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Strategies
Definition
After the decision to invest has been made, the exact mode of operation has to
be determined. The risks concerning operating in foreign markets is often
dependent on the level of control a firm has, coupled with the level of capital
expenditure outlayed. The principal modes of engagement are listed below:
Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing
indirect exporting would utilize a channel/intermediary, who in turn would disseminate the
product in the foreign market.
From a company's standpoint, exporting consists of the least risk. This is so since no capital
expenditure, or outlay of company finances on new non-current assets, has necessarily taken
place.
Thus, the likelihood of sunk costs, or general barriers to exit, is slim. Conversely, a company
may possess less control when exporting into a foreign market, due to not control the supply
of the good within the foreign market.
Joint Ventures
Most of the firms are eyeing at the global marketplace to improve their
competitiveness. Considerable controversy has arisen in recent years,
concerning the most appropriate strategy in international markets.
Deciding how to deal with the globalization of markets, poses tough issues
and choices for managers and their firms. They must consider both –
external environmental forces and internal organizational factors, before
they arrive at an international marketing strategy.
The growing integration of international markets as well as the growth of
competition on a worldwide scale implies adoption of a global perspective
in planning marketing strategy.
Strategic Implications of Globalization
The following four factors affect a company's ability to formulate and implement
global strategy:
Organization structure comprises the reporting relationships in a business -
the 'boxes and lines.
Management process comprises the activities such as planning and budgeting
that make the business run.
People comprise the human resources of the worldwide business and include
both managers and all other employees.
Culture comprises the values and unwritten rules that guide behavior in a
corporation.
Besides these, to become globally competitive, the company needs to focus on the following:
Developing a marketing plan with universal appeal.
Help employees understand the company's global vision.
Benchmark off mistakes that other have made in the past.
Select the right partners for joint ventures overseas.