MBB7007M - Global Business Strategy: Evaluating Host Nation Impact

This essay evaluates how state and host nation contexts shape and impact global business strategy, focusing on theories that explain host national contexts, supported by case study examples, particularly Volkswagen, a European-based organization with international sites. It explores international market dynamics, strategy formulation, and responses to internationalization challenges. The essay covers drivers of international expansion, Hofstede's cultural dimensions comparing Europe and Asia, and Volkswagen's strategic plan, including its mission, strengths, weaknesses, opportunities, and threats. External factors such as political, economic, technological, legal, and social aspects are analyzed, along with types of internationalization strategies like exporting and franchising.

Global business
strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Essay...........................................................................................................................................3
CONCLUSION .............................................................................................................................10
REFERNCES:................................................................................................................................11
Books and Journals:..................................................................................................................11

INTRODUCTION
International business refers to trade among different countries by the use of latest
technology and effective transportation. There is need of managing the work in such a manner
that the business organisation are able to carry on the work in international market (Guercini and
Milanesi, 2020). There is need of analysing the strategies and trends that will help the business
organisation to enhance the operations in effective manner. This report is based on Volkswagen
that is a Europe based organisation. The company has operations around the world. The Group
operates 120 production plants in 19 European countries and a further 10 countries in the
Americas, Asia and Africa. It is necessary to know about the best strategies that would help the
business organisation to operate in effective manner. This essay has discussion related to the
theories that help to carry on the business operations in international market in effective manner.
The company has to assure that they are able to fulfil their mission in the international market as
well. The use of effective strategies help them to manage the work. The challenges that are faced
in international business are also evaluated and the ways of overcoming the same are also part of
this report.
MAIN BODY
Essay
International business has facilitated the trade across the borders. The business
organisation are able to enhance their business operations and manage the business by carrying
their operation in international market. The nature of market is dynamic and there are several
changes that take place in the market. The business organisation such as Volkswagen are able to
get broader market to carry on their operation. The sales of the business directly expands as they
have got opportunity to manage the trade across the boarders. They have much more options to
carry on the business (Buckley, Enderwick and Cross, eds., 2018). This has also enhanced the
competition in market. Volkswagen has to compete with other company that has operations in
Asia, Africa or America. The business organisation has to analyse the needs and wants of
customers so that they are able to gain competitive lead. There is regular enhancement in
competition and that is the reason Volkswagen designs new strategies that help them to carry on
their operations in effective manner. Along with that, it is seen that due to international
operations the business organisations have to face more competition and the risk in their

operations also enhance. The use of key tools and techniques and proper research help them to
carry on their operations in effective manner. This has facilitate the customers as they are able to
get wide market that enhances the choice for the customers. It helps the customers to effectively
make purchases as per their desires and wants. The employees also get opportunities to get work
in international market so that they are able to get career growth. There is need of expanding the
operations by analysing the opportunities being present in market (Cherunilam, 2020). There are
certain drivers that helps the business organisation to expand their business in international
market. There is need of knowing about these drivers as they help the company to enhance the
operations in international market. There is more opportunities in the international market. It is
seen that the Volkswagen gets more opportunities to expand their operations in Asia, America.
This helps them to expand their business and the process of production. In the starting the cost
involved is enhanced but afterwards the business profits are also more. There is need of
knowing about the global marketplace and managing the work in proper manner. The right
strategies are adopted by Volkswagen and that is the reason they are able to carry on the work in
proper manner. It helps to carry on the work in emerging market with the help of proper
capability and use of resources (Shenkar and et.al., 2020). The car manufacturing organisations
identify the places where they are able to get low cost production and enhance the operations to
gain benefit. The expansion of business helps the business organisation to gain the advantage of
economies of scale.
Hofstede dimensions of culture
It helps to know about the culture of different countries. It is seen that all the business
organisation must know about the culture of place so that they are able to carry on the operations
in effective manner (Chi and et.al., 2019). The comparison of the culture in Europe and Asia is
done to illustrate. There are certain dimension that help to understand the culture and they are
explained below:
Power distance: It is seen that in Germany where the headquarters of Volkswagen there is equal
distribution of power. All the members are given equal rights that help them to carry on the
operations effectively. There is direct communication seen among the members of the
organisation there and they work together to achieve the goals and objectives properly. On the
other side, in Asia there is high score of power distance. It is seen that there is hierarchy that the

individuals have to follow at the time of working in a business organisation. There is layer of
people who give orders and the juniors have to follow them.
Individualism: It is seen that in both Asia and Europe the focus is being given to collectivism.
The people of the nation live together and carry on the their business. All the work is done in
teams and there is cooperation and coordination seen among the team members (McWilliam and
et.al., 2020). All these strategies are necessary to carry on the work in effective manner and
achieve the desired mission.
Masculinity: It is examined that there is high masculinity being observed in Germany. It is seen
that there is high competition seen in Germany and this motivates the people to carry on the
operation in effective manner by forming effective strategies. The competition in Asia is
moderate and lesser than in Europe. This shows that Volkswagen has better opportunities in Asia
to carry on the work in effective manner.
Uncertainty avoidance: The risk is present in the market. In Germany preference is being given
to uncertainty avoidance. It is seen that there is equal opportunities being provided to the people.
On the other side the score of Asia is low that shows that they have medium preference for
avoiding uncertainty.
Long term orientation: The score of Asia in this dimension is moderate. This shows that they
do not carry on future planning in effective manner. They are moderately ready to carry on the
work. On the other side, the score of Germany is high that proves that the people in Germany
carry on the work with proper planning and think about long term (Hooper and Holtbrügge,
2020).
Indulgence: In Germany the score is low and this shows that the people do not spend time of
leisure and entertainment. Along with that in Asia the score is also low. This shows that the
societies are Restrained societies.
Strategy formulation plays a critical role in enhancing the operations international market. The
company has to analyse the market of different nations so that they are able to select best among
them to carry on their operation. It is necessary for them to select best channel to expand their
business (Hannibal and Knight, 2018). The strategic plan is formulated by Volkswagen in order
to enhance their business.
Mission: To provide attractive, safe and environmentally sound vehicles to their customers. They
also want to gain competitive advantage in the market.

The key strengths of Volkswagen is their wider brand portfolio. The company has wide
range of products that satisfy the requirement of different set of customers. They also provide
healthy and strong vehicles that help them to serve the needs and wants of customers in effective
manner. They follow the strategy of diversification so that the risk is minimised and the overall
work is managed in proper manner. The weakness faced by business is that they are unable to
cater the needs of customers effectively in US market. The problem associated here is regarding
to no competence in making battery driven vehicles (Hamilton and Webster, 2018). The
opportunities in the market is enhancing day by day as they can expand their business globally
and that will enhance their sales. The demand of autonomous vehicles is enhancing on regular
basis and this is beneficial for the business organisation. Also, by following the sustainable
practices Volkswagen will be able to carry on the work in proper manner and will enhance the
brand image of the business. The threat is related to changes in taste and preference of
customers around the nation. It is seen that all the customers have diverse needs and wants and
the company has to satisfy the requirement of all the customers (Hernandez-Pozas and Carreon-
Flores, 2019). The government regulations also change and they have impact on the operations
of the business. There is need of taking necessary actions and forming such strategies that will
help to overcome threats.
There are certain external factors that have impact on the business. There is need of
analysing all the factors and their influence on the business. Political factors include the trades
and tariffs implemented by government. Volkswagen has to follow the tariffs of all the nations
such as Europe, Africa, America and Asia in order to operate smoothly. The economic factors
include one of the major events that are Covid-19 due to which the economy of all the nations
have shown downward graph (Zhao, Zhang and Kwon, 2018). Due to this, Volkswagen also
faced the problem of low sales in the business. The use of latest technology is also important for
Volkswagen as they are able to manage the working in effective manner. They produce self-
driving cars that help them to attract the customers in effective manner. The laws and legislations
are followed by Volkswagen and this is beneficial for them. They keep all the stakeholders
satisfied by following the laws. The use of laws keeps the employees satisfied and the work is
managed in proper manner. The needs and wants of the customers must be satisfied by knowing
about them. They transform their car according to the requirement of the nation. By satisfying
the requirement of customers they are able to enhance their sales. They assure that they work on

reducing pollution and take proper care of environment. It is necessary to follow the same and
use green technology so that the company is able to enhance their brand image in market. They
must become part of corporate social responsibility so that when they expand business all the
nations know about the good work done by the company (van Tulder, Verbeke and Piscitello,
eds., 2018). It is necessary to take care of all these factors so that the company is able to expand
the business effectively.
The types of internationalisation helps in identifying the opportunities and key areas for
going into international market. There are many ways and types through which Volkswagen
could easily enter in new market. The Exporting is the most common ways to establish their
business in the international country. It is less complex way but it require high export charges
and duties for selling the product and service. Volkswagen could not create exporting facilities as
they are working in the automotive sector by serving their cars to the other markets. The other
types of internationalisation is franchising which is effective and highly recommenced to the
Volkswagen. The advantage of using this way is to elaborate the performance in the international
market. Through franchising, the company can take the benefit of the new marketplace with ease
in getting licensing. Also, the other type is global strategy, multi domestic and transactional.
These strategies will impact on the key behaviour of company and their financial stability to
enter in the new market. Through following global strategy, the Volkswagen will influence on
the marketing the terms of scarifies of products. This will lead to bring some changes in the
products and services as per the culture of the country. The transactional strategies seeks a level
between both domestic and global strategy in which the desires and local preferences which will
be able to create impact on the internalisation
It has been critically evaluate that the formulation of business strategies in response to the
challenges of internationalisation is necessary also it shows how they reflect changes in both the
domestic and international business environments. The business strategy in response to the
European companies has major impact on the company’s performance. It shows that, there is
requirement of the company’s betterment for taking commercial planning and boost the
companies to reach the highest level. Therefore, the challenges which are faced by the companies
impact on the both domestic and international strategies. This shows that how a firm will get
impacted through the foreign market. Challenges and issues are plays crucial role in developing
many factors within the company (Blagoeva, Jensen and Merchant, 2020). It will resist in

changing plans, formulating alternative options and provide better. Business is required to impact
on the leading ways that analyse the potential of the employees and eliminate work barriers. An
organisation continuously plans to formulate new strategies which help in adjusting with the
changes at marketplace for the company. Some of the crucial internationalisation strategies
which help in selling goods and services into market. International market helps in coming up
with better opportunities which makes is effective foe every business to grow. These crucial
strategies are increase in the rate of return, great ROI, competitive advantage, brand recognition
and global customer satisfaction. A company wants to expand its reach and enhance their
customer base to generate more sales and turnover. It could only do through operations strategy
with new markets by providing services as per customers’ demands and requirements. Hence, the
challenges are required for analysing mistakes and drawbacks which the company is lacking to
adopt in the dynamic environment. In context of Volkswagen, the business is going to respond
on the key market factors that come across for the establishment of businesses at different
market. The company mainly face challenges of language barriers, cultural differences,
managing global teams, currency exchange and inflation rates and foreign policies. These
challenges influence on creating development plans and policies for hiring employees, come up
with existing product in the new market (Rialp and et.al., 2019). The cultural differences came
across in analysing different perception with different people it will create barriers in
understanding others believes and values which might impact on organisation functioning. Also,
working at domestic level is not much difficult task as all the teams and employee are working in
the host country and communication becomes easy. But at international market, it is as much
difficult to cooperate and manage the staff at different country level that creates barriers in
communication, people working and cooperating with the firm. Also, maintaining relations with
the global team is also a challenge that faced by Volkswagen Woking at different nations like
India, UK, China and many more. The focus is on hiring experts and local employees for each
international market to cope up with them.
Current exchanges and rate of inflation is also an impacting factor for the Volkswagen.
For example, in Asian market, the economy has faced serious downturn in the purchasing power
of the customers and inflation rate got rise. When a company face downturn in the international
market, they get totally dependent on the local country and all the cost and resources get
managed through it. Due to this factor, the company has come into the negative criticism which

has its impact on public speaking. Volkswagen is not able to increase its share in the US market
which impacts on the productivity and profitability of that international country. This means that,
the organisation is not positively contributing in the US automotive sector. It affects on the sales
of companies cars as people do not showing interest towards diesel car due to building high
competition in the marketplace. This shows how the company is able to form believe among the
customer by analysing best competitive strategies. It has critically evaluated that, competitive
strategies are the crucial for business in automotive sector. Due to having luxurious products and
long term customer promises, they have to be critical and attentive about competitor’s actions.
The Volkswagen currently follows the strategy of research and development and sustainability
performance to cover the negative impact occurred due to Covid-19 pandemic. The company is
considering its best practices by providing good engines (Casson and Wadeson, 2018). The issue
faced during the environment practices which are able to ascertain the valuable strategic chain
for the company. The other challenge which impact on the Volkswagen is of high government
regulations in the international market. Government implications are plays key role in
maintaining the lawful business strategies which is in favour of both society and business. The
company needs to use effective strategies for overcoming and sustaining with the challenging
marketplace. They must focus on highly trendy demands of people who have different culture,
values and beliefs. The more company will take decisions according to these strategies, the more
they will get closure towards attaining success. This will impact on the leading business
requirements and the organisation will be able to undertake competitive advantage by bringing
the products and services which are customer oriented. The organisational policy leads to create
impact on the internal and external working environment of the Volkswagen. In order to create
emphasize on competing and focusing on the international strategy mode (Bowie, 2019). The
strategies which are required for the organisation is to enter into the market by analysing
strategies for market penetration, market development, diversification or product development.
The Volkswagen has its specialisation and brand name in automotive sector due to which they
can be adopt the strategy of market development and penetration by choosing new market and its
customer. The company also needs to focus on the legislation and legal policy of country before
entering into it. As legal obligation may harm the company brand image. For example, the
Volkswagen has to take pricing decisions as per the Asian market income distribution. It must
not be more than the average income of a household that will not be effective and competitive

pricing decision. Managing expectation of people, stakeholders, society and government are go
hand in hand. If companies fails to meet with the expectation of the society, they do not likely to
survive in the market. One of the most desired need of society is of digitalisation and advantage
of technology, the automotive industry Is being flourished with technical advantage in many
ways through developing new car models, features, engines and batteries (Chow and
Schoenbaum, 2020). So that, the leaders of the Volkswagen has capability to manage their
stakeholder’s relations for undertaking great investment and their contribution in the
organisational success. Also, it is necessary to evaluate the difference between cross border
knowledge sharing activities which will have high impact on the formulation of key plans for
entering effectively in the market. It has also recommended to the company that, they must
ensure about the key development research tactic which tends to create include on the needs and
wants of the customers.
CONCLUSION
From the above essay, there is key role of business organisation in enhancing their business
in international market. A company must analyse the nations and their environment so that they
are able to expand their business in effective manner. The nature and scope of international
business is evaluated in this report. The key drivers that have impact on the international
business are mentioned. The strategies of entering the market are evaluated so that the company
is able to expand the operations. The challenges faced by company at the time of entering the
market are mentioned. The recommendations to overcome the challenges are mentioned in the
end of this report. By evaluating the strategies a company is able to expand the business
operations in proper manner.

REFERNCES:
Books and Journals:
Blagoeva, D.H., Jensen, P.D.Ø. and Merchant, H., 2020. Services in international business
studies: A replication and extension of Merchant and Gaur (2008). Management
International Review, 60(3), pp.427-457.
Bowie, N.E., 2019. International business as a possible civilizing force in a cosmopolitan world.
Journal of business ethics, 155(4), pp.941-950.
Buckley, P.J., Enderwick, P. and Cross, A.R. eds., 2018. International business. Oxford
University Press.
Casson, M. and Wadeson, N., 2018. The economic theory of international business: A supply
chain perspective. In The Multinational Enterprise. Edward Elgar Publishing.
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Chi, T and et.al., 2019. Real options theory in international business. Journal of International
Business Studies, 50(4), pp.525-553.
Chow, D.C. and Schoenbaum, T.J., 2020. International business transactions: problems, cases,
and materials. Wolters Kluwer.
Guercini, S. and Milanesi, M., 2020. Heuristics in international business: a systematic literature
review and directions for future research. Journal of International Management, 26(4),
p.100782.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hannibal, M. and Knight, G., 2018. Additive manufacturing and the global factory: Disruptive
technologies and the location of international business. International Business Review,
27(6), pp.1116-1127.
Hernandez-Pozas, O. and Carreon-Flores, H., 2019. Teaching international business using virtual
reality. Journal of Teaching in International Business, 30(2), pp.196-212.
Hooper, A. and Holtbrügge, D., 2020. Blockchain technology in international business: changing
the agenda for global governance. Review of International Business and Strategy.
McWilliam, S.E and et.al., 2020. Global value chain governance: Intersections with international
business. Journal of World Business, 55(4), p.101067.
Rialp, A and et.al., 2019. Twenty-five years (1992–2016) of the international business review: a
bibliometric overview. International Business Review, 28(6), p.101587.
Shenkar, O and et.al., 2020. National culture and international business: A path forward. Journal
of International Business Studies, pp.1-18.
van Tulder, R., Verbeke, A. and Piscitello, L. eds., 2018. International business in the
information and digital age. Emerald Group Publishing.
Zhao, H., Zhang, F. and Kwon, J., 2018. Corporate social responsibility research in international
business journals: An author co-citation analysis. International Business Review, 27(2),
pp.389-400.