Strategies for competing in international markets

GLOBALIZATION IS FORCING COMPANIES TO DO THINGS IN NEW WAYS-Bill Gates

In this entry, I would like and love to focus on one subtopic only. :)

Before all conglomerate become rich, and richer,

they must think about ONE.

which is the statement of 'WHY'

WHY THEY MUST ENTER FOREIGN MARKET?

i'm focusing on this! :)

According to Arthur A. Thompson, there are five reasons why they should enter foreign market. The main reason is to gain access to new customers. Expanding into foreign markets offers potential for increased revenues, profits and long term growth for the product. As an example, Petronas widen their business to other country such as Indonesia. Because of what? Because to access new customer there. Instead of having linear sales every month, they can increase up the volume of sales by entering foreign market.

Another reason is to achieve lower costs through economies of scale, experience, and increased purchasing power. This reason also related to Petronas. We may look this reason at different angle, first, think about going to low cost country such as Indonesia, Kembodia, India. By doing this, companies may have low cost to their company through economy of scale and their currency value is low.

The third reason is to further exploit its core competencies and to gain access to resources and capabilities located in foreign market. aren't these two reasons attractive enough to enter new market? it supposed to be yes! and, lastly, to spread its business risk across a wider market base. A company spreads business risk by operating in many different countries rather than depending entirely on operations in its domestic market.

so, these are the reasons why businessman always grab the chance just to market their product outside countries.!! :)

enjoy reading,

thank you :)

Strengthening a company's competitive position

Don't form an alliance to correct a weaknesses. The only result from a marriage of weaknesses is the creation of even more weaknesses.-Michel Robert

What does that mean? As for me, every organization has its own weaknesses, and the weaknesses cannot be disappeared  just by making new organization. By that activity (build new organization), more weaknesses will come out.

Related to this chapter, an organization should strengthen their strength and discover the weaknesses by the strength. In this chapter, there are five strategies in order to strengthen a company's competitive position:
1) Blue ocean strategy
2) Horizontal merger and acquisition
3) Strategic alliance
4) Joint venture
5) Vertical integration strategy

BLUE OCEAN STRATEGY

Meaning: where the industry has not yet taken shape, with no rivals and wide-open long- term growth and profit potential for a firm that can create demand for new types of products.

Example: Air Asia already applied this strategy in fuel purchases. How? Air Asia buy fuel earlier from they need and they in large quantity. This situation had never been done by other companies. This is why Air Asia always can provide low price to their customers.

HORIZONTAL MERGER AND ACQUISITION

Meaning : Merger : Is the combining of two or more firms into a single corporate entity that often takes on a new name. Merger also is the establishment of a new company wile the two or more names of those involved in the merger will not exist anymore.

Meaning : Acquisition: Is the combination in which one firm, the acquirer, purchases and absorbs the operations of another firm, the acquired.

Example : Merger : Bank Bumiputera + Commercial Bank = Bumiputera Commerce + Southern Bank = CIMB

Example : Acquisition : F&N -> Red Sena Bhd

STRATEGIC ALLIANCES

Meaning: Formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective.

Example: I think about this simple example! :)
University doing MOA with other institutions .


JOINT VENTURE

Meaning: partnership involving the establishment of an independent corporate entity that the partners own and control jointly, sharing in its revenues and expenses.

Example: Mazda and Bermaz make a joint venture in Malaysia.
check this link out! http://www.mazda.com/publicity/release/2012/201209/120911a.html :D


VERTICAL INTEGRATION STRATEGY

1. Full integration - A firm participates in all stages of the vertical activity chain.
2. Partial integration - A firm builds positions only in selected stages of the vertical chain.
3. Tapered integration- Involve a mix of in-house and outsourced activity in any stage of the vertical chain.