Challenges in International Business: Risks and Opportunities
Added on 2019-11-26
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Running head: STRATEGIC MANAGEMENTStrategic ManagementName of the Student:Name of the University:Author note:
1STRATEGIC MANAGEMENTAnswer 1 Globalization is the procedure of economic integration and interaction of the people,businesses and governments of different countries. This is driven by international investmentsand trade relations, supported by information technology. Globalization impacts politicalsystems, environment, culture, economic development, prosperity and human well being of thenations (Beck, 2015). Regionalization refers to segmentation of a nation into smaller regions,such as, states or provinces. The relation between the regions is also affected by the globalization(Jones, 2017). Lastly, localization refers to the process of adaptation of a good or service formeeting the needs of a specific region’s culture or economic condition (Mander, 2014). Thestrategic difference among these three processes is that, globalization is a broad processinvolving the regions of the entire world, and therefore, the impact is widespread. On the otherhand, regionalization covers only specific regions and their needs. Economic and culturalactivities are planned in a way to meet the requirements of particular regions. Localization ismore specific. The activities are more focused towards very specific requirements of thatparticular locality. Answer 2 Reactive business strategy or responses are those, which react to any unanticipated eventonly after it happened, on the other hand, the proactive strategies are those, which are designedto anticipate the possible challenges in the business (Dahlander & Piezunka, 2014). Two reactiveresponses for firms to go for globalization are as follows. If there is a fall or saturation ofdemand in the domestic market, and the firm has excess capacity for production, then it tries to
2STRATEGIC MANAGEMENTexpand its business in the international market. Moreover, when the cost of production increasesin the domestic market, then the firms are forced to find a cheaper place for production. Thisway, manufacturing of many firms is outsourced to economically underdeveloped countries toreduce the cost of production (Joseph & Gaba, 2015). On the other hand, profit seeking and sales expansions are two proactive reasons that thefirms wish to involve in globalization. Firms try to enter an international market to make a globalbrand image and it enters with a lower price, to gain a competitive edge. For sales expansion,firms follow the fact that the customers are global, and the international markets have morepotential than the domestic market (whygointernational.weebly.com, 2014). Answer 3Cathay Pacific, the international airlines, headquartered in Hong Kong InternationalAirport, offers services to 180 destinations in 44 nations world wide. Cathay Dragon, a fullyowned subsidiary of Cathay Pacific, operates in 44 destinations in the Asia-Pacific Region. In2016, the revenue earned by the airline was HK$92,751 million (Cathay Pacific, 2017). Thecompany started its business in the East Asia in 1946, when there was no other dominantinternational airline in that Asia-Pacific region. Thus, it entered a new market, with fewercompetitors. A major strategy adopted by this airline is the strategic alliance, which helps inopening up of new and emerging markets. This also helps in expansion in the internationalmarket, along with co-sharing the flights with partners, which opens up new markets(ToughNickel, 2015).
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