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In the 21st century, with the advancement of technology, there are a large number of businesses that are constantly entering the market. These business are striving hard to achieve a niche for themselves in the global market. There are increasing number of opportunities available to the potential business players and at the same time they have to accustom to the ever increasing demands of the customers in order to ensure a competent customer satisfaction and content. Consequently, the concept of international business or multi-national business has gained huge popularity as more and more companies are going global. A multi-national company is a company that would be having its operations in more than two countries across the globe.
Multinational companies tend to maximize their reach globally for connecting to large number of people and transforming them into potential customers for the company’s products or services. There is a considerable amount of research that has to be carried out for incorporating a company into a multi-national firm that would be handling international business across different countries. This research does not only involve considering foreign markets, but also includes considering the local markets that would help them in establishing a firm hold in a specific region. The evaluation of the changing trends that are existing in the market is very important for developing an international business. Multi-national companies have to keep a track of the changing market conditions that are prevailing in the foreign markets where they have established their enterprise. The global and local context of international business requires evaluation and analysis of various factors that are going to be discussed in the below section.
Significance of research in local or global context
There is an extensive research that is to be carried out while developing an international business and developing a multi-national company that would be functioning across different nations. The level of research is very critical and it depends on identifying the target market and target customers that have the potential to achieve the desired level of business from the foreign countries. But, in order to establish a firm hold across the globe, a business has to first be a market leader in their specific business in the local markets or local areas. It requires great efforts to be carried by different departments that are present in the company.
The evaluation of the potential customers requires an in-depth understanding of the needs of the people. Developing the factors and elements that are needed by the people is followed by evaluating the options available. It is then followed by significant research to be carried out for selecting the best possible option that would help them in achieving a large share in the local market. After completely catering to the needs of the customers and people in the local market, a company can develop plans and strategies for its expansion into different countries. For this purpose, there is a considerable amount of research to be carried out regarding the culture, traditions, lifestyle and earning patterns of the people living in the foreign country. The demographics and the business trends have to be merged for deriving an appropriate business strategy for expanding a business from local to international boundaries through developing a multi-national company.
It is very important to understand the local context of the business before making it global as it will not be able to achieve the required level of popularity and support from the market. On the same note, there has to be considerable and extensive research regarding the local factors that have the potential to affect the business. Gathering knowledge and obtaining expertise would help the company to sustain in the local market. It is after establishing a niche in the local market that a company would look for expansion into overseas markets. It would be a critical decision that has to be taken after evaluating and analyzing certain important factors that contribute in determining success of a specific business in the international market. These factors have been discussed with the help of expert researches by business scholars and authors and is described in the below section.
In order to enter the international market across different countries, a company needs to develop strategic alliances with popular and well-known local enterprises or small firms that occupy a great share in the market. This is very important for ensuring that strategic flexibility is obtained that would incorporate the ever changing market conditions and demands of the local people. In 2014, Aldakhil, Abdullah and Nataraja, Sundaram have helped in determining the environmental factors that contribute to the success of any international business for a multinational company through developing International Strategic Alliances. In order to measure the performance of a firm, they have discussed various factors that would help a business to engage in strategic alliances through considering the example of various U.S. enterprises that would partner with multi-national companies and execute their international business (Aldakhil & Nataraja, 2014).
There is another research by authors and business research scholars Dirk Gilbert and Patrick Heinecke in October, 2014, that highlights the importance of developing regional strategies for achieving tremendous growth and success for a multi-national company. They have carried out modelling through the structural equation and derived the interrelationship between the regional factors and the distance between the regions. They have analyzed and evaluated the data that has been collected from the top 500 firms of Fortune Global firms. The degree up to which a regional exposure to the product or service would be useful for developing a significant share in the local market has been determined. The various strategies that are to be incorporated for inculcating the traditional and local values, characteristics and attributes that are expected from the products or services are mentioned and they involve developing a considerable research from the global as well as local context of the business (Gilbert & Heinecke, 2014).
The importance of an extensive and widespread Research and development (R&D) process has been developed by the business authors Michele Cincera, Claudio Cozza and Alexander Tubke in December, 2014. They have derived a research that involves sampling of about 130 large companies that are related to R & D and are based in Europe. The selection of location for expanding the business and taking it to new frontiers has to be carried out after carrying a considerable amount of research about the location. There has to be a local support from the people in the R & D that is carried out by the company in local as well as foreign market. When a foreign location is selected for expanding the local business to different countries, the economic cost has to be considered (Cincera, Cozza, & Tubke, 2014). It will help in measuring the feasibility for the entire process of expansion and also guide in the financial management process for handling the business in different countries word wide.
The companies have to inculcate changes in its operations as well as its products or services owing to the ever changing trends that are prevalent in the market. In January 2016, Michael Hitt, Dan Li and Kai Xu have developed the process of graduation of the international business strategies and concepts that would be useful for taking a business from local dimension to global dimension. They have developed the importance of obtaining global diversification throughout the processes that are adapted by the business to become a Multi-National Enterprise (MNE). There are many strategies that have been explored regarding the opportunities that are available to the Multi-National Enterprises (MNE) for expanding their business in a new territory or country. At the same time, emerging trends in business, different levels of complexities, emerging trends, sustainable factors and business capabilities are to be explored while expanding a company from one region to another region in some different country (Hitt, Li, & Xu, 2016).
In December 2015, Zhaleh Najafi-Tavani, Ghasem Zaefarian, Stephan Henneberg, Peter Naude, Axele Giroud and Ulf Anderson have stated that knowledge management serves to be one of the most important factor while developing an international business in a multi-national company. They have described the role that developing subsidies play in the success of multi-national companies. The contribution of the relationship that is developed between the headquarters and its subsidiaries help in establishing a firm ground for the development of business in different nations across the globe. It is also very important for the managers to consider the characteristics that are derived in developing subsidiaries in the business and these characteristics include, socialized mechanisms, values that are shared, the autonomy features and power to contribute from within. They have developed evaluation by considering 184 U.K. subsidiaries that are governed by international business. Thus, developing a business that would be knowledge intensive and involve developing subsidiary management across the different nations would be very important (Najafi-Tavani, et al., 2015).
These are the various literatures that have contributed immensely in developing a significant research regarding the development of international business through multi-national companies from global as well as local context. The high levels of competitiveness that are existing in the local as well as global market has to be considered from the business point of view. The researches have helped in determining the importance of several factors that are to be researched upon before expanding any business into foreign markets. These factors include the environmental consideration for sustainability, important elements related to R & D to be carried out for taking the organization or business from local to global, development of regional strategies for formulating International Strategic Alliances and developing an extensive knowledge based subsidiaries that would help any business to grow in the international market. Thus, there is a huge significance of carrying a research in developing a business from the local as well as global context.
Aldakhil, A. M., & Nataraja, S. (2014). Environmental Factors and Measures that Affect the Success of International Strategic Alliances. Journal of Marketing & Management., 17-37.
Cincera, M., Cozza, C., & Tubke, A. (2014). Main drivers for local and global R&D sourcing of European Multinational Enterprises. Eurasian Business Review, 227-245.
Gilbert, D., & Heinecke, P. (2014). Success Factors of Regional Strategies for Multinational Corporations: Exploring the Appropriate Degree of Regional Management Autonomy and Regional Product/Service Adaptation. Management International Review (MIR)., 615-651.
Hitt, M. A., Li, D., & Xu, K. (2016). International strategy: From local to global and beyond. Journal of World Business, 58-73.
Najafi-Tavani, Z., Zaefarian, G., Henneberg, S. C., Naude, P., Giroud, A., & Andersson, U. (2015). Subsidiary Knowledge Development in Knowledge-Intensive Business Services: A Configuration Approach. Journal of International Marketing., 22-43.