International Business Strategy: R&D Challenges and Solutions

This report analyzes the critical role of Research and Development (R&D) in international business strategy, particularly for multinational companies (MNCs). It emphasizes the significance of R&D in market analysis, innovation, and achieving competitive advantages. The report delves into geographical, structural, and control issues that MNCs must consider when managing global R&D. Geographical issues include environmental concerns, resource availability, and trade barriers. Structural issues encompass organizational structures (centralized, decentralized, and hybrid) and cultural considerations. Control issues involve managing accounting, operations, and headquarters-subsidiary relationships. The report uses examples like McDonald's and Burger King to illustrate the impact of effective and ineffective R&D strategies. It also discusses the challenges of innovation and the importance of adapting to different market environments. Overall, the report underscores the need for comprehensive R&D to navigate the complexities of international business and ensure long-term growth and profitability. The report further explains that the success of international business depends on the R&D in the foreign market to analyze the market conditions.

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International business strategy

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Contents
Research and development..............................................................................................................2
Geographical issue...........................................................................................................................3
Structural Issue................................................................................................................................4
Control issue....................................................................................................................................5
Reference.........................................................................................................................................9

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Research and development
Research and development is the most important aspect for all multinationals companies.
It is necessary to analyze the market before entering into the market. Multinationals make a huge
investment in R&D globally as it helps in making the business successful globally. Multinational
companies operate their business in several countries and manage by doing research and
development. Multinationals need to do R&D for creating jobs, wealth and improving
technologies in different countries for the growth and development of the company. For doing
business internationally, the company relies on R&D activities to achieve its strategies. In order
to achieve the objectives of the organization, Research, and development help in analyzing the
culture of different countries. Examples of MNC like McDonald's which operate in many
countries and do the R& D before entering into the market to analyze the taste and preferences of
the customers. They offer the food products according to the need of the consumers and which
they prefer to eat. International business is driven by the economic, social and political factors of
global market (Dong, et al., 2008).
Research in international market helps in making export planning successfully. Global
research and development are the activities in which the company performs to innovate and
introduce new products and services for taking the business globally. It is the first step of the
process for development in the international market (Han, et al., 2010). The goal of MNC's is to
take the product and services to the international market and adding it to the company's bottom
line. Companies of all sectors and industries have to perform the Research and development
activities to analyze the market situation. R&D helps in making effective marketing strategies to
exist in the market with competitors. It helps in keeping the company on top as compare to its
competitors. The company may not be able to survive in the international market without doing
the R&D of the market in which the company wants to enter or to analyze the market conditions
in which the company already exists. Global R&D is a totally different activity than the
operational activities which are performed by the company (Drahokoupil, 2014). R&D is done
globally not to only make profits but to contribute to the long-term profitability and growth of
the company. Multinationals Companies invest and set up the R&D department. MNC’s totally
rely on the R&D activities for achieving the various strategies for the growth and development of
the company. Research and development help in achieving competitive advances in the local
market. The various strategies which are implemented by the management help in analyzing the

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R&D location in the global market. In order to maintain and improve their performance in global
market, MNC can adopt the generic competitive strategy to improve its competitive performance
(Purdy and Wei, 2014).
R&D by multination involves the exporting, setting up a foreign sales subsidiary,
licensing agreement with the country, and it is the establishment of foreign production. R&D
helps in minimizing the risk of the business and increases the profits and sales in the global
market. It is necessary to set up the process in the foreign market to do the business effectively
and efficiently (Farndale, et al., 2014). R&D helps in keeping the track on the competitor's
strategies when a number of competitors exist in the global market. It is necessary to continually
monitor the market by research for evaluating the various factors which are effective for the
current business strategies. R&D helps in analyzing the new information of the global market
and market perceptions as it will help in changing the risk-return of the entry strategy. The
greatest challenges which are faced by top managers of MNCs is organizing, fostering, and
exploiting innovation and new product development. Innovation is the most important factor for
MNCs to grow in global market. R&D helps in bringing new innovative ideas of the global
market. For the international operation of MNCs, technology innovation and R&D has become
the most driving factors.
Geographical issue
In international business, it is necessary to consider the environment for the growth and
development of the organization. R&D helps in analyzing the market and its environmental
issues to be considered for doing the business. The company has to consider the geographical
issue for doing business internationally. Research and development department of the company
analyze the various environmental issue which the company may face before entering and during
the business. As some countries do not allow doing business as they say that it will cause
economic damage in their country (Hennart, 2001). As the US has banned the importing of
shrimp harvested without turtle excluder as they are concerned about the sea turtles. Some
developing countries are affected because of some industries relocation as it causes pollution in
their country. MNC’s may face the issue of location in global market. It is necessary to
determine the geographical location by research and development. MNC’s may consider the
three sets of factors for taking the decisions are national resource availability as the resources

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availability and cost are different in different countries. Competitive advantages are based on the
resources and capabilities of location, and how the resources are managed by MNC’s in global
market. Wal-Mart has experienced the issue in recreating its capabilities in other countries than
US. MNC’s also had to consider the tradability in global market.
Some developed countries do not allow multinationals because of the nation's polluting
technologies as it causes pollution in their environment. The other issue must be considered by
multinationals during R&D is the trade barrier as the government making some restrictions on
international trade. Various barriers can be tariffs, non-tariffs, import licenses, and trade
restrictions. MNC’s which are from developing countries set the R&D in the developed countries
to enter into the market and catch up with the competitors. R&D helps in creating the network in
different countries to develop their products and bring innovation in their products with the new
technologies (Hoskisson, et al., 2000).
MNC’s make the R&D in making decisions about the strategy of market entry; it is done
to make the ownership of foreign operations, production, marketing, and financial activities to be
performed by the company in the international market. Example of burger king which operates a
business in parent country and expand business in the global market but their efforts were not
new in the market. They had not researched the market taste and preferences. They had not
adopted any new technique to enter into the market; they adopted the strategies which the
competitors had already adopted earlier. They had not made an investment in R&D in the global
market (Peng, 2009). It is important for the organization to understand the geographical aspects
of the country. It includes environmental issues which are to be faced by the business in the
global market.
Global R&D helps in making the business effective and competitive in the market. it
helps in making the business innovation with the new technology. R&D in global market
includes the basic research, fundamental research of the market, development in technology and
also the advanced development can be done to exist in the market (Christopher and Towill,
2002). It also includes the various concepts for the development of the products and services,
new product development strategies can be adopted by analyzing the market, the development
process can be analyzed, and R & D portfolio management must be done by the business. In the
pharmaceutical industry, the geographical issue is the main issue for MNC in the global market.

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To set up the project of the pharmaceutical industry in the global market, the analysis of the
environmental issue is to be considered which may affect because of the climate change of the
country (Kvint, 2015).
Structural Issue
Every organization needs to maintain the structure of the business in the global or
domestic market. R&D plays a major role in the structure of the organization in the global
market. It is important to consider the structure of the business as it helps in the performance of
the business globally. Multination faces the issues of strategy when going global as the target
market strategy must be considered to get success in a particular market. As every country has
own culture and structure which is to be followed by the organization. The structure must be
considered for doing business globally (Betts, et al., 2015). It is necessary to do the R&D of the
structure as it will be convenient to set up the business after the structural issues are analyzed. It
includes the operations, supply chain, location.
The structure of the business can be centralized, decentralized or hybrid in the global
market. The structure of the business depends on the size of the business and the approaches
which are adopted by the MNC’s. The strength of R&D when it is centralized is that it
encourages risk-taking and long term thinking (Noe, et al., 2017). When it is decentralized, it
encourages that the R&D will be done of the project and the needs of business and helps in
shortening time to market. The hybrid structure includes the mix approaches which are adopted
by the company for doing the business. R&D requires in hybrid structure is to analyze the
strengths and weaknesses of both centralized and decentralized structures. An effective structure
is required to make the business successful in the global market. Global R&D helps in analyzing
the structure to be adopted in different countries (Steiger, et al., 2014). R&D also helps in
restructuring the existing organization in the global market. Fujifilm Corporation restructured its
organization with the change in the nature of technology in the global market. They had set up
the new structure for responding to the present and future challenges effectively.
The structure of the company also includes the culture of the business which is to be
followed in another country so R&D must be done to know about the culture to be followed in
the foreign country as it will help in existing into the market. The culture of the host country

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cannot be followed in the global market as people will not accept it and business will not grow in
the future. An example is when Multinational Corporation is establishing their business in
another country they follow the rules and regulations of that country to know more about the
customers and their preferences. MNC’s are unfamiliar with the cultures of another country,
R&D helps in analyzing the culture of different countries in which an organization want to
expand their business (Castles and Vezzoli, 2009). A structural issue that is to be considered by
the organization for the R&D is the rules and regulations which are applied at the location of the
new business. Every country has its own tariffs and export fees so it is important for the MNC to
understand the concepts and customs of the global market. Global R&D requires hiring the right
candidate for the global market. It is required to hire the right team for the business in the global
market to understand the terms and conditions of the foreign country (Mussatto, et al., 2010).
.
Varzaru, M., & A. A. Varzaru,
(2013). Knowledge
management and
organizational structure
design process.
Annales Universitatis
Apulensis : Series
Oeconomica, 15(2), 716-724.
.

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Varzaru, M., & A. A. Varzaru,
(2013). Knowledge
management and
organizational structure
design process.
Annales Universitatis
Apulensis : Series
Oeconomica, 15(2), 716-724.
Control issue
In international business, it is important to maintain and control the process. When the
business is done in the international market, R&D must be done to verify to check the process
and control the organization process; it can be accounting, operations, headquarter-subsidiary
relationship or political factors of the country (Hill, 2008). Researchers need to consider the issue
of control in international business by doing the inquiry and have to keep the link for the content
research in strategic management. For controlling issue, MNC's must focus on the contingencies
as it makes the company different for Domestic Corporation. Every country requires different
techniques for doing the business which is according to the requirement of locals (Ambos and
Schlegelmilch, 2007).
For the development, it is necessary to have control of management on business strategies
in the international market. McDonald’s considers the research as the most important step in the
process. They frequently talk to customers to know about the key aspect of the development of
restaurants in the global market. Research is done for the purpose of the strategic planning and
they conduct the research in various ways such as quality, service, cleanliness, and value of the

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products (Chasek, 2009). McDonald’s does the research in the existing market by controlling the
operations. In the existing market, they offer new products with a change of taste and preferences
and they consider that the research in new products and services is essential for their business.
They use the research methods like surveys, questionnaires, and even by face to face interviews
for taking the feedback of customers. It is necessary for controlling the business units and brings
new innovation in the global market to compete with the competitors (Rowntree, et al., 2015).
R&D helps in developing the process more efficient and helps in developing new ways of
delivering services. Global R&D requires planning and control which is to be considered in the
global market. R&D has to properly integrate the objectives of the business and linking it with
the preferences of customers. R&D must intermediate targets, time frames and budgets, and
performance management system of the business. The strategic infrastructure must be considered
which includes the competencies and assets. In the global market, the national culture and
organizational culture reflect on R&D and innovation (Varzaru and Varzaru, 2013). Control
issues can be managed by doing the audit for monitoring and controlling the research and
development activities. It mainly covers all the issues which can be faced by the business in the
global market are the budget allocation, expense tracking, and recruitment of the capable
individual, coordination between the departments. It is necessary to keep the control of activities
to be performed and all the necessary inputs and equipment required for the business in the
global market (O'Dwyer and O'Flynn, 2005).
R&D in the global market helps in adequately commercializing the new technologies in
the market and for commercializing new technologies; MNC has to develop different and new
versions innovation for different countries. R&D in MNC helps in analyzing the distribution
strategy for delivering the products to the consumer in different countries. It also depends on the
market entry strategy to be adopted in different countries. Another important aspect to be
considered for entering into the market is pricing strategy (Willer and Lernoud, 2017). MNC
need to consider price discrimination, strategic pricing, and regulations that affect pricing
decisions. The idea of the new product comes with the interaction of research, conditions of
demand and competitive conditions in the global market. New product development will be
greater in the global market when the money spent and applied R&D in the global market. R&D
helps in analyzing the demand, affluent customers and competitions. The political conditions

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must be controlled by R&D as the political atmosphere of different countries offers the
opportunities and challenges for the MNC’s.
R&D helps in analyzing the various legal and regulatory barriers to be considered in the
global market. It is important to consider the various legal terms to be adopted of the global
market which are regulated to run the business in the target market. it is advised to have the best
legal counsel for doing the business overseas to identify the barrier that may cause the business
in the future. MNC's must consider the stability of the local government and their authority of the
global market before entering into the new market. the various aspects to be considered are the
exchange rate of currency, research of needed resources and raw material, the various options of
communications and transportations, the immigration laws of the foreign country and policies for
protecting the business in the overseas market. R&D is done by MNC's to understand the
market's potential, different trends in the market, the pattern of financial costs and forecasting
markets and economic feasibility. It is important to study financial feasibility if the business
makes any financial sense. The financial aspect is an important factor for the MNC in the global
market. It is essential to analyze the cost of business in the global market. Investment to be done
in the global market includes more risk and risk can be decreased by doing effective R&D.
Every organization has to face the issue and challenges for expanding its business in the
global market and R&D in the global market helps in market conditions, situation and strategies
to be adopted in the global market. Various issues like geographical, structural and control issues
may arise as barriers in expanding the business but R&D helps in overcoming the different
situations. It is necessary to understand the global market before entering into the market for
doing the business effectively and efficiently. MNC has to accept the culture of the country and
have to implement effective strategies to get success in the international market. Location is the
most important aspect for the R&D; MNC has to consider the most effective location to enter in
new business. R&D helps in getting the best location after doing the research of the different
markets. The research will help in understanding that what is best for the company and help in
building the market strategy so it helps in handling the number of situations of business and
competing with the competitors in the global market.

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