World economies have benefited significantly from the effects of globalization. Improved communications, reduced tariffs, and better capital mobility have given businesses access to financial markets and international expansion.
However, in order to make the most out of the opportunities offered by international business, you must adopt the right global business strategy. Here are four strategies to consider for companies going international:
The Four Types of International Business Strategy
- International
An international strategy focuses on exporting services and goods to overseas markets and importing resources and products from other nations for domestic use, allowing access to a broader customer base. Usually, the companies that adopt this strategy keep one main headquarters, often in their country of origin.
Although this approach brings various challenges like ensuring compliance with trade regulations and managing global logistics, it is still the most commonly used method since it requests the least amount of overhead expenses. Moreover, even though the essential parts of goods and services are left unchanged, this strategy may require other adjustments. For instance, software companies must add multiple languages for international customers.
- Multi-domestic
To use a multi-domestic business strategy, a company needs to invest in developing its presence in foreign markets and customizing its products or services to meet the needs of the local consumer base. Instead of trying to advertise foreign goods to customers who might not understand them, businesses make the necessary changes and edit their marketing strategies to engage with foreign customs, traditions, and cultural traits instead.
These businesses usually keep their company headquarters in their country of origin but also establish subsidiaries to provide region-specific versions of their goods to overseas customers.
- Global
A global strategy requires the homogenization of products and services to minimize costs and access a broader international audience. Usually, the companies that adopt this strategy keep one main headquarters in their country of origin while also setting up dozens of operations in countries all around the world. Companies using this strategy should make practical adjustments like adjusting the language used in their products or changing the name of their goods for local markets.
- Transnational
The transnational business strategy may be the most intricate approach companies can adopt when expanding abroad. It is a combination of multi-domestic and global strategies. It is unique since it allows a company to operate full-scale overseas while maintaining its central headquarters in its country of origin.
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