Global Strategies
Global Management Strategies
Involvement in the global economy is inherently risky but also carries a number of distinct opportunities for those who venture thusly. According to our research, as highlighted in the text by Dess & Lumpkin (2002), there are four distinct management strategies for entering into the international trade. Accordingly, these are identified as exporting; licensing and franchising; strategic alliances and joint ventures, and; wholly owned subsidiaries.
Exporting:
Exporting is perhaps the most common avenue for engaging in the global trade. Many domestic companies rely on target populations in foreign countries in order to meet core sales expectations. And as the article by Delaney (2010) notes, many of these companies will use intermediary export companies or agencies in order to reach broad customer bases. Indeed, this is the most notable advantage of the approach, which enables a company to bring its products to a decidedly wider base of potential buyers.
One distinct disadvantage is the challenge of conducting effective market research on target populations reached by an intermediary. As Delaney indicates "under these circumstances, you will not know who your ultimate consumers are. When selling by this method, you are normally responsible for collecting payment from the overseas customer and for coordinating the shipping logistics." (p. 1) These are complexities for which functionality must be established before establishing a global export business.
Licensing and Franchising:
The most notable advantage of licensing and franchising is that it provides legal protection for the product, brand and identity being marketed in an international context. This offers legal recourse for undue infringement of ideas, images or product features. The primary disadvantage relates to the extremely wide variance of legal conditions impacting licensing from one nation to another. For the internationalizing firm, it is critical to gain a fully understanding of the protections and also of the limitations of licensing in any given national context.
Strategic Alliance and Join Venture:
For organizations that lack the resources to enter into the global market on their own, a strategic alliance or joint venture might be the ideal avenue. According to Joint Ventures (2013), this is an avenue that can ultimately help to facilitate financial demands of internationalization that a company might not otherwise be able to meet using its own resources. This advantage is counterbalanced by the disadvantage of having to share decision-making responsibilities. Accordingly, "Operational control and decision making are sometimes compromised in joint ventures. Since there is an agreement that divides which one will take over a particular operation, the other may not be satisfied with how the things are worked out with another." (Joint Ventures, p. 1)
Wholly Owned Subsidiary:
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