Globalization has spread its roots across continents and countries. As technology drives the world closer through enhanced communications, cheaper travel and increased capital mobility; globalization continues to impact economies all over the world. In order to continue their sustenance and expand to newer markets, companies need to explore global markets.
Successful expansion in a global territory requires that the company adapts to the international business strategy custom made for their company. An international business strategy tells a company how to deal with expansion into foreign markets. It deals with relations with international stakeholders like employees, customers, partners, governments etc. Organizations are hiring professionals who have an international business certification or an international business strategy certificate to take on global responsibilities.
A global business manager needs to work on various elements such as the adaptation of brand messages according to the culture of the country where the company is expanding. The company needs to understand the political and social scenario through a proper analysis of the environment of the country. The company should assess the competitive scenario of the relevant industry in the new geography.
The distribution models and supply chain management prevalent in the country will help the company understand the adaptation that they will have to make. They need to figure out their production plan and the products they want to launch according to market dynamics. An international business strategy helps the company in all the above-mentioned aspects. It also prepares the international business manager to face the challenges that come with it.
Also Read: Steps to Build a Robust Business Management Strategy
International business strategy can be of four types – international, multi-domestic, global and transnational strategy. Using an international type of business strategy means that the company will focus on exporting products and services to foreign markets or importing goods and services from other countries. In a multidomestic business strategy, the company must invest in establishing its presence in a foreign market and customize its products to suit local preferences.
The third type of international business strategy is the global one. In this case, the company leverages economies of scale by creating operations and production units in different parts of the world to cut costs. The transnational type of international business strategy helps an organization function in different parts of the world by giving the decision-making responsibilities to the local units.
All types of international business strategy provide clarity on how to handle business across borders in a functional and efficient manner.
When a business is set-up, the first thing that is worked upon is the strategy and the organizational structure that will drive it. There are many ways to define the strategy, but the best way is one that ties up with the vision you have for your business and the one that is most optimal in terms of resource utilization. Strategic management courses in India cover this key aspect of businesses. One of the most prevalent strategies that is used is the functional one.
Some key elements about a functional strategy are shared below for better understanding –
- It is designed to meet the requirements of the functions –
While the overall approach is aligned and flows into the organizational strategy at the broad level, the functional strategy is designed to meet the goals of the functions that are present within an organization. This works well for organizations which are structured in this manner and also have a lot of decision making being done based on the function.
- The goals are reflective of the function’s responsibilities –
The business goals stem from the functional area’s responsibilities and link its purpose to the objectives. This helps to ensure that the resources aligned to that functional area are the right fitment and also able to use their skills and expertise to achieve these goals. Each function has a crucial role to play in business performance. Such a strategy ensures that the role is not only clearly defined, but also tracked and monitored to ensure that it performs.
- A thorough analysis of the function’s strengths and gap areas is needed –
A detailed analysis of the function’s strengths and gap areas will be the cornerstones of this strategy. It will make sure that one has all the great portions that can be leveraged and the developmental ones can be worked upon. It might result sometimes in functions operating in silos or based on their own goals. While it might work well at times,
- Functional strategy means specialists will be present –
The strategy is aimed at creating specialists within the firm and not generalists. That means that each function has its own experts and even sub-domain experts who specialize in their roles. The focus on technical know-how or functional knowledge is high for such a strategy. A big challenge that it might present at times is the issue of cross functional job rotation.
This is the overall approach that a functional strategy in business has. It has its own pros and cons, and depending on size of operations companies might choose to use this or another form of strategy.
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