A proper international business strategy will lead a company to successful penetration and development in the global market. Nowadays, many businesses aim to expand their operations globally to access more potential customers in international markets, in addition to their domestic market growth. However, entering a new market comes with challenges, and businesses cannot apply everything that worked in the domestic market to ensure similar success.
Therefore, the concept of international business strategy has emerged, with four typical forms widely applied by businesses worldwide.
1. What is an International Business Strategy?
An international business strategy involves implementing business strategies in foreign markets by cleverly shifting valuable skills and products from the current business model to align with the international customer base.
While most operational and production activities remain largely unchanged from the domestic market, the approach to market entry, product promotion, and market penetration strategies will differ due to variations in the needs and interests of the international customer groups.
Like any business strategy, an international business strategy allows a company to:
- Clearly identify the advantages and disadvantages it will face when initiating operations.
- Maximize resources to exploit business opportunities effectively.
- Minimize threats and risks in business operations.
- Leverage competitive advantages for efficient operations compared to other competitors in the international market.
2. Four Typical Models of International Business Strategy
To approach and implement international business models, most companies will use four typical strategies that you can consider and apply according to your business situation:
2.1. International Strategy
If your business plans reveal a shortage of supply in an international market, or at least a deficiency in manufacturing skills and product values, this might be an opportunity to implement an international strategy in that market.
The international strategy creates business value by transferring valuable skills and products to international markets, where customers might be unfamiliar with your products or where the market offers the best possible solutions for this customer group.
This strategy is significant when local businesses are not yet strong, or local factors such as cost-cutting and local policies do not significantly impact your business.
2.2. Multinational Strategy
This strategy involves having the same products and production lines, but the application, types of products, and marketing strategies are adapted to suit the customer file in each country.
This means that a separate strategy is applied for each country depending on the needs and desires of that market. This strategy is effective if there is a high demand in that market and your business does not face cost-cutting issues.
2.3. Global Strategy
Another commonly used international business strategy is the global strategy. With this strategy, companies focus on increasing profits by optimizing production costs to achieve massive cumulative profits.
Most companies applying a global strategy will bring standardized products to all markets. This way, their product costs will be significantly reduced by producing a large, regular quantity of goods.
A global strategy is often applied in companies facing high pressure to cut costs and in markets where customer requirements for products are not too strict.
2.4. Transnational Strategy
Unlike other international business strategies, the transnational strategy requires significant differences. It is often applied in markets with high competition.
Companies must exploit all key strengths to create their unique competitive advantage and then create pressure with local companies operating in the same field.
Most companies use this strategy when facing significant pressure to cut costs and strict market demands, or when facing intense competition in the industry.
3. Conclusion
An international business strategy is a crucial factor to consider when deciding to take your business further in foreign markets. Each strategy has its own pros and cons. It is essential to thoroughly understand your business to use the most suitable strategy, along with consistent business plans to ensure stable company operations in any market.
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