning,.51(1). pp.22-31.
Reuber, A.R., Knight, G.A. and Zhou, L., 2018. International entrepreneurship: The pursuit of
entrepreneurial opportunities across national borders.
Teagarden, M.B., Von Glinow, M.A. and Mellahi, K., 2018. Contextualizing international
business research: Enhancing rigor and relevance. Journal of World Business. 53(3).
pp.303-306.
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