Discuss three international corporate-level strategies.
The use of international business strategies gives companies opportunities to expand beyond the scope of their original country, attracting customers and potential business partners all over the world. There are different strategies that businesses use to enter into the international market. The use of exporting provides the ease of manufacturing in the native country and shipping products to international customers. Exporting cannot be done without an agreement between the host country and the customer’s country. A benefit of exporting is that a business does not have to establish a physical facility in the international market, yet it can still reach out to many customers. A disadvantage is the expensive costs of shipping internationally. Hitt (2017) states, “Potentially high transportation costs to export products to international markets and the expense of tariffs placed on the firm’s products as a result of host countries’ policies are examples of exporting costs,” (p. 253).
Licensing is a different strategy in which a foreign company buy the right to establish a firm and sell products in a different country. The licensing company earns a portion of returns through a royalty. A huge benefit of international licensing is the ability for a firm to attract companies in the homeland as well as in the foreign country. This is a business’s chance to gain a large customer base and build on diversification.
A strategic alliance is the collaboration between two different companies, potentially in two different countries, can enter more than one international market. The most effective use of a strategic alliance will be to build upon each individual company’s core competencies, whether that is social relationships or technological advances. Alliances depend strongly upon trust between the companies, because they earn gains together and they take losses together.
Prompt: Discuss three international corporate-level strategies. Several of these strategies include exporting, licensing, strategic alliances, acquisitions, and wholly owned subsidiary.