Strategies for International Markets
The development of foreign markets opens opportunities to increase revenues, profits, and long-term growth. This option is especially attractive in cases when the country’s domestic market is already saturated. In the context of international competition in different industries, each enterprise should form its global strategies for a more efficient production process concerning its competitors. There is no universal competitive strategy; only a plan that is consistent with the conditions of a particular industry, the skills, and capital that a specific firm possesses, can bring success. Thus, companies’ executives need to understand how their firm creates and maintains a competitive advantage. This report will discuss an article written by Quackenbos et al. (2016) in Harvard Business Review that analyzes how companies go global and how the data in the article is reflected in practical application.
The article “Does your company have what it takes to go global?” (2016) discusses the essence of factors that determine the company’s growth potential and perspectives when entering new international markets. Reporters point out that there is a necessity to evaluate internal variables rather than external when it comes to whether the company is strong enough to transfer its operations to new markets and compete with other companies (Quackenbos et al., 2016). Favorable new market conditions that executives tend to rely on do not guarantee the success of the transition. Many entry initiatives fail even when companies are big and successful in local markers because they lose in competitive values. Analysts presented a diagnostic tool for managers to assess the company’s potential to be competitive globally based on internal factors that include “prioritization of expansion, knowledge, and skills, ability to align opportunities with capabilities, ability to adapt, legal and ethical practices, tolerance for uncertainty, and commitment to global initiatives” (Quackenbos et al., 2016, para. 26). It was concluded that 77% of companies’ managers who transferred to global markets successfully answered that their company surpasses average levels across all seven principles (Quackenbos et al., 2016). Thus, the company’s assessment of major internal factors that influence the transition to overseas markets is crucial for companies to overcome competition barriers and be presented globally.
The class content included comprehensive information on how companies manage their operations, create strategies to go abroad, and evaluate their capabilities, skills, and resources against competitors. The report presents specific information on the internal factors that decision-makers usually overlook and substitute them with external variables that do not define the success of the international strategy. The frameworks that are discussed in class can be complemented with a diagnostic tool that reporters propose to get an overview of various factors that should be considered when deciding which strategy will help the company to succeed globally. The tool can also be applied to a local company’s expansion and other managerial choices since it summarizes internal factors that influence the company’s ability to be competitive and grow.
Some researchers might disagree with the article because they have provided different tools or recommendations on how to evaluate a company’s potential to enter new markets. For instance, researchers propose an evaluation of market entry based on the development of several strategies and scenarios and the assessment of them against the company’s capacities and highlight the significance of managing uncertainty while entering new markets (Oliver & Parrett, 2018). Other researchers might disagree with the article because they tend to advocate the necessity to focus on developing proper strategy and including a comprehensive analysis of international market entry mode and dynamics (Hitt et al., 2016). Nevertheless, recommendations and the tool created by the authors of the article might be combined with various frameworks that discuss international expansion.
Researchers have tested the diagnostic tool that they created on managers who were in charge of the international expansion of companies and found a correlation between seven principles aimed to assess internal capabilities and expansion’ success. Therefore, the information in the article and the tool can be utilized in a company to determine whether the organization will be able to move its operations globally and not fall apart. The data provided in the article was evaluated by relevant surveys among executives and can be complementary to other frameworks used to develop an international growth strategy, such as a capability-based strategy framework (Management Association, 2018).
From my perspective, the authors of the article presented valuable recommendations on the evaluation of various dimensions that should be included in the analysis of the company’s potential and capacity to enter international markets and ensure that the entrance is sufficient. Simultaneously, the data provided by executives and a survey that was conducted might be studied further to get a broader sample to prove that all seven principles are relevant for the utilization of competitive advantages and international growth estimation.
To conclude, one can say that if firms pursue international growth, they need to find valuable capabilities, resources, and skills to compete with other localized companies. The article pointed out that executives should assess internal factors and maintain a competitive advantage before starting to operate globally. At the same time, the capabilities of firms are not limited to the borders of their home country. Thus, special attention should be paid to the role of global strategies since these strategies might boost the company’s position, revenues, and expansion.
Hitt, M., Li, D., & Xu, K. (2016). International strategy: From local to global and beyond. Journal of World Business, 51(1), 58-73. Web.
Management Association. (2018). Global business expansion: Concepts, methodologies, tools, and applications. IGI Global.
Oliver, J., & Parrett, E. (2018). Managing future uncertainty: Re-evaluating the role of scenario planning. Business Horizons, 61(2), 339-352. Web.
Quackenbos, D., Ettenson, R., Roth, M. R., & Auh, S. (2016). Does your company have what it takes to go global? Harvard Business Review. Web.