Answer the following 2 questions;

Minimum 250 word response for each question. 2 references for each.

Question 1:

International strategies are constructed on two distinct concept: the comparative advantages of countries and the competitive advantages of companies. Provide a discussion on the connection of these two concepts and their impact on an organization creating an international or global strategy.

Question 2:
What do you think are the future challenges of domestic companies that want to grow via international expansion? (Consider demographic, political, cultural, etc shifts in your answer.)

Answers

Question one

International firms operating internationally have to incorporate international strategies that will enable them to run well and effectively in the competitive market that they are all focused on satisfying. Global strategies are business plans or strategy created by companies to help businesses in the international markets. For an effective business strategy to be settled, it requires analyzing international markets, studying resources, defining goals, understanding market dynamics and development offerings. The leading international strategies available include the multidomestic, global and transnational. There are so many international companies, and that’s why it calls for proper adaptation and implementation of the different international strategies. The international strategy is constructed on two fundamental concepts: the comparative advantages of countries and the competitive strategy of companies.

Competitive advantage refers to an aspect a company has that provides them with benefit competitors in the same industry don’t possess in production than those of the rivals. On the other hand, comparative advantage is the ability of a state’s economy to produce a particular good or service at a lower opportunity cost than its trading partners (Cavusgil et al., 2009). The distinction between the two concepts above is that comparative advantage seeks to explain trade patterns and gains. In contrast, competitive advantage helps define the firms or nations that will be winners in a global competition involving several countries and industries and how they position themselves for the win. Any organization set to create either an international/ global strategy with the implementation of the two concepts above will produce cheap products and services and focus on the products that they are best at. This is advantageous to them because they will be able to bit on their rivals and other countries in the global market (Ewing & Meissner, 1964).

Question two

A domestic company is a company that conducts its affairs and business in the home country that it is first formed to operate. In the past series of centuries, it has been challenging for investors in the domestic countries to start and run their businesses effectively due to several challenges that they face both internally and externally, for a company to domestically start and run well till it develops to be a significant and known company called for proper management and aid of the state’s government. A well-managed and developed company can, in some ways, try its luck in the international markets. Its vividly clear that in the global markets, domestic companies must be prepared to face the challenges that are mostly harsher than the local/ domestic ones they are aware of (Grunig & Morschett, 2011). For a domestic company to make their first steps into international trading, they must consider several variables such as the sort of company it is, customers, expansion plan, time and investment cost, and the countries to settle for.

The challenges that have a high probability of being faced may include; language and social, cultural barriers, local competition, tax codes and compliance issues, supply chain risks and operational risks with hiring staff, political, economic, technological, legal, and demographic factors, among others. In the larger context, we will focus on the external factors such as the demographic, which is the study of population characteristics based on age, gender, race, ethnicity, educational levels, income levels etc. (Prohl, 1997). Political factors to be considered include tax rates, policies and actions of a country, foreign trade regulations etc. On the socio-cultural aspects, elements of importance include culture, language, religion, attitude, beliefs, and customer preferences.

References

Cavusgil, T., Sinkovics, R. R., & Ghauri, P. N. (2009). New challenges to international marketing. Emerald Group Publishing.

Ewing, J. S., & Meissner, F. (1964). International business management: Readings and cases.

Grünig, R., & Morschett, D. (2011). Developing international strategies: Going and being international for medium-sized companies. Springer Science & Business Media.

Pröhl, M. (1997). International strategies and techniques for future local government: Practical aspects of innovation and reform. Brookings Inst Press.