International Business Strategies
Strategy; this is the plan of action laid down in order to achieve certain goals.
Strategy is concerned with how different activities are linked. There are different strategies in the market that are used to compete globally (Henderson 34). They include;1. Multi-domestic strategy;In this strategy products for each market are customized, there is local decision making that is, there is decentralized control and it is very effective when a large difference exists between countries (Chaffee 13).It is advantageous in that there is product differentiation, minimized political risk, minimal exchange risk and local responsiveness.2.
Global strategy;Products are similar in all the countries, there is centralized that is, there is little decision making on the local level, it is more effective when differences between countries are small. Its advantage is that it has coordinated activities, faster product development.3. Global cost structure analysis;In 1986, Whirlpool Corporation was taking into consideration expanding into Europe by acquiring Philips’ Major Domestic Appliance Division. From the framework of customers, costs, competitors, and government, there were several pros and cons to this proposed strategy.Philips is an example of a company that followed the multi domestic strategy.
This resulted to innovation of local R, spirit of entrepreneurship, products that were tailored to individual countries and of quality because of backward integration.Philips was also faced with a number of challenges in that there was duplication across countries due to tailored products, the innovation of R resulted to products that ere R driven instead of being market driven and the decentralized control meant that national buy in was required before introducing a product hence time to market was slow.Matsushita followed the global strategy (Henderson 54). It resulted in financial control, more applied R, company wide mission statement that was followed closely, strong global distribution network and ability to get market quickly and force standards since individual country buy in was not necessary (Chaffee 33).The company faced a number of challenges which were loss of non Asian employees because of glass ceilings, too much dependency on one product and the problem of strong yen.
Business ethics are also corporate ethics is a form of professional ethics that examines ethical principle that examine principles that arise in a business environment. It applies all aspects of conduct in a business (Chaffee 43). The conduct of the workers and that of the whole organization is also included in the ethics. There are several ethical issues in business which include;Philosophy of business; It aims at determining the fundamental purposes of a company.CSR or corporate social responsibility; in this the ethical rights and duties between the company and society are debated.Fiduciary responsibility; Looks at the issues between a shareholders and the business.
Ethics also look at the leadership of a company.Another ethical issue is the political contribution of the corporation.Another ethical issue is corporate manslaughter and misuse of corporate ethics policies as marketing policies.Other issues include;The hunt for common values as a basis for international commercial behaviorComparison of business ethical traditions in different countries, also on the basis of their respective GDPComparison of business ethical traditions from diverse religious perspectivesEthical issues arising out of international business transactions include: Issues such as globalization and cultural imperialismVarying global standards – e.g.
the use of child laborThe way in which multinationals take advantage of international differences, such as outsourcing production (e.g. clothes) and services (e.g. call centers) to low-wage countries(Chaffee 63).
.The acceptability of international commerce with recluse statesThere has been noted that some corporations experience unethical behavior due to a number of reasons which include;Racism; some corporation management may opt to employ a person who is not well qualified because he/she maybe of their race and leave out a more qualified who is not of their race.Gender; mostly women do not ascend to the top positions in most organizations since they are considered inferior and they are also mistreated and harassed by their male colleagues.Corruption; it is a major cause of unethical behavior in corporations. Once an employee becomes corrupt he/she ceases to be ethical.
Employee raiding; this is taking away employees from a competitor company to take advantage of their knowledge.Employing very skilled people in a certain field even when they are not needed to avoid other corporations from employing them is unethical.The porter’s diamond of national advantage is a framework that illustrates the determinants of national advantage. The framework is diamond shaped and represents the national playing field that countries establish for their industries (Chaffee 83). The points of the diamond are as follows:Factor Conditions Demand Conditions Related and Supporting IndustriesFirm Strategy, Structure, and RivalryInstruments of trade policyThis is custom duty levied on imports and exports.
That which is levied on imports serves as revenue and protection. Tax on exports provides revenue, conserves domestic resources and stimulates the growth of domestic industries. If violation of custom rules of the importing country occurs then penalty duties are levied.These are government payments to a domestic producer. They help the manufacturers set prices that are not completely dependent on the cost of production.
Quantitative controlsThese take the form of import quotas, export quotas and voluntary quotas. Import quotas are used to protect domestic markets from foreign competition. Export quotas limit the raw materials and manufactured goods leaving a country. Voluntary quotas respond to pressure exerted by domestic producers or organized labor.Boycotts and embargoesA boycott is an official act to discourage relations with a firm, country or a person. An embargo is an official act to prohibit the import of a product.
Exchange controlsThey are commonly used during war. They limit the import of those commodities which do not fit government plans.Foreign direct investmentFDI is the long term participation in management, joint-venture, transfer of technology and expertise by a country (Chaffee 93). FDI benefits the host country in the following ways:FDI benefits the home country in the following ways:Fixed and Floating Exchange RatesAn exchange rate is the price which one country’s currency trades for on another on the foreign exchange market.Floating exchange rate is a market driven price for currency and it is entirely determined by the free market forces of demand and supply of currencies with no government intervention.Fixed exchange rate; here the government is not willing to let the currency float freely and a level at which the exchange rate will stay is stated.
Some countries ought for the floating rates since there is automatic correction of the exchange rate as the country let it float freely. There is also insulation from external economic events as the country currency is not tied to a possibly high world inflation a rate is under fixed rate(Henderson 154). Governments are also free to choose their domestic policy as it allows for automatic correction of any balance of payment disequilibrium that might arise from the implementation of domestic policy.Other countries opt for the fixed rates because despite its rigidity there is certainty of the exchange rated as it is fixed. International trade and investment is less risky. It is also advantageous in that there is little speculation on a fixed exchange rate.
Liberalizing the EU energy marketThis market covers coal, oil, nuclear energy, electricity and gas. The benefits of this liberalization include;Creation of a single market, providing the most effective and safest most competitive energy market, all companies will enjoy equal access of the market as all restrictions will be removed, there will be transparency of prices, and there will also be a security of supply (Boot 101).