Global Business Strategy Analysis

This assignment delves into the complexities of global business strategy. It examines key concepts like corporate social responsibility (CSR), the evolution of business models, and the role of stakeholders in a globalized world. Drawing on academic sources, the analysis explores how companies navigate challenges and opportunities presented by international markets and diverse cultures.

Issues in Global Business
and
Strategic Concepts

EXECUTIVE SUMMARY
When organisation have to expand the business in the different countries and they are called
MNC's. Along with this foreign markets have to select a mode which includes global
concentration, global synergies and global strategic motivations. The MNC can indulge in
various activities for entering the international market such as they can adopt import and export,
merger, acquisition, joint ventures, etc. The staff members have to use proper strategy which
helps in attaining the targets which includes international, transnational strategy etc. Along with
this they have to use appropriate structure whether it is functional, matrix, divisional so that they
can attain the success and expand the growth.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
COURSEWORK 2...........................................................................................................................1
Analysis of modern day scenario based on international business.............................................1
CONCLUSION..............................................................................................................................10
RECOMMENDATION.................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
International business is related to all commercial activities between various regions,
countries and continents for profit and political reasons. It includes transaction of goods such as
resources, capital, skills, etc. and services of banking, finance, insurance, etc. which helps in
developing better relations between the countries. The organizations expanded in different
countries are known as MNC and to enter the foreign markets they need to select a mode such as
global concentration, global synergies and global strategic motivations (Carroll and Shabana,
2010). The MNC can indulge in various activities for entering the international market such as
they can adopt import and export, merger, acquisition, joint ventures, etc. In the given report, the
MNC Siemens Wind Power is taken as the case study.
The company is established in Germany and became a separate division in 2011 which
has set up a turbine factory at Green Port Hull, UK during 2014. Siemens Wind is known to have
more the 6% market share of combined offshore wind turbines in the world and recently
claiming to be the second largest company. It chose to enter Britain's market through a joint
venture with ABP for investing in wind turbine production.
COURSEWORK 2
Analysis of modern day scenario based on international business
The activities of international business also include the production of renewable energies.
This activity helps companies as well as the country in which the activity is carried out (Killing,
2012). The renewable source of energy in UK can be divided in electricity, heat energy, wind
energy etc. which is generated through different sources. UK started its renewable energy
production in 1990s which has increased gradually. This energy generation helped in reducing
the energy consumption done by the country resulting in lesser carbon emissions. Traditionally
hydroelectric schemes were the largest producers of renewable electricity which has been
overtaken by the wind power being the best resource available in UK. The country has been
ranked as one of the top producers of wind power in the world and it is the second largest source
of renewable energy in UK. The generation of renewable wind energy includes offshore wind
power and onshore wind power (Zott, and et.al, 2011).
Onshore wind energy- The onshore wind energy is the most cost effective technique for
energy generation. It is most economical and competitive renewable energy source in the present
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time. It is used to reduce carbon emission and replace finite energy sources to preserve natural
resources and environment of the place.
Offshore wind energy- Offshore technology used in wind energy to produce electricity is
one of the clean energy source but with very high costs and development constraints. It is one of
the most expensive energy sources at present. It is not considered in priority for energy
generation due to its limitations in development, locations, procedures and objections from
government (Keller, and et.al, 2011). Many issues also need to be taken into consideration while
establishing this plant regarding fishing, boat navigation, ocean habitat, marine conservation, etc.
Strategies for international business
To expand and establish its business in international markets, proper strategies are
required to be followed by the companies. The different strategies used by the companies are:
International strategy: International strategy involves presenting a company's core
competencies in the new market. . It is the global plan for a particular company which only aims
at global expansion. This is done to attract clients and customers for the product. In the case of
Siemens Wind Power Company, the international strategy needs to be developed around global
market opportunities as it was done for establishing plant for producing renewable wind energy
in UK. The company is required to identify the opportunities in the global market to expand
internationally. This strategy can be implemented by the company when the pressure for cost
reduction and local responsiveness both are low (Solomon, 2014).
Global standardization strategy- This strategy increases profitability and revenues
through practice of cost reduction. The focus in this practice is to apply low cost strategy on a
global scale. It can be implemented when the pressure for cost reduction is high but the local
responsiveness required is low.
Transnational strategy- The strategy is applied when the pressure for cost reduction and
local responsiveness both are high in the market. It includes practice of product differentiation in
geographical areas and allocating of different skills in its subsidiaries.
Localization strategy- This strategy uses technique of customizing the products or
services to cater different trends and preferences in the national markets. It can be applied when
the pressure of cost reduction is low but the need for local responsiveness is high due to
substantial differences in preferences and trends globally.
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The strategies are not suitable for every situation in the market as different methods needs
to be adopted according to the situations (Trkman, 2010). The international strategy is not
profitable for the long term operations of the company and the company’s needs to shift towards
global standardization or transnational strategy to maintain market position and gain competitive
advantage. The organization can use the strategy of localization to get a competitive edge in the
industry and global markets. In the course of long run, Siemens Wind will need to shift strategy
from international or localization to global standardization or transnational as more competition
in the market make these tactics less viable and obsolete.
The organisation of International Business
The organisation of a business defines its structure and hierarchy which comprise of
different business functions and departments. The allocation of tasks, coordination and
supervision of activities are involved in the process. The structure of an organisation is
dependent on its functions and objectives. The main structure system followed by the companies
is functional and divisional structures.
Functional- This structure consist of coordinating, supervising and allocating activities
within the organisation. The employees are allotted a fixed task and department which controls
all products and services provided by the firm. This practice leads to specialization in the field
resulting in the increased efficiency (Russo and Perrini, 2010).
Divisional structure- This structure has different divisions for each product and service
provided by the company. Every division comprises of its functions which makes it easier for
every department to focus on a single product and service type. This structure does not promote
function specialization.
The expansion on the firm on a global level leads to changes in its organisation structure. To
operate the activities at national and international level simultaneously becomes a challenge
which can lead to downfall of the company. While entering a new market the firms tend to
combine their activities for all the products introduced in the international market. The firms can
continue following the same structure as in national market but it has a potential to develop
conflicts and coordination problems in operations of both markets together.
Siemens in UK follow a divisional structure of organisation same as in national market
(Schaltegger and et.al, 2012). It has segmented its products and services of various types as per
the industries in the national and international markets. Each of these divisions have their own
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functional structure with finance, marketing, productions, customer relations department, etc. Its
division of Wind Power in UK is a divisional structure which consists of headquarters in
Germany and divisional office in UK and other countries as well. Under headquarters it has
different domestic divisions and an international division for all global activities. In every
country the company has a general manager under whom other functional managers are
allocated. Siemens has a managing director for each industry which supervises the operations of
the company for the particular product and service in all countries (Kolk and Van Tulder, 2010).
The Managing Director for Offshore Wind Power Division controls the activities of this specific
field operating in all over the world. This structure gives more freedom for delegation of
responsibilities and authorities to the employees to form a better organisation and encourage
them to perform at maximum level of efficiency.
Entry Strategy and Strategic Alliances
A company planning to enter into the international market needs to identify its entry
modes and create strategic alliances with its competitors already established in the market. This
gives company a fair chance and way to showcase its product and service to new customers and
clients to attract them. In the country it gives a boost to the economical and infrastructural
development for better lifestyle of the people and more employment opportunities (Werther Jr
and Chandler, 2010). The organisation can choose between various entry modes such as:
Franchising/Licensing: The form of giving permission to the licensee or franchisee to
produce an already patented product or process, use manufacturing, marketing and technical
know how and use of trademark and brand, etc. This method has many advantages as it is easy to
implement and process with minimum business costs. It helps to access many new markets for
the company. It also minimizes the risk of entering the foreign market. Whereas, there is no
control required for maintaining experience curve and location economies, no control over
strategic moves over different location globally.
Exporting: The method of exporting is easiest, cost effective and most commonly used
practice for entering the international market. While many businesses does this activity
deliberately, some become exporters by accepting orders from other countries. It is also
considered as one of the most basic way to enter global market due to its minimum investment
requirement and an experience on the small scale basis (Lasserre, 2012). This can sometimes fail
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to attract customers due to its price as lower cost manufacturing locations may be available, and
the cost of transport and tariff can increase the prices.
Joint venture: The method of joint venture involves combining of two or more business
in order to invest together with share in finance and management of the company so formed. It is
a better alternative to developing a whole new business single handedly (Grant, 2016). It benefits
the company as the investment to be made is comparatively less, lessen the risk of losing
finances in international market and helps to have a closer control over production and other
operations. On the other hand, it has the risk in giving control of activities to other person and
can lead to conflicts in the case of partnerships.
Siemens Wind Power company chose the method of joint venture for entering the market
of offshore wind power in UK with Associated British Ports (ABP). They collaborated together
to build and develop plans for new offshore wind turbine manufacturing and export at the Green
Hull Port in UK. ABP being the leading ports group company owns major ports in England,
Scotland, Wales, etc. This venture will help the Siemens company to establish in UK as a
producer of wind energy and provide new market prospects for ABP in other countries as well.
This collaboration will help both the companies in expanding and creating new market
opportunities for themselves and their partner (Birkinshaw and et.al, 2011).
Exporting and importing
Whatever the company produces in their home country, they deliver product across the
boundary in known as exporter. The goods which they purchase from another country, the
process is known as importing. High rate of export and low rate of import is beneficial for
organizations. In today's world Siemens green port welcomed export-import bank of united states
to the Wind service training centre in Orlando for Siemens's energy businesses. The chairmen of
Export-import bank is Fred Hochberg, who during the time of wind service training centre
boosting the export process (Al-Debei and Avison, 2010). The Siemens produced wind blade and
reared nacelles in their premises which export in various countries and help company to earn
more profits. EXIM bank has played a vital role in export and import process of Siemens green
port, by providing accurate finance to the company for purchasing equipment form another firm.
Further, for the energy renewable energy projects in Peru, bank give financially help to Siemens'
costumer services for purchasing power generation equipments and components. Also for water
treatment solution as well health care services. The EXIM bank provide financial assistance to
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company of approx $17.7 billion in U.S. Export sales and also support in import process as well.
By exporting goods and services in another countries company needs to increase its promotion
function. Promotion programmes help firms to maintain their performance in international
markets and improve their earning efficiency as well (Scherer and Palazzo, 2011). Through
increase of more importing organizations may reduce their performance and suffer loss as well.
Siemens wind power engaged in a business of manufacturing wind turbine. Siemens wind power
had a market share of wind turbine further it is combined share of 63% of European offshore
wind turbine. As the time increases company may build up their exporting services and try to
reduce their importing processes in order to increase performance by other countries. In today's
world, by increasing rate of exporting Siemens green port can improve their work efficiency and
providing greater rang of employment in different countries. The Siemens wind power had a
6.3% share in world wind turbine market. Company needs to support its workforce and
production system as well. Greater exporting is a big strength for every organization and give a
opportunity to grow which may boost up the confidence of their staff members and firm as well.
The company transfer its product in various countries like- Hamburg, Germany, Denmark etc.
By transporting its goods and services in different countries it get a huge benefits and greater
opportunities to grow.
Ethics in international business
Siemens has a potential to build up their performance in internation businesses. In order
to their work quality Siemens need to focus and manage their technologies like- wind turbine,
bio power, hydro power, geothermal, solar photovoltaic and many more. Renewable energy is
able to generate more electricity in a future time so that, it is compulsory to generate wind
power. Renewable energy assist company to meet demand of electricity in local market as well
as in a other countries (Osterwalder and Pigneur, 2010). In all over the world there is huge
demand of electricity which can be maintain by the renewable energy. The demand of electricity
is increases every year which can be fulfil by organizations by using various resources like wind
turbine, solar power, bio power and many more. Use of resources in a efficient and appropriate
manner can be able to provide more electricity. Renewable energy assist companies to meet their
goals and achieved desired objective. It provide a various way to fulfil target. Company needs to
improve its performance by making plans and strategies. Also it have to make future strategies
like employed skilled labour force, use advance technologies, better infrastructure and logistic
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capabilities. International businesses give a opportunities to grow and build up a perfect image in
it. Siemens green port can take advantage of increasing earning efficiency and sale as well for
providing its services in various countries (Freeman, 2010). Various types of tools and methods
are used by Siemens to generate electricity through different factors and fulfil the demand of
people who are look for the same. Organization can complete its long term goals and objective
by making plans and future strategies. Through renewable energy firm can get motivation by
using a smart grid of technologies.
Global production, outsourcing and logistic
In modern time, growing of renewable energy in wind is the hardest situation for the
companies. Further, Siemens green port is need to concentrate on renewable energy to meeting
long term goals and reduce conflicts or contingencies. Through this, company can also be avoid
misconception and environment which made a bad impact on existence of the firm. Thus, some
planning and strategies can assist organization can able to focus on the points firm is need to
improve them on a continuous basis. Siemens provide good costumer services to their
consumers. The organization can lower the cost of value creation of production and logistic by
delivering goods and services in most efficient locations (Chhokar and et.al., 2013). Firm need to
manage global supply and demand chain by manage international market and supply of people in
a efficient way. Further, for increasing their earning efficiency company need to remove
defective goods from supply process and from manufacturing process as well for providing
better costumer services. Entities need focused on product's value-in-weight because if it is high
then company produce goods in single place and then transport it in various places. But in case
value-in-weight is low which means high pressure on production and company need to maintain
it from many places. Production and logistic factors are responsible to meet quickly with
costumer demand and choices. Siemens green port have to concentrate on various factor for
improve their production and performance in international market. Here, those factors are
aligned below:
 Country factor- Company must concentrate on transportation costs and policies
which affect foreign trade policy. Siemens need to recruit skilled workforce which
assist firm to meet their goals (Varadarajan, 2010). It also work with supporting
companies. Organizations have to get an idea, about fluctuations in future
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exchange rates. Trade barriers also made a great impact on existence of firm like-
formal and informal trade barriers so that, every entity aware about that.
 Technological factor- Siemens need to use a advance technologies for maintain its
level of fixed and variable costs. It have focus on level of output on which various
plant and related factors are exhausted. The organization must use technologies
which are flexible in nature not a fixed plant. Because whenever, it need some
chang4es then they easily can do so.
 Product factor- When organization start production then they need to focus on
few elements like- fixed costs become efficient and flexible technologies are used
by company. In production function Siemens are need to manage their both costs
fixed or variable (Agarwal and et.al, 2010).
Globalisation
Globalisation is the process of international interchange of product, views, services
between many countries. In today's world, European wind power in enter in the globalisation of
wind turbines market and adjusted in a very efficient way. Through this Siemens can developing
their businesses from their regular market. European industries get a tremendous development
growth through Globalisation process. Siemens get a effective productivity growth rate through
local market because wind turbines are no longer handle the price. Further, price of wind
turbines more than almost a million euros per wind turbine megawatt. In 2009 price of one wind
turbines is more than 1.2 million but which can drop in 2010 to less then a million per wind
turbines megawatt (Ietto-Gillies, 2012). There are several reasons for this draw back in prices.
First is, supply of equipment is slow which is not match with the market demand of goods and
services. Second is, increasing the number of Chinese industries through which price of other
products are going to reduce. Chinese industries are increasing day by day and which reduce the
work performance of other industries. The third is that market of wind power is tending to fall
into the hands of major suppliers like oil industries etc. Siemens is the manufacturer of wind
power turbine which provide more than 70% in development process and performance.
Companies need to make a plans and strategies to build their products in a international markets.
They have to make manufacturing strategies for make and buy the goods. It is very important for
firms to improve their work quality (Gunasekaran and Spalanzani, 2012). Organizations are also
need to take a make or buy decisions. Decisions related to international market are more complex
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then a domestic markets decision. Elements include in international market are very complicated
in comparison to local market. The biggest goal of Siemens green port is manage global supply
and demand chain at the lowest and best possible cost and providing good costumer services to
their costumer. They need to establish a competitive advantage through superior and best
costumer services. They have improve the logistic of company through get a material into
manufacturing process and after this plan a supply process. They have to use just in time process
which generate the major cost and reduce the warehousing and inventory cost (Issues in Global
Business & Strategic Concepts – Issues, 2017).
Regional economic integration
Generally, it is a agreement between various countries and try to reduce tariffs and non
tariffs barriers and improve free flow of goods, services, ideas and production factors between
each other. Through this, countries are improve their business performance and activities
between them. Some different economic blocks like NAFTA between American countries. It
managed it self as a single market while other countries are cooperate and working together for
their economical development and political support. In this kind of market situation trading and
business activities are freely move between countries which are connected with each other or
working jointly. For example; European as a single market and which have 27 member union
nations. These member nations are freely share labour force, goods, services, monitory items and
electronic items without any trade or non trade barriers. Further, this type of regional economic
integration is having a great impact on development, growth and promotion of renewable
energy. Renewable energies are get a opportunities to grow through this type of integrations
system. In case of social economic development, renewable energy sector plays a important role
on regional integration. Thus, for the development and appropriate growth of particular region
sustainable development wants a renewable energy. Which provides a growth in a efficient and
appropriate manner (Global Business Strategy, 2010). Some different problems are have to be
face by the nations are like sustainable development, increasing demand of energy , continuously
increasing market competition and many more. These various kind of challenges can be reduce
the level of performance and production growth as well. Also it is good for Siemens for
improving its market share, work quality and increase its level of revenue as well. Further,
company have to face the challenges for getting more chances to grow and opportunities for
development of their business. Few trade barriers and non trade barriers are reduce the work
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performance of the entities. Though which they are not able to exceed their work quality and
reduce their revenue as well.
CONCLUSION
In the above report, the factors relating to international business are discussed with the
example of a company Siemens Wind Power operating in UK. The factors affecting expansion of
a company in the international market with its existing products, strategies for international
business such as international strategy, global transnational strategy, localization strategy, etc.
are explained. The organisational structure of international business as functional and divisional
structure and the one used by the mentioned company is explained. The report also shows the
methods and modes for a company to enter in the international business and the most suitable
entry strategy used by Siemens Wind Power to expand in offshore wind energy producing
industry based in UK. After summarising the report it can be stated that for the mentioned
company to enter in the international business the suitable approach was through joint venture,
and to expand further the company will need to switch form international strategy to either
global standardization or transnational strategy.
RECOMMENDATION
Siemens wind power company, there are several causes which can lead to decrease in the
company's profitability and production in the future. The technology used by the company is one
of the most expensive and non efficient as it requires a large amount of finances and resources to
generate power. Thus, to keep the profitability of the company from reducing, it needs better
alternatives in the future.
 As being the most expensive renewable technology at present, there is need to adapt more
economical and sustainable energy generation source.
 It is still in its early phase and further developments and modifications are becoming a
challenge.
 It has a huge negative impact on the environment and marine ecology around it, as the
process of installation destroys the local fish habitat.
 It creates obstruction for the radar operations in the sea around the wind plant.
 It causes irreparable damage to the ecosystem and marine system along with fishing
grounds being a major source of income and food supplement for the locals.
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 The waves in high tides and heavy wind activity during storm can cause damage to the
equipments.
This can also effect the activity of travel and tourism in the region as it covers a large area for
operation.
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REFERENCES
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Online
Issues in Global Business & Strategic Concepts – Issues. 2017.[Online]. Available
through:<https://www.coursehero.com/file/13039511/Issues-in-Global-Business-Strategic-
Concepts/>. [Accessed on 3rd March 2017].
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through:<http://www.economywatch.com/business/global-business-strategy.html>. [Accessed on
3rd March 2017].
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