Table of Contents
A strategic alliance is a collaborative agreement between two or more organizations. There are several types of strategic alliances, each with its advantages. A joint venture brings together two organizations to form a single unit for the undertaking of certain projects and is good for larger companies (Das & Teng, 2000). Franchising entails a franchisee paying an operational fee to a company to set up a business using their concept with no financial risk to the company. Product licensing allows a company to manufacture and sell products belonging to another organization (Das & Teng, 2000). Distribution involves a cross-promotional agreement between two organizations. Others are outsourcing, affiliate marketing, and technology licensing.
Before a company goes global it must consider the following. First, it must pick the right product or service to take internationally that will have the biggest impact on foreign markets. The company should also carry out market research to determine which markets will be suitable for its product or service. They should then set pricing based on consumer needs and market trends (Luo & Tung, 2007). The company needs to develop culture-specific marketing campaigns that will resonate well with the target conumers. They can also explore international alliances and partnerships to help them enter new markets. Finally, the company should ensure they are abreast with international legal and regulatory procedures.
For a business intending to expand to international markets its main concern would be whether its international strategy is capable of producing greater benefits than the costs involved in order for the expansion to be economically sustainable. When developing an effective international strategy executives should pose to themselves the following questions. The first is the state of customer demand in the targeted geographical area. This will require them to carry out an analysis of the market in order to determine its size, growth, and key demographics such as age, social-economic status, and gender distribution (Luo & Tung, 2007). The second question they should ask is how the competition is fairing. This involves evaluating both local and international companies that are already in the market, identifying their competitive edge, and analyzing their market shares, products, and services. The next question is how the regional infrastructures are set up within the intended markets. This will help the organization plan for operational costs and requires a thorough investigation into the cost of communication, transportation, and distribution to several international locations (Luo & Tung, 2007). The executives should also ask themselves what the political and economic trends of the country are. There may be too much political and economic risk attached to a market and an organization must consider this before investing. Lastly, they should ask themselves if there are any international trade procedures that may hinder their globalization. They must find out if there are any tariffs or quotas that might have a negative or positive effect on market opportunity.
Gaining a competitive edge is a major hurdle for most organizations. One of the ways an organization can set itself apart from its competition is through innovation. Innovation involves transforming and revolutionizing procedures, viewing things from new perspectives, taking risks, and being adaptable (Weerawardena & Mavondo, 2011). Organizations can be innovative in their products and services, through technological advancements, and even through the development and training of their human resource. Innovation enhances the efficiency and success of an organization. All these strategies ensure that an organization has a unique advantage in their market and propels them to the forefront so that they stand out to consumers.
- Das, T. K., & Teng, B. S. (2000). A resource-based theory of strategic alliances. Journal of management, 26(1), 31-61.
- Luo, Y., & Tung, R. L. (2007). International expansion of emerging market enterprises: A springboard perspective. Journal of international business studies, 38(4), 481-498.
- Weerawardena, J., & Mavondo, F. T. (2011). Capabilities, innovation and competitive advantage. Industrial Marketing Management, 40(8), 1220-1223.