Sample: Implementation of International Business Strategy, Rationale
1.2 Rationale
It is to be noted that various established markets are saturating now and thus most of the international corporations are seeing emerging markets of developing countries as an attractive area to expand their business. Now, it is also important to understand that global business strategy for a developing country will surely be different from that designed to operate in a developed nation. The mode of entry MNCs adopt for developing countries in general may not be the same as those adopted in case of industrialized countries. The MNCs have to be very wary of political and exchange rate risks that are high in the developing world. The host government may nationalize the assets of MNCs, and fair compensation may or may not be given. Moreover, because of constraints on the external balance position, the government can impose restrictions on the imports of MNCs and encourage local procurement. It may impose curbs on the repatriation of profits and other transfers. The host country currency may depreciate and may cause shrinkage of profits in terms if the home country currency. This does not mean that these risks are absent in developed countries, but they are more common in developing nations. So, any entry strategy with respect to a developing country must take into account all these facts.
On the other hand it is true that the operating strategy in a developing country is influenced by cost minimization, product differentiation, and market segmentation similar to that of an industrialized country. But in developing countries, market segmentation plays a crucial role. This is because some sectors get government protection and they become sheltered markets. MNCs can gain from such protection through market segmentation. MNCs gain from such protection through market segmentation. Financial strategy is more important in the case of a developing country than in case of a developed market economy. This is because the currency of developing countries is often weak and tends to depreciate frequently vis-Ă -vis convertible currencies. Moreover, the financial market is not developed with eth result that the interest rate structure is rigid and procurement of funds within the host countries is not so easy.
Keeping all the above points in mind, the proposed research will be conducted to know that challenges or difficulties that an international firm faces while designing and implementing international business strategy especially to operate in India. The major focus of the research is to determine how the designing and implementation of international business strategy is practically different from that of a domestic business strategy and how such differences are even more exaggerated when the company is planning to expand its business in India. Additionally, the impact of the local linkage of global firms on the success of a global business strategy will be explored in this research. The focus will be on firms based in UK that are planning to enter the Indian markets in various sectors.
