In today’s global environment, international business strategy holds significant importance for organizations looking to expand their operations beyond national borders. Companies that are successful in this arena use various strategies to enter new markets, increase their market share, and maintain a competitive edge.
Here are two examples of international business strategy in action:
1. Strategic Alliance
A strategic alliance is a collaborative agreement between two or more firms to pursue mutually beneficial objectives. This approach allows companies to tap into new markets while sharing risk and costs. Moreover, strategic alliances offer firms access to local market knowledge, technological expertise, and distribution channels.
One real-life example of a successful strategic alliance is the partnership between Starbucks and PepsiCo. In 1994, Starbucks entered into a licensing agreement with PepsiCo to manufacture and distribute bottled Starbucks frappuccinos. This partnership allowed Starbucks to enter the ready-to-drink segment of the market while leveraging PepsiCo’s distribution networks. Today, Starbucks continues to expand its strategic alliance with PepsiCo, launching new products such as Nitro Cold Brew in 2019.
2. Joint Venture
A joint venture is a business arrangement where two or more firms create a new entity to achieve specific business objectives. This approach allows companies to pool their resources and expertise, reduce risk, and increase market share. Joint ventures are usually formed when companies are expanding into unknown or high-risk markets.
One example of a successful joint venture is the partnership between Tata Motors and Fiat Chrysler Automobiles (FCA). In 2006, Tata Motors acquired the iconic British car brand, Jaguar Land Rover, from FCA. This joint venture allowed Tata Motors to enter the luxury car market while leveraging the brand value, distribution networks, and technological expertise of Jaguar Land Rover. Today, Jaguar Land Rover is a leading luxury car brand in the world, with a strong presence in China, Russia, India, and the Middle East.
In conclusion, strategic alliances and joint ventures are two robust international business strategies that organizations use to expand into new markets, share risks, and increase market share. By partnering with firms that have complementary capabilities, companies can leverage their collective strengths to achieve their goals. In today’s global economy, international business strategy is more critical than ever before, and the success of companies will depend on their ability to navigate complex global networks.
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