The Strategy of International Business

  The Strategy of International Business.

Strategies for I.B..

Vision;

The vision of a business is the long-term goal or desired outcome that the company hopes to achieve. It is a statement that outlines the company's aspirations(goals) and defines the direction in which the business wants to move.

Example: Google: "To organize the world's information and make it universally accessible and useful."

Mission;

Mission are the steps to achieve vision.

Example: Hiring, Selecting, Production and Marketing etc.

Organize Operations;

Organizing operations refers to the process of designing and managing the structure, resources, and processes of a business in order to achieve its goals efficiently and effectively. Here are some steps that can be taken to organize operations:

Define objectives, Develop a structure,  Allocate resources, Establish processes,  Monitor performance,  Continuously improve.

Strategy;

A strategy is a plan of action designed to achieve a long-term or overall goal. In the context of business, a strategy is a comprehensive plan that outlines how an organization will achieve its objectives, compete in the marketplace, and create value for its stakeholders.

Different departments need different strategies for their operations.

Why we make strategies?

We make strategies for;

1.    Value Addition:

A strategy for value addition aims to increase the value of a product or service by improving its quality, features, or performance. Here are some steps that can be taken to develop a strategy for value addition:

2.    Firm performance:

A strategy for firm performance aims to improve the overall performance of a company by aligning its goals, resources, and activities with its mission and vision. We check the results of our strategies either positive or negative. If negative then we change the strategies.

 

Strategic Planning;

Strategic planning is a process that organizations use to set goals, allocate resources, and make decisions that help them achieve their long-term objectives.

 

Steps for Strategic Planning:

Define the mission and vision, conduct a situation analysis, set strategic objectives, Develop a strategy, allocate resources, implement the plan, evaluate and revise.

 

Why vision and mission are necessary for strategic planning?

Vision and mission statements are necessary for strategic planning because they provide a framework and direction for the organization's long-term goals and objectives.

Vision and mission provide the sense of purpose of organiztion, Vision and mission guide the decision making. A clear vision statement motivate the organization to achieve its long terms goals.

 

Making Sense of Strategy.

Making sense of strategy refers to the process of understanding, interpreting, and evaluating a particular strategy or set of strategies that an organization has developed to achieve its goals.

This involves analyzing the key components of the strategy, such as the organization's vision, mission, objectives, and tactics, as well as the external and internal factors that may impact the success of the strategy. Resources are the part of strategies. We should see our resources first then we should make the strategies. There should be different strategies if one don’t succeed then the 2^nd should be adopt, means that there should be multiple plans.

Role of resources, Capability and Competencies:

Resources; Resources play a crucial role in making strategy because they determine the organization's ability to implement its plans effectively. When formulating a strategy, an organization must take into account the resources available to it. Resources include financial resources, human resources, physical resources, and intangible assets.

Capability; Capabilities are an essential element in making strategy because they represent an organization's ability to execute its plans effectively. Capabilities refer to the combination of an organization's resources, processes, and skills that enable it to achieve its objectives. For example, a company with a highly skilled workforce and efficient processes may be able to offer high-quality products at a lower cost than its rivals.

Competencies; Competencies refer to an organization's ability to perform a specific task or function better than its competitors, and they are often linked to the organization's core business activities. An organization's competencies may include technical expertise, design capabilities, marketing skills, or customer service capabilities, among others. (If a company that has a strong reputation for innovation may focus its strategy on developing new products and services to maintain its competitive edge).

The Quest( search) to Create Value:

The quest to create value refers to the pursuit of activities that add value to an organization's products, services, and overall operations. Creating value is critical for the long-term success of any organization, as it enables the organization to meet the needs of its customers, differentiate itself from its competitors, and generate sustainable profits.

To create value, organizations need to focus on the following key areas:

Understanding customer needs, Developing innovative products and services, Optimizing operations, Developing and core competencies, Building strong relationships.

1.    The Strategy of Cost Leadership;

Cost leadership is a business strategy that aims to achieve a competitive advantage by offering products or services at the lowest cost possible while maintaining an acceptable level of quality. This strategy is particularly effective in markets where price is a significant factor in consumer decision-making, and it allows companies to attract price-sensitive customers.

Drawbacks/Risks of Cost Leadership strategy;

Disruptive technologies change efficiency standards, Customers may change their needs, The competitor may offer better and cheaper products that will definitely affect our sales negatively.

2.    The Strategy of Differentiation;

Differentiation is a strategy that involves creating a unique and distinctive product or service that is valued by customers and difficult for competitors to imitate. The goal of differentiation is to create a competitive advantage that allows a company to command higher prices, increase customer loyalty, and gain a larger market share.

Drawbacks/Risks;

If we introduce a different product as compare to our rivals then we have to face the High cost of that product. There is also risk of failure of that product. The competitor may introduce a higher performing alternative product.

3.    The Strategy of Integrated Cost;

It is a strategic approach that combines elements of both cost leadership and differentiation strategies. The goal of this strategy is to achieve a balance between offering products or services that are unique and valued by customers while keeping costs low enough to remain competitive.

Drawback/Risks of Integrated Cost Strategy;

Complexity in making such product, Difficulty in achieving balance, Customer Perception may change. Difficulty in sustaining the competitive advantage.

 

The Value Chain:

The value chain is a concept developed by Michael Porter that describes the sequence of activities that an organization undertakes to create value for its customers. The value chain includes both primary and support activities, which are:

 

Primary activities: These are the activities involved in creating, delivering, and supporting a product or service, including:

a. Product Design: Design the functions, features, colours, packing etc.

b. Inbound logistics: Receiving and storing raw materials or components for production.

c. Operations: Transforming raw materials or components into finished products or services.

d. Outbound logistics: Delivering finished products or services to customers.

e. Marketing and sales: Promoting and selling products or services to customers.

f. Service: Providing customer support and after-sales service.

 

Support activities: These are activities that enable primary activities to be performed efficiently and effectively, including:

a.    Procurement: Sourcing and purchasing materials, supplies, and equipment.

b. Technology development: Research and development, process and product design, and technology innovation.

c. Human resource management: Recruiting, hiring, training, and developing employees.

d. Infrastructure: Facilities, equipment, and other assets required to support the organization.

 

The value chain helps organizations identify the specific activities that contribute to the creation of value for customers and helps them optimize these activities to improve efficiency, reduce costs, and increase customer satisfaction.

 

 

Global Integration;

Global integration means that we standardized our product Effectively

 and Efficiently. Effectiveness refer to gaining the objectives through products selling and Effieciently refers to the use of minimum resources in manufacturing products.

Local Responsiveness;

Local responsiveness, refers to the ability of companies to adapt their products, marketing, and business practices to local market conditions. This involves tailoring products and services to meet local needs and preferences. Companies customized the products according to area wise people needs.

Why We Standardized the Products?

We standardized the products as it can help to improve the quality and safety of products.

Standardization can also help to reduce costs and improve efficiency by simplifying production processes and reducing the need for customization.

When we standardized the products then we can make the more number of units of products and the cost per unit may decrease.

Reaction of People about Standardization, Local Responsiveness and Mixture?

People's reactions to standardization, local responsiveness, and their mixture (glocalization) can vary depending on their cultural background and personal experiences.

International Level Strategies:

1.    International Strategy; In international strategy companies may choose a specific are where the product that company want to introduce is not available, if there is available then it is of low standard and of less effective and efficient.

Advantages; Access to new markets,  Increased profitability and Risk diversification are the key advantages of international strategy.

Disadvantages; Increased complexity of cultural differences, regulatory compliance, political instability, and currency fluctuations. Increased competition with local and global competitors, which can be challenging.

2.    Globalization Strategy:

In globalization strategy the MNCs manufacture the products of same quality and standard. For example, the luxary goods company Gucci sells essentially the same products in every country.

Advantages; Increase revenue, Diversification of operations and reducing of risk, Access to new resources, Improve brand recognition and reputation.

Disadvantages; Increased competition between local and international competitors, Cultural differences between countries can pose challenges for businesses, Political and legal risks, such as changes in trade policies, regulations, or economic conditions, can impact businesses operating in foreign markets.

3.    Localization Strategy;

In localization strategy the companies adapt their products, marketing, and business practices to local market conditions. This involves tailoring products and services to meet local needs and preferences. Companies customized the products according to area wise people needs. Change the price according to area wise spending pattren of people.

Advantages; Increased market share, Reduced risks, Improved brand recognition

Disadvantages; Increased costs by Adapting products or services to the local market can be expensive, as it requires additional research, development, and marketing costs, Lack of standardization, Cultural misunderstandings.

4.    Transnational strategy;

Transnational strategy is a global business strategy that combines elements of both the global and local responsiveness strategies.