An international business strategy refers to planning and focusing on exporting products and services to foreign markets. It also acts as a guide for commercial transactions that take place between entities in different countries. Commonly, a strategic course for international business refers to the plans and actions of private companies rather than governments. The end goal is of undoubted course, increased profits.
Why is there a need for a strategic course for international business?
Due to day-by-day increasing globalisation, even smaller companies felt the need to cross national borders and conduct their business abroad. As a result, these companies were given the title of multinational companies (MNC’s), global businesses, trans-national companies, etc. which also gave rise for the need to understand the nuances of doing business on an international scale.
Let’s move on to the types of international strategies.
There are mainly 3 types of international strategies:
Strategy # 1: Multidomestic Strategy
A Multi domestic Strategy is a marketing tactic used by MNCs where each branch establishes its own marketing strategy based on the distinguished needs of each country. The strategy is commonly based on the cultural and traditional needs of that nation and its preferences. It is quite different from a centralized global marketing strategy where the content is based on a wider prospect and broader elements are targeted instead of specific needs pertaining to specific geographical locations.
A firm using a multi-domestic strategy emphasizes on the responsiveness to local requirements within each of its markets and as a result of which it ends up losing control over the efficiency of the whole operation.
Strategy # 2: Global Strategy
A Global Strategy is referred to as a strategic guide to globalization. Unlike a multi-domestic strategy, a global strategy is appropriate where firms are faced with cost-reduction pressures. These strategies are not focused on local responsiveness. Therefore, it allows industries to sell a standardized product worldwide.
Fixed costs like capital equipment and such are substantial. Nevertheless, these companies are able to take advantage of the costs that occur due to expansions. It affects their learning curve because they have a standardized product that can be exported all over the world.
A firm using a global strategy emphasizes on efficiency as a result of which it ends up sacrificing responsiveness to local requirements, making it the complete opposite of a multi-domestic strategy.
Strategy # 3: Transnational Strategy
A Transnational Strategy comprises of a series of actions defined by a company to conduct operations in markets abroad. The term “Transnational” generally applies to the methods and structures that allow a firm or company to initiate and maintain functions in foreign countries.
A firm using a transnational strategy preserves central coordination at one specific location. Also, it tries to seek a middle ground between a multi-domestic strategy and a global strategy. That means they try to maintain a balance between the desire for efficiency and the need to adjust to local preferences within different countries.
To pick the best fit of a strategic course for international business that suits your business, it is advised to take a short online course for international business. This will help you understand the nature of your business and the type of marketing strategy that will be effective specific to your particular domain type of business.