Role of Strategy in International Business

Since early 1990s, the international markets have become highly liberalized and competitive. Each of independent firm and MNC are trying to grab the world market opportunities create by liberalized trade and investment related rules and business friendly environments. A firt can increase its profitability, and competitiveness only when it reduces the cost of the valu creation (lower the cost) and/or when it differentiates the product or service in such a mann the consumers value that more than the product offered by competitors. 

The resources (money, time and talent) are limited and there are many alternative ways an options to use these resources. These options or ways are the “strategies” that give answers t questions “Which” and how?” For example 

i. Which basic strategy to follow (cost reduction/standardization or differentiation/loca responsiveness - adaptation)? 

ii.Which technology to invest (intermediate or most modern)? 

iii.Which product or service to produce or develop? 

iv. Expand market or not, 

v. Which market to enter? 

vi. Which market entry mode to adopt? vii. vii.Which approach to follow (ethnocentric, polycentric or geocentric)? 

A company manager is always in dilemmas and forced to choose the way of doing things for reducing costs or adding or retaining or creating values from various options. He or she has to make important decisions or judgments based on the well thought out plans as well as lessons learned in the past. These crucial judgments determine the profitability and competitive positioning. In international business determination of international strategies play a crucial role and the first step in determining the international strategies is to formulate strategic plan  that helps to make pragmatic decisions. 

Related Posts

Post a Comment