Why Implementing an International Business Strategy Is Not as Straightforward as a Domestic one

Why Implementing an International Business Strategy Is Not as Straightforward as a Domestic one

The unprecedented technological advancements particularly in the area of Information

Communication Technology (ICT) and other areas have significantly impacted business.

Consequently, established modern business enterprises have been striving to expand their

operations into new global markets. Business organizations from western economies and the

rapidly growing Asian economies are consistently seeking to gain a market niche in the global

markets so as to improve their profitability and sustain their competitiveness in this era

accelerated globalization.

According to Ireland, Hoskisson, and Hitt (2008), business organizations pursue

international expansion strategies in order to maximize utilization of their existing resources and

access new resources, build new markets, strengthen control of their competences and learn.

Second, organizations seek global expansion in order to benefit from economies of scale. Third,

organizations shift and expand their operations into new global markets in order to access

important resources such as raw materials, expertise or cheap labor. For instance, the change

towards liberal market principles embraced by the Chinese government from around 1978 have

attracted an unprecedented inflow of foreign direst investors intending to reach Chinese cheap

labor and skilled labor. Finally, as firms become well established within their domestic markets,

they seek to pursue international markets with a view improve their overall financial

performance, enhance their competitiveness and enhance development of their core

competencies (Ireland, Hoskisson & Hitt, 2008; Ajami & Goddard, 2006).

Attainment of the above enumerated desirable objectives at the international level

requires not only a clear international strategy but also a high level of knowledge, skills, attitudes

and orientation. While implementation of a domestic strategy business involves political and

socio-economic terrain that is well known to the management of an organization, shifting a

firm’s operations into international level entails far much higher risks of encountering unforeseen

circumstances and unfavorable conditions, which hamper successful business. Therefore,

implementing an international business strategy is not as straightforward as implementing a

domestic business strategy.


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