Creating a robust international business strategy in a changing global economy
As globalisation moves business further into the international sphere, business strategists need to develop global savvy to ensure their brands stay ahead of the curve.
The heyday of the mom-n-pop corner store is little more than a nostalgic memory as successful companies take on a transnational mission. Coca-Cola, Nike, Apple and Google are but a few of the international brands that have earned acclaim over the past few years for their effectiveness in conducting business on a global platform.1
Even if your business has not yet earned its place as a household name, you can still harness the benefits of globalisation to give your business plan that competitive edge.
Benefits of globalisation for business2
- Expanded market reach
Gone are the days of a capped market. With globalisation, you can reach consumers with a much broader net by expanding into other countries and tapping into consumers there. Brands like McDonald’s have taken this one step further by adjusting their offerings based on the locale with region-specific menus.3 Access to a wider market opens opportunities for joint ventures with other companies, allowing you both to benefit from the cost advantages of such a merger.
- Location flexibility
Operating across a global market gives you the opportunity to base your production hubs almost anywhere, opening doors for the most cost-effective resources and labour for your business. Where companies used to be dependent upon domestic resources, the open market in China allowed Western companies to outsource their production to China’s cheaper labour force.
- Economies of scale
Intercontinental trade makes large-scale production a no-brainer. Bulk buying resources and streamlining your production process minimises overheads and per-unit costs while maximising profits. IKEA started out in 1958 with a single store in Sweden, and by 2017 business had boomed to more than 400 stores across 49 countries with a sales revenue of 38.3bn euro.4 Their strategy relies on a warehouse store model and highly organised supply chain – and the brand continues to maintain its competitive edge by adjusting and upgrading production systems to meet the demands of consumers.5
- Investment in developing countries
Basing operations in a developing country affords transnational corporations the opportunity to invest in uplifting developing economies by injecting skills and technologies. This benefits developing countries by creating employment, growth, and foreign exchange. In the long run, this benefits international companies by strengthening the global market.
These are only a few of the ways you can leverage globalisation to benefit your long-term business strategy, but current affairs and the shifting sands of the global market present a challenge for international business management. With Europe reeling to find its feet in the wake of Brexit and the world holding its breath to witness the next wave of changes in the USA, former market leaders are undergoing major trade policy rewrites amidst the rise of populist sentiment. The face of the global business environment is changing rapidly, and competitive business strategies will need to employ a critical eye and a shrewd sense of global policy in order to ride the wave of political change.
Globalisation is a powerful tool for nations to harness their collective strengths for profit, but it’s not without its risks. If you link arms with another country for part of your business, and that nation undergoes significant changes in trade policy or political instability, it starts a ripple effect for which transnational corporations need to be prepared.6
Economic globalisation has gained international momentum which strategic-minded business leaders can harness for the benefit of their business, but a critical eye for the economic ripple effect of socio-political affairs will help companies to ride the wave of globalisation without being lost in the undertow.
