MODULE 6: STRATEGY AND STRUCTURE OF INTERNATIONAL BUSINESS

• It is a comprehensive plan or approach that a business or organization develops to expand its operations and achieve its objectives beyond its domestic market or country of origin.

  International Strategy
• FOUR COMMON INTERNATIONAL STRATEGIES

  • Global Standardization Strategy
  • Multidomestic Strategy
  • Transnational Strategy
  • Localization Strategy
• It is an approach adopted by a company to expand its operations and market presence on a global scale.

  Global Standardization Strategy
• ADVANTAGES OF GLOBAL STANDARDIZATION STRATEGY

  • Uniform Brand Image
  • Economies of Scale
  • Transferrable Experience
  • Easier Control and Coordination
• It means marketing the same products with the same packaging and services using the same marketing campaigns everywhere the company does business.

  Uniform Brand Image
• The company essentially treats all of its markets as if they are a single market.

  Economies of Scale
• A standardization strategy means that all of a company’s marketing teams are working with the same campaigns and strategies to address the same business goals.

  Transferrable Experience
• It reduces organizational complexity and enables easier monitoring and control.

  Easier Control and Coordination
• This aims to increase the company’s responsiveness to local market conditions and gain a competitive advantage by tailoring products or services to local preferences.

  Multidomestic Strategy
• Sometimes, businesses may try to find a balance between the need to reduce the costs and the need to meet the local preferences.

  Transnational Strategy
• This means adjusting products and services to suit each market's unique preferences.

  Localization Strategy
• FORMS OF BUSINESS OWNERSHIP

  • Sole Proprietorship
  • Partnership
  • Corporation
• A business owned by one person. The

  business is owned by one individual, who has complete control and decision-making authority.

  Sole Proprietorship
• It is a type of business structure in which two or more individuals or entities join together to manage and operate a business.

  Partnership
• A business that operates as a legal entity separate from any of the owner.

  Corporation
• They are the owners of a corporation

  Stockholders or Shareholders
• ADVANTAGES OF SOLE PROPRIETORSHIP

  • Simplicity
  • Complete Control
  • Tax Benefits
  • Direct Ownership
  • Low Start-up Costs
  • Privacy
• DISADVANTAGES OF SOLE PROPRIETORSHIP

  • Unlimited Liability
  • Limited Capital
  • Limited Expertise
  • Workload
  • Limited Growth Potential
• ADVANTAGES OF PARTNERSHIP

  • Shared Responsibilities
  • Diverse Skills and Resources
  • Access to Capital
  • Flexibility
• DISADVANTAGES OF PARTNERSHIP

  • Potential for Conflicts
  • Profit-Sharing
  • Management Roles
  • Exit Strategies
  • Personal Conflicts
• ADVANTAGES OF CORPORATION

  • Access to Capital Markets
  • Professional Management
  • Employee Benefits
  • Centralized Management
  • Credibility
• DISADVANTAGES OF CORPORATION

  • Costly
  • Potential for Conflict
  • Complex Decision-Making
  • Regulatory Compliance
  • Lack of Privacy
• OTHER FORMS OF BUSINESS ORGANIZATION

  • Municipal Corporation
  • Nonprofit Corporation
  • Cooperative
• An incorporated town or city organized to provide services for citizens.

  Municipal Corporation
• Groups created to provide a service and not concerned with making a profit.

  Nonprofit Corporation
• A business owned by its members and

  operated for their benefit.

  Cooperative
• CHARACTERISTICS OF COOPERATIVE

  • Member Ownership
  • Democratic Governance
  • Voluntary and Open Membership
• Cooperatives are owned and controlled by their members, who have a say in the decision-making processes of the business.

  Member Ownership
• Cooperatives operate on democratic principles, with members having equal voting rights, regardless of their level of investment or involvement.

  Democratic Governance
• Cooperatives are typically open to anyone who meets certain membership criteria, and membership is voluntary.

  Voluntary and Open Membership
• An organization that conducts business in several countries.

  Multinational Company/Corporation
• CHARACTERISTICS OF MULTINATIONAL COMPANIES

  • Worldwide Market View
  • Standardized Product Companies
  • Culturally-Sensitive Hiring
  • International and Local Perspective
• They view the entire world as their potential market. Companies seek product ideas through foreign subsidiaries and obtain raw materials on a worldwide basis.

  Worldwide Market View
• Involve offering uniform products or services across different markets and regions. they look for similarities among markets to offer a standardized product whenever possible.

  Standardized Product Companies
• They use consistent hiring policies throughout the world but are also culturally sensitive to host countries.The companies recruit managers internationally rather than just from the organization’s countries of operation.

  Culturally-Sensitive Hiring
• These businesses distribute, produce, price, and promote with both an international outlook and a local perspective.

  International and Local Perspective
• METHODS FOR GETTING INVOLVED IN THE INTERNATIONAL BUSINESS

  1. Indirect Exporting
  2. Direct Exporting
  3. Management Contracting
  4. Licensing
  5. Franchising
  6. Turnkey Operation
  7. Wholly-Owned Subsidiary
• Occurs when a company sells its products in a foreign market without any special activity for that purpose.

  Indirect Exporting
• It is a market entry strategy in which a company actively seeks and conducts its own export activities to sell products in foreign markets.

  Direct Exporting
• An agreement under which a company sells only its management skills.

  Management Contract