In the global marketplace, expanding overseas is more than a matter of profit management; it also affects the way a business gains market share and stays ahead of the competition. To make money domestically and internationally, the company may implement a sound strategic management vision, paying attention to factors such as exporting and foreign direct investments.
The four levels of global strategic management are exporting, licensing and franchising, joint-venture participation and foreign direct investments. Global strategic administration shows a business how to make money, especially the mix of tactics to hew to and the initiatives to spearhead domestically and abroad. This work stream indicates to top leadership how to win the economic competition in the company's home country and how to parlay such competitive clout on the global stage. Global strategic administration involves the definition of a specific plan of action -- or mix of plans -- aimed at expanding overseas and building profitable businesses on a stand-alone basis or with local partners.
Exporting is integral to global strategic management, as it tells company principals that foreign markets might be sources of sizable profits down the road. In the global marketplace, the increased economic inter-connectedness requires that a business set proper strategies to conquer foreign markets and identify affordable ways to provide goods and services to clients overseas. The goal is to ensure that foreign markets do not fly under the radar of corporate policy-makers and strategists, especially when the markets experience exponential growth compared to domestic markets.
Licensing and Franchising
In the modern economy, licensing and franchising have become part of multinational companies' operating journeys. Franchising means a company grants another business the authorization to sell the company's goods or services in a particular place, usually for a periodic fee -- called the franchising fee. Franchising is often relevant in industries providing goods to a large clientele, such as fast-food chains. Licensing means giving a legal document to a person or company -- the licensee -- and allowing the licensee to do something. For example, a software maker may grant licenses to users for a periodic fee.
Joint ventures are significant in the way companies manage their global strategies, especially when they find that going it alone in a foreign land is close to mission impossible. In a joint venture, a business partners with a local company and shares risk or expertise. The goal is to share losses and rewards, especially if a divergent or stand-alone strategy might be inappropriate. Joint ventures are relevant in various operating scenarios and may be conducive to stalwart businesses as well as weaker contenders.
Foreign Direct Investment
Foreign direct investment is a global strategy in which a company sets up shop in a foreign country. The business marshals its own resources and equipment, bringing its full-scale expertise to bear. The company may do so by buying and restructuring a foreign subsidiary or building new facilities.
The Difference Between Domestic Business Strategy & Global Business Strategy
Differences between domestic and global business strategies result from the way management allocates the company's resources to expand into global markets.
Pros and Cons of Joint Ventures
A joint venture allows for short-term collaboration among two or more entities, but cultural and communication barriers can mitigate potential advantages.