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Strategies for Reaching global markets - Essay Example

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Strategies for Reaching global markets

Within the context of today's global competition, businesses and firms no longer compete as individual companies but try to corporate with other businesses in their activities (Wu & Chien 2007:2). These researchers went further to argue that, this strategy has become quite common in many businesses. The conventional vertical integrated company based business model is gradually being replaced by collaborative relationship between many fragmented, but complementary and specialized value stars and constellation (Wu & Chien:1).
Against this background, this paper examines the various strategies used by companies to reach the global market. The first part of the paper, examines forms of foreign direct investment, the second part appreciates each of the methods while the last part of the paper presents the summary, conclusion and recommendation.
In the years that follow after the Second World War, trade and investment have become increasingly intertwined. Within the first few decades after the war, most countries from Asia and Africa viewed Foreign Direct Investment (FDI) with suspicion, and wariness and the flow of FDI towards these areas has been relatively slower (Buckley 2004, Sumelong et al., 2003). To most of these countries, the presence of Multinational Enterprises (MNEs) was seen as an impeachment to their national sovereignty. The situation was further aggravated with previous colonial experience and the fact that to some, FDI was a modern form of economic colonialism (Sumulong, Fan & Brooks 2003).
According to the World Trade Organisation (WTO), the flow of FDI has substantially changed the international economic landscape. From1980 it has been argued by a handful of researchers (e.g. Hill 2007, Sumelong et al 2003, Buckley 2004, and Reis & Head 2005) that FDI outflow has overtaken the growth of world exports. The expansion in FDI became relatively pronounced during the period 1985-2000, a period characterized with scores of mergers and acquisitions, the Asian financial crises, the oil boom and privatization programs in Latin America (Hill 2007, Sumelong et al., 2003).
1.2International Expansion Strategy by Multinationals
The very act of going international multiplies company's organisational complexities. Recent changes in the international market scene, politics and environment have forced companies in the quest and optimisation of various options (Ghosal et al 2002). Moving global, shouldn't be an overnight decision in multinational enterprises. Such a move should be carefully given a second thought, as it involves not only a total strategic reorientation but a major change in an organisations capabilities, resources and challenges (Ghoshal 2002, Caves 1996).
Companies going global should be able to face the challenges of thinking globally and implementing locally. There is no doubt operating in internationally rather than domestically presents organisations with many new opportunities. From the quest of access to new markets, tactical and ...Show more

Summary

Today's business environment is increasingly becoming more turbulent, chaotic and challenging than ever before and to survive, it is vital that a firm can do something better than its competitors ( Wonglimpiyarat 2004:1). Globalisation has not only altered the nature and the intensity of competition but has had to dictate and shape organisations in terms of what consumers want, how and when they want it and what they are prepared to pay for it (Hagan 1996:1).
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