As globalisation touches economies around the world, more companies now are connecting with the global market. Expansion into the foreign financial market has become easier, thanks to improved communication, enhanced capital mobility and slashed tariffs. However, international business expansion involves many factors like dealing with foreign stakeholders, facing stiff competition, foreign employees and labour laws as well as government jurisdiction. Thus, successful business managers embrace a well-planned business strategy that caters to their needs as well as abilities.
Four Most popular global business strategies:
An international strategy refers to exporting or importing goods and services to and fro from foreign markets. You can either export to a particular foreign country or import their goods to your domestic country. This is the most basic import-export strategy that businesses have been following for decades. Companies that focus on international strategy are based on their domestic country from where they manage their overseas functions.
Professionals who have gained knowledge and experience in strategic business management can very well adapt to this strategy. Usually followed by small local businesses who are seeking to export resources to foreign markets, the strategy has its own challenges too such as setting up sales offices abroad, managing global logistics and ensuring compliance with foreign trade regulations. Still, this strategy has minimum overheads and is quite popular among businesses seeking business expansion beyond geographical boundaries. India has been exporting its textile products and importing fuels – this is a classic example of the international strategy.
Companies that are seeking to boost their revenue and upscaling their international reach follow the global strategy wherein they aim to expand the customer base and sell in more foreign markets. In an attempt to reduce costs, products or services are homogenised, and the horizon of international outreach is broadened by establishing operations worldwide. They might have to make small-scale changes in their original product according to regional needs in other countries. So, while the core items and the global message stays intact, there may be essential changes in language or food items in a foreign menu. Operating from a domestic office, the company might address a broad international audience from multiple foreign set-up establishments too. The companies with global strategy are highly centralized and subsidiaries follow only the parent company’s footsteps. That’s why it is also known as a hub and spoke model of business. A fine example of a global business strategy would be the pharmaceutical companies.
While international and global strategies may sound similar, there is a very significant difference. Companies adopting international strategy keep their domestic policy intact and try to adapt it to the international markets. In the global strategy, the companies treat each foreign market differently and try to adopt the domestic culture.
Businesses that adopt the multidomestic global business strategy invest in establishing their own presence in a foreign market. So, instead of marketing foreign products to those customers, companies alter and then offer to engage with a foreign culture, customs and daily requirements. This is a common strategy adopted by food and beverage companies. While the headquarters are in the original country, many subsidiary offices are set up in foreign lands which are well equipped to deal with region-specific requirements. There is little pressure for integrating worldwide operations as subsidiaries operate as autonomous bodies from the headquarters.
Take, for instance, McDonald’s, Nestle and Pizza Hut. Their offerings are customized to each country’s taste preferences.
One of the most challenging strategies, the transnational global strategy can actually be seen as a mix of global and multidomestic strategies. The headquarters remain in the country of origin, but the strategy allows the establishment of similar full-scale operations in foreign countries too. An effective leader who is well trained and experienced in strategic business management can lead the company through a strong transnational strategy. Individual facilities in various markets are equipped with decision making, sales and manufacturing functions with the aim that they can respond well to local consumer needs. The biggest challenge that is faced by companies following their strategy is the identification of the best management policy that can boost the economy of scale positively. A significant investment is also required in order to establish multiple entities. Besides, overcoming foreign legal matters, recruiting foreign nationals, office establishment are all under the cost reduction umbrella that management needs to address.
Unilever is one of the best known transnational companies as it strives to achieve global efficiency while trying to adopt local responsiveness.
The challenges of business globalization can be well handled by persons who have a deep understanding of the core business and are efficient in selecting the right strategy for the right business. Globalization trends tend to impact businesses in every part of the world. Gaining opportunity with expansion and following the correct strategy with efficient management and analytical skills works wonders. If you want to develop a global perspective, you can consider gaining insights from business strategy courses. You would be learning in-depth about each kind of global strategy.
It comes without saying that any strategy when implemented needs to be managed from end-to-end. Thus, By enrolling in a business management course, both freshers and working professionals aim to develop a basic understanding of various business functions and learn how to apply themselves in a business environment.
Now that you have taken your business global, what comes next?
We all know for a fact that change is the only constant, going global was only step 1. The business now needs to grow like never before. How do you do that? For starters, use strategic management for the growth of your business.
For the better part of almost a decade, the strategy has been a buzzword among top-shelf executives. Strategic management is considered a philosophical approach to business since managers layout strategies for everything, starting from raw material sourcing to R&D. However, to be a success at strategic management, the top executives have to think strategically first, then apply that thought to a process. The process is best implemented when everyone within the organization understands the strategy clearly. For that, first, let’s try to understand the scope of strategic management.
Scope of Strategic Management:
Strategic management is a process of formulating, implementing, and evaluating, cross-functional decisions that facilitate an organization to accomplish its objectives. The major purpose of strategic management involves using and creating new opportunities for the future of the organization. The whole nature of strategic management is to offer a strategic direction that is backed-up and supported by the team and the stakeholders. A clear business strategy and vision for the future and a structure to uphold the governance forms the logical framework of strategic management.
Now that’s clear, let’s move on to understand how to use the strategic management process for the growth of the business?
Step 1: Clarify your Vision
The purpose of setting a goal for your organization is to clarify the vision. In order to clarify the vision, you need to answer the question “where do you want to be”?. This consists of identifying and defining both short term and long term objectives of your organization along with laying down the roadmap of how to accomplish your objective.
After you have done that, you might need to customize the process for your staff, assign resources to specific tasks and lay down timelines for the completion of the task that matches the mission statement of both your organization and stakeholders.
Step 2: Gather and Analyze Information
Analysis is the key to unlocking the door to your vision. The focus of analysis should be on gathering as much relevant information and data you can to help you understand the needs of the business, its strategic direction and initiatives that will help your business grow. Also take into account any internal or external issues that might affect your goals and objectives and layout solutions for these issues, if they may arise along the path.
Step 3: Formulate a Strategy
In order to formulate a successful strategy, first, you need to review the information gathered post completing the analysis. Then determine what resources are available at the company’s disposal and whether these resources can help you reach the defined goals and objectives.
Step 4: Implement Your Strategy
Successful implementation of the strategy is very critical to the success of the business. Everyone within the organization should be made clear of their roles and responsibilities along with due deadlines for each task that will lay down a timeline for your project. Once the funding and resources are in place, and the employees are ready to go, execute the plan.
Step 5: Evaluate and Control
Constantly review the performance of your employees keeping in preview the internal and external issues and taking corrective measures when necessary. Any successful plan takes into account the dynamic business environment. If you determine your strategy that is not moving towards the goal of the company, change it and take corrective actions.
The scope of strategic management is both an art and science that helps facilitate the goals and objectives of an organization. To become a successful strategist, you will need the guidance of a strategic management course online. Scout the internet. Google will give you thousands and thousands of interesting options. Choose a credible strategic management course online that fits well within your budget. These courses help you gain the expertise and knowledge you need to become an outstanding strategic manager with an out of the box thinking attitude.