By students, for students.

ISM crash course: regional and global strategy

In Management, Marketing on January 17, 2013 at 7:08 pm

mcdglob1

Business is international. Globalising processes have accelerated since the turn of the millennium, increasing trade, capital and investment movements, migration and knowledge exchange across geographic borders.

Transactions – import, export and investment – are carried out across borders to access foreign markets, protect against domestic market conditions and leverage scale advantages. The amount of international trade has increased because of developments in communication and production technology and regulatory bodies, such as the World Trade Organisation.

graph international exports

Source: Bureau for Economic Policy Analysis

International business is driven by multinational enterprises (MNEs) – businesses which operate in more than one country. The majority of MNEs come from the economically powerful triad nations – Japan, the USA and the EU15. Small and medium enterprises (SMEs) support the activity of multinationals and compete in niche markets.

Businesses succeed by achieving competitive advantages. These can be based in the capabilities of the firm (firm specific advantages or FSAs) or the resources of the countries they operate in (country specific advantages or CSAs), but broadly fall into categories of innovation, local responsiveness and national advantage.

Example:

Tata-logo

Tata

Tata is among India’s largest MNEs. Although the majority of its sales are in Asia, the group is highly diversified – representing 100 operating companies across all triad regions. It has been proactive in responding to national market conditions and industry demands.

During a period when the steel industry was consolidating through acquisitions, it grew its own capacities – acquiring Natsteel in Singapore and Corus in the UK.

Further, Tata leveraged its expertise to effectively target segments of the automobile market. Tata Motors produced the Nano, design to appeal to India’s emerging middle class, and later took it to similar consumers in South African markets. At the same time, the 2002 acquisition of Jaguar Land Rover has given the firm the technology and branding needed to meet the demands of elite buyers.

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