The other reason is that a company wants to exploit core competencies for the industry. When a company enlarges their business in other foreign country, their business will become much stronger in the market than before. Thus, it is easier for the company to exploit the core competencies for the industry in their target market. When entering a foreign country, some of the chosen country offers a much better technology and resources. So, the company can have more access to the resources and capabilities in the foreign country. And the last reason on this situation is to spread their business risk across a wider market base.
Although there are many reasons that lead a company to enter foreign country, the competition that might emerge in the future will make the process on making a strategy is more complicated and complex. This is because the industry competitiveness factors differ from one country to another. Besides, the location-based advantages are applied for a certain country. Another important factor that leads to the complexion on making strategy is the differences in the cultural, demographic and market conditions factor. Another factors for this complexion is the government of the country which involves the difference in the policies and also the economic conditions and not forget the currency exchange rates risks which will occur whether when the currency is high or low.
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The impact of government policies and the condition of the economic may gives positive and negative impacts to the business. The positive impact from the government policies is that the company may earn some tax incentives beside low tax rates and also low cost loans. Environmental regulations might be a negative impact from the government policies to the business in the foreign country. The government policies also result in competing against the domestic competitors for the subsidies and loans and also there might be restrictions on the import activity.
Exporting, licensing, franchising, wholly-owned subsidiary and also strategic alliances or joint venture are the strategic options for entering and competing in the international markets which really applicable when a company make a decision to enter a foreign country. All of these strategies have their own advantages and also disadvantages. Exporting requires low capital and also offers economies of scale in utilizing production capacity. Besides, exporting has no distribution risk and direct investment risk. But unfortunately, exporting offers high transportation and shipping costs, also the exchange rates risk is quite high. Exporting also lead to the loss of the channel control.
Licensing and franchising strategies offers low resource requirements, gain income from royalties and franchising fees and lastly, offers rapid expansion into many markets. Same as exporting, licensing and franchising strategy also has few disadvantages such as high costs of maintaining the control of proprietary know-how, loss of operational and quality control and also difficult to adapt to local market tastes and expectations. Acquisition allows the company to have high level of control, quick large-scale market entry. Acquisition also avoids entry barriers and access to acquired firm's skills. Bur acquisition offers high costs for the acquisition, the complexity in the process of acquisition and also the integration of the firm's structures, cultures, operations and also personnel.
While Greenfield strategies offers high level of control over the venture, "Learning by doing" in the local market and direct transfer of the firm's technology, skills, business practices and also culture. But the capital costs of the initial development is quite high, also the risk of loss due to political instability or lack of legal protection of the ownership. Greenfield has the slowest form of entry due to the extended time required to construct facility. The last is the alliance and joint venture strategies that avoid entry barriers. It also allows for the resource and risk sharing, offers partner knowledge of local market conditions. Joint learning and sharing and also offers preservation of partner independence. But there are barriers in cultural and language. Also the costs of establishing the working arrangement are high, there are also issues of the joint control and the protection of proprietary technology of competitive advantage is lacking.
A company desirous of competing in foreign country markets needs to pay close attention to the advantages of cross-border transfer of competencies and capabilities. Such transfer often a key to competitive advantage. Competitive advantage is the factors that meets the customers' needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost. In short, competitive advantage is the factor that only that company has that differentiate the company from another company. Sustainable competitive advantage is giving the buyer or customers lasting reasons to prefer the company's products or services over those of its competitors.
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There are four ways on building a competitive advantage. First is through the low-cost provider. In term of efficiency, a company will strive to become the industry's low-cost provider. Second, in term of effectiveness, a company will be outcompeting the rivals on differentiating features such as uniqueness of the products. Third, a company will be focusing on better serving a niche market's needs and lastly, a company will be offering the lowest and best prices for differentiate goods as the best-cost provider. While sustainable competitive advantage can be created by developing valuable expertise and competitive capabilities over a long-term that rivals cannot easily and readily copy, match or else.
Once a company decided on entering foreign market, the company should think strategically on how to outcome their future competitors whether domestically or internationally. A company who is entering foreign country markets should pay close attention to the advantages of the cross-border transfer of competencies and capabilities because of the competitive advantage which leads to the company's success in the future.
In creating a strategy-supportive reward structure, it is important to define jobs and assignments in terms of the results to be accomplished not just in terms of the duties to be performed. I am agreed with this statement because by defining jobs and assignments in terms of the result, it will ensure that the strategy that is developed before can be achieved successfully.
Good strategy execution is done by a good company with a good corporate culture. A corporate culture is the meshing of shared values, beliefs, business principles and also traditions that imbues a company's operating style, behavioral norms, ingrained attitudes and also work atmosphere. These factors are very important because it will influence the company's actions and the approaches in conducting their businesses. A company cultures can be either strongly or weakly embedded. A company with a strong culture has deeply rooted widely shared values, behavioral norms and operating approaches. A strong culture company also insists that its values and principles will be reflected in the decisions and actions taken by all of the company's personnel. While a weak culture company lacks in values and principles that are consistently preached or widely shared. The company also will have few or no traditions, beliefs, values, common bonds or behavioral norms.
When a company is has a weak culture, there should be an initiative in changing the cultures which will aid good strategy execution. A strong, out of sync or unhealthy culture must be changed in order to execute strategy successfully. The most important factor in changing the company's culture is the role of the leadership. A competent leadership at the top is necessary for culture-change efforts to succeed.
In leading the strategy executions, it requires the leadership to be staying on top of what is happening and closely monitoring progress. The leader also should be putting constructive pressure on the organization to execute the strategy well and achieve operating excellence. It also need to initiating corrective actions to improve strategy execution and achieve the targeted performance results.
Strategy execution is an operations-driven, involving management of both people and business processes. It is a job for the whole management team, not just a few senior managers. Strategy execution can take a long time to develop as a real proficiency than implementing strategy. It requires a determined commitment to change, action and performance.
Committing a executing a strategy entails figuring out the specific techniques, actions and behaviors necessary for a smooth strategy-supportive operation. It needs to follow through to get things done and deliver results. Leadership must make things happen while the management needs to make them happen right.
There are three steps in building an organization capable of good strategy execution. First is to assemble a strong management team and a cadre of capable employees, second is to renew, upgrade and revise resources and capabilities to match chosen strategy and lastly to create an organizational structure that is strategy-supportive.
Superior strategy execution capabilities are difficult to imitate and socially complex process that take a long time to develop. It also will maximize the organizational resources and competitive capabilities in support of the business model. Superior strategy execution capabilities will lower costs and permit firms to deliver more value to customers. It also will enable a firm to react more quickly to market changes, beat competitors to market with new products and services, and gain uncontested market dominance..
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