Organizations are not limited to business within their national borders only. The whole world is a large market, therefore, geographical borders should not represent an obstacle for expanding a business in order to maintain the competitive advantage. Financial, material, and human resources, as well as knowledge, are available worldwide, and they should be attained wherever it is strategically possible.
Globalization brings immense opportunities and the rewards the global market provides are quite attractive. The global market brings many opportunities to companies, for example, to increase their revenue and profitability. Today, when expanding outside the national borders, there is the potential to create a company’s advantages by increasing knowledge. There are numerous reasons for a company to expand internationally. Some of the most obvious is to increase the size of the potential market for the company’s products and services and to reduce the cost of research and development as well as traveling expenses. International expansion can enable a firm to find the optimal physical location for each of its activities.
There is a growing trend among companies to expand their operations outside of their own countries. Globalizations provides a greater approach to bigger potential markets and secures a great basis for relevant manufacturing factors such as raw materials, workforce, well-trained managers and technical professionals.
Globalization does not only include moving the goods and investments across the borders but moving the people and information as well. To mobilize the human technology capital, they must be used effectively in order to facilitate mutual cooperation and develop more sophisticated systems for knowledge management. A management’s challenge and opportunity are not only to gain and maintain human capital but to ensure the employees develop and maintain a strategic perspective when contributing to the organization. This is especially important if the management wants to use its talents to help the organization reach its goals in an effective way. Modern organizations must anticipate dramatic and unexpected changes in their competitive environment and to react to them accordingly. As opposed to financial and material assets, human capital became the key to securing long-term advantage on the market. To train and mobilize the employees and to maintain the assets within the organization, leaders in all segments of the organization are necessary. Organizations can no longer be successful and efficient if only the top managers do the job. When it comes to the globalization of the market, everyone must be involved in the strategic management process: line leaders, executives, and employees.
The tendency to globalize as soon as possible has emerged worldwide as well as a series of issues due to its openness that is necessary in order for it to function properly. There are multiple problems organizations face such as the issues related to being too the openness ascribed to globalization. Much deeper problems emerge from deeply rooted fundamental basic and fundamental cultural differences that exist between countries-differences which include tradition, history, religious beliefs, and deeply rooted values in cases when the tendency to achieve profit leads, efficacy, and growth may encounter problems. The issues of political differences also lead to the danger of being attacked by those who do not understand them.
When it comes to the global market, strategic management is crucial because it consists of analysis, decisions, and activities an organization undertakes to achieve and maintain a competitive advantage. The basis of strategic management holds the question: How and why are some organizations more prosperous than others? According to that, the challenge managers face is choosing the strategies which secure advantages that can be maintained for a longer period of time. The key attributes of strategic management should be directed towards to the overall goals of an organization, numerous stakeholders, the trade-off between effectiveness and efficacy, and short-term and the long-term goal of an organization as well as their processes. All that is followed by technological changes and expanding technologies which are taking place rapidly. Such development and branchiness emphasize a company’s needs to be innovative if they wish to remain competitive.
Strategies are not fixed within a vacuum nor should they be. They must react to the external business surrounding. Companies must know their business surroundings. One of the instruments for analyzing trends is anticipating. When working on a forecast, scanning and monitoring the environment is very important in order to detect key trends and events. Managers must collect and distribute data about the competitors. Such information are invaluable in the process of forecasting in order to decrease present and future dangers as well as to fully exploit the new opportunities.
There are two contradictory pressures managers face when competing in the markets outside their countries. These forces represent contradictory demands for the companies that strive to be competitive. On one hand, competitive pressure requires companies to reduce the price per piece so that consumers don’t find their products too expensive. This may lead to a company to place its manufacturing capacities somewhere where the workforce is cheaper and to develop products suitable for multiple countries.
Apart from the pressure of reducing the price, managers must also react quickly to local pressures for adjusting their products to the demands of the local market in which they do business. This requires differentiation of their offers from country to country according to buyers’ taste and tendencies and making changes in the distributive channels, as well as the differentiation of different human resource’s experience and different state regulations. However, since differentiation strategies and tactics of products and services according to the local markets include additional cost, a company’s prices will have a tendency to grow.
The result of two contradictory pressures is four different basic strategies that companies can use to compete in the global market: international, global, multidomestic, and transnational. The strategy a company chooses depends on the level of pressure it deals with when it comes to reducing prices and the importance of adjusting to local markets. It has been shown that companies tend to have some elements from all four strategies.
In order to remain competitive, developed companies must constantly seek new growth opportunities and new methods for strategic advancements in their performance. Shifts in consumers’ needs, new technologies, and changes on the competitive scene require companies to constantly innovate and initiate corporate ventures to compete with the competition. To achieve that, they must expand their offer, break into new markets, and reach new consumers. At times, profitability may increase by joining all the processes into a single course. And by working more efficiently. Such activities require changes. To maintain its sustainability, a company must be able to carry out the necessary changes.
What options do organizations that wish to change and expand have?
The road to expansion and bettering your organization’s business leads to strategic renewing (innovation) and searching for new venture opportunities (corporate entrepreneurship). Innovations help an organization to remain fresh and to rebuild itself according to the changes in business environment. Innovation is the key matter within implementation strategy. Revolutionary innovations, as well as the conception of new products, technology development and changes in demands, create new opportunities for corporate ventures and successful business.