What are the strategies for entering into the global market? What are some strengths and limitations?. Do you know a company who has done well in a global economy?
To enter the global market, companies usually employ various strategies. Here are a few commonly used strategies:
1. Exporting: Selling products or services directly to customers in foreign markets.
2. Licensing and Franchising: Granting permission to foreign companies to produce or sell products under the brand's name.
3. Joint Ventures and Strategic Alliances: Partnering with a local company or forming strategic alliances with foreign firms to enter the market.
4. Foreign Direct Investment (FDI): Establishing a physical presence in foreign markets by setting up subsidiaries, branches, or manufacturing facilities.
5. Mergers and Acquisitions: Acquiring existing businesses in foreign markets to gain instant market access and expand operations.
When it comes to the strengths of entering the global market, they include:
1. Increased Revenue Potential: Access to a larger customer base, leading to higher sales and profits.
2. Diversification: Spreading business risks across different markets, reducing dependence on a single economy.
3. Economies of Scale: Achieving cost advantages through larger production volumes and optimized operations.
4. Innovation and Knowledge Transfer: Exposure to diverse markets can foster innovation and enable knowledge sharing.
However, there are some limitations involved as well, such as:
1. Cultural and Regulatory Challenges: Dealing with different cultural norms, languages, and legal frameworks can be complex, requiring significant adaptation.
2. Economic and Political Risks: Market volatility, currency fluctuations, and political instability can affect business operations and profitability.
3. Increased Competition: Entering the global market often means competing with established local players and international competitors.
4. Operational Complexity: Managing supply chains, logistics, and coordinating activities across multiple locations can be challenging.
An example of a company that has done well in the global economy is Apple Inc. Apple has successfully entered and thrived in various international markets. They have employed a combination of strategies, such as direct sales, licensing, and partnerships, and have effectively adapted their products and marketing strategies to suit different cultures and consumer preferences worldwide.