The paper "How the Strategy of International Businesses Has Needed to Respond to the Conditions Facing Them" is a perfect example of business coursework. In the last years of the 20th century and early 21st century, numerous barriers in the global trade reduced and several companies started pursuing international strategies in quest of gaining the competitive advantage (Twarowska & Kąkol 2013, p. 1005). International markets enable the firms to increase product or service awareness, enhance customer base, improves their profit and market share. However, international markets are full of challenges emerging from economic, social, political and technological factors (Das 2010, p. 47).
As a result, some companies do better than other international stage and this down to global strategies. In other words, must have a strategy to respond to the international challenges. Therefore, in this paper, the easy will explain how the strategy of international businesses has needed to respond to the conditions facing them in the later years of the 20th Century and the early part of this century. In its argument, the essay will consider factors affecting firms in production and in their operations and sales as well as economic conditions. Globalization has intensified in the last and current century as companies scramble for international markets (Hamdi 2013, p. 142).
Research has shown that countries have a comparative advantage which makes them better in terms of opportunities. Twarowska and Kąkol (2013, p. 1006) claimed that such opportunities include technological development, large customer base, economic growth, political friendliness, and low-cost labour, production, and operations. For instance, it is now easy to recognize globalization due to the presence of different brands in the markets. Japanese products like automobiles and electronics can now be seen in Asia, Africa, the Americas, Oceania and Europe (Gupta & Gorindarajan 2003, p.
56). Similarly, consumers can commonly find US entertainment products, financial service and automobiles in all continents. A Japanese car making company Honda currently operates the biggest single plant in the US, whilst Coca-Cola also operates in others countries across the globe with its 80 percent profit coming from global sales (Punnett n. d). Some companies had become successful after going global in the late 2oth century and early 21st century.
However, despite the success, firms did not escape challenges in the global markets. Some of the factors affected production, operations and sales. The challenges need a global strategy to enable the company has a competitive advantage in the market. Twarowska and Kąkol (2013, p. 1005) argued that global strategy enables a company to adapt well within the domestic business environment. A global strategy needs should be carefully be formulated to be used within the whole company networks such as subsidiaries across many countries of the world. One of the factors that affected product is labour.
It is has been found that companies expand to other markets with cheap labour to reduce the cost of production (Hartungi 2006, p. 731). The truth is that some countries attain low cost of labour as intended. This is because they invest in countries with a high number of jobless people. However, according to Wenjing, et al (2012¸ p.11059) the challenge is that most number of these people may only work at the lower level of the organization because they lack the necessary skills to operate at the middle or top level.
The strategy would be to train unskilled people in foreign countries to reduce the skill shortage. In doing so, the company will still get cheap to help manufacture products at lower production cost. Nevertheless, countries’ laws on labour also change over time with the new government and can affect the firm’ s quest for cheap labour. Some countries set a minimum wage for its employees so as not to be exploited by companies (Hartungi 2006, p. 732). In this way, an international firm who had the intention of capitalizing on cheap labour for production is forced to go back to the drawing and review their budgets, particularly on wages.
For instance, over the years, China has been known for cheap labour (Hartungi 2006, p. 732). As a result, firms had moved to these countries to capitalize on cheap labour to reduce the production cost.
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