International Strategy, Essay Example

Developing an international strategy is a process of exploring markets outside of the national borders, while identifying opportunities. Next, the company needs to explore capabilities and resources, use core competencies to determine the right mode of entry.

Through developing an international strategy, the company is able to expand the life cycle of the product, update its supplier market and acquire raw materials at a lower cost, move operations on a global scale, develop technologies faster and gain access to customers in emerging markets. Further, the basic benefits of international strategies are increased market size, learning, economies of scale and advantages originated from location.

An international business-level strategy should be based on existing domestic market strategies. However, capabilities that work on the existing market might need to be adjusted to the needs of the international market.

The main determinants of national advantage need to be reviewed before the firm moves to international markets and creates national advantage. National advantage is determined by factors of production, demand conditions, firm structure, strategy and rivalry, and related and supporting industries. Indeed, the same conditions determine the success of an international strategy as well.

There are three main types on international corporate-level strategies: multidomestic, global and transnational. International entry modes vary based on the existing national strategy of the company. The firm can decide to start with exporting, licensing, building strategic alliances, pursue acquisitions or create a new, wholly owned subsidiary. All of these modes of entry have different risks, benefits and dynamics associated with. Risks can be coming from different sources in the international market: they can be political or economic. However, the main challenge of international strategies is the complexity requirement of management approaches and limits of international expansion.