STRATEGIES FOR COMPETING IN INTERNATIONAL MARKET

BISMILLAHIRRAHMANIRRAHIM

This topic is a very interesting topic, because it was something that playing around in my head. Sometimes I keep asking about how to make business in international market. It is not easy to start a new business in international market as a new entry or a new competitor against others older competitor because there are many differences in terms of currency, language, rules and regulation and others factor. 

When we talk about KFC, MCDONALDS, SUBWAY and other fast food company, all of the brand are well-known in international market. Almost every country we can see this company provide their product. What are the primary reason a companies choose to compete in international market? There are several reason why the companies enter the foreign market, which is:

• To gain access to new customer. 
• To achieve lower cost through economies of scales, experience and increased purchasing power
• To gain access to resources and capabilities located in foreign markets
• To spread business risk across a wider market base

International market is totally different from home country business market. In terms of risk, the risk companies face is in the political and economic risk. Although in the home country also the companies facing the political and economic problems, but the problem or risk in international market is far more complicated. The political risk in international market stem from instability or weaknesses in national government and hostility to foreign business. Beside that, the economic risks stem from the stability of a country's monetary system, economic and regulatory policies, the lack of property rights protections.

Beside that, as I mention before about the different currency from our country and the others foreign country, there will be effects of exchange rate shifts which is exporters experience a rising demand for their goods, whenever their currency grows weaker relative to the importing country's currency. On the other hand, companies usually use the greenfield venture when competing in international market. 

Greenfield venture is a type of venture where finances are employed to create a new physical facility for a business in a location where no existing facilities are currently present. A greenfield investment originally referred to locating new company buildings on a pasture that was literally a green field, but the term is often used generally in modern business communication. A greenfield venture also means a subsidiary business that is established by setting up the entire operation from the ground up. 

Miss Ummi also taught us the three strategy approaches in competing internationally which is multidomestic strategy, global strategy, transnational strategy. International strategy means strategy that company use in competing market between two or more countries. A multidomestic strategy means the companies offering their product from a different variety based upon the value in the country they wanted to market their product. A global strategy have a different meaning from multidomestic strategy because using global strategy, companies tend to offer a same product everywhere. On the other hand, the transnational strategy means an international business structure where a company's global business activities are coordinated via cooperation and interdependence between list head office, operational divisions and internationally located subsidiaries or retail outlets. A transnational strategy offers the centralization benefits provided by a global strategy along with the local responsiveness characteristic of domestic strategies.

Three approaches for competing internationally:

• Global Strategy : Think Global - Act Global
• Transnational Strategy : Think Global - Act Local
• Multidomestic Strategy : Think Local - Act Local