Macro reality: Busting the Myths on International Business Strategy

Ever wondered why for most companies, a substantial part of their economic value goes for a toss when they add international locations to the profile?

Business strategists from around the globe admit it to be one of their prime business concerns when taking an international leap.

The trend has been similar for over a decade. IBM’s Global CEO study, ‘Capitalizing on Complexity’ done after the last global recession outlined that managers often feel shortly equipped to handle international business.

The roots of the managers’, CEOs’, development managers’, and corporate strategists’, fears of going international goes back to two wrong ideas about international business. Professor Lilac Nachum from University of New York sheds some light.

2 Common Misconceptions

When your advisors and thereby your strategy is under the grips of a wrong belief, it is bound to affect your judgement and decisions. When operating on an international scale, strategists must steer clear of these two myths commonly found in most industries.

Myth 1: International business strategy is same as general strategy, only multiplied across countries.

The notion, may however sound plausible, is misleading on several grounds.

For one, any international activity raises many issues peculiar to it that do not arise when you are operating in one country context.

To illustrate, think of the supply chain disruptions caused by COVID-19 pandemic situation. Businesses operating at multiple locations had to operate in accordance to the situation, laws and context of each country. Essentially you have to deal with foreign stakeholders – from foreign customers and employees to governments, and business strategists must plan for each context accordingly.

There hardly is ever a prêt-à-porter one size fit all strategy.

  • Geographical location
  • Spread of activity in the foreign country
  • Market size
  • Laws of the land

Single country businesses and international corporate strategy may be similar on competition, competitive advantage, but it differs on all of these multitudes of factors when determining how heterogenous your business strategy must be as per regions.

Myth 2: International corporate strategists face challenges on three fronts mainly: operations, unfamiliar environment, and coordination.

It is not to deny that these are some of the common challenges business strategists face when operating in multiple countries, but limiting challenges to these as prime challenges can be counterintuitive.

Professor Nachum says as most managerial attention gets diverted into addressing these challenges, a limited attention is paid to the opportunities underlying international activities.

In reality, the similarities and differences of operating in multiple countries bring with it diverse challenges not encountered in single-country operation, and augur opportunities and solutions that is not available for single country businesses.

Global business strategists must understand the competitive merits of operating internationally. As you go international, your scale and scope alter significantly. You would have to widen your perspective to multiple resources available at your disposal.

These two myths are myopic, unfitting and even dangerous for strategists. First, undermines distinctive strategic responses business strategists can explore, and second distracts them from opportunities.

Treading the International Waters: A Strategy

The world of international business is big with multiple growth opportunities. Global cooperating among countries, governments and businesses have grown by multifold. Even when sometimes political leaders take a conservative tone to international businesses, business communities often come forth to resist and voice their opinions. Size of international market is growing at an unprecedented rate.

This calls for a new approach to international business strategy. It will help managers recognize and successfully address the challenges of international business, and maximize the gains. There is a need for developing international business strategy as a separate field of inquiry.

An approach ingrained in next-gen business strategy is offered by The Strategy Institute Business Strategy Certifications. It forms the foundation of robust learning opportunities for international business consultants and imparts executives the competence to arbitrate a business plan across countries.

  • JohnSmith

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