Operating a small brick and mortar shop in rural Pennsylvania is very different than running a multinational corporation that distributes products to fifty countries. Companies of different sizes probably have common objectives, including how to increase profits, the best way to capture market share and the best way to raise money for operations, but the way in which companies work to achieve these goals scale national is different from the way it is done internationally.
A home business strategy for the manufacture of products for the company involves finding the most cost-effective providers within their own borders. Producers nationals are required by law to pay their employees a minimum wage, meet minimum safety standards in their factories – which tend to be more stringent in developed countries – and collect items of work within their country. A global business strategy, in turn, casts a wider net. International companies can take advantage of cheaper labor markets in China and India, buy cheap textiles from Asia and production importing countries of South America. Global companies derive significant cost savings as a result of cheaper global markets.
A business plan national focuses on how to leverage the local demographics and how to appeal to their tastes and preferences. For example, a beverage company in the US could focus on the packaging is pleasing to the youth population and launch its products in service stations nearby high schools. A global business strategy incorporates many of these same plans, but must modify their products to suit the cultural preferences of its global audience. The same packaging and flavors can not be translated into a foreign audience. Moreover, global companies must alter their advertising strategy. While American teens may respond well to interactive online ads, African teenagers in remote villages of Ethiopia are likely to respond better to billboards and flyers.
The strategies include global businesses adapt to economic conditions in foreign countries. Each country has different rules on taxation, political and currency. So while a business plan nationally operates within the parameters of their host country, global business strategies play with multiple regulations in many countries. While global companies often can get products at a lower price, go through several risks: corruption, vandalism and currency volatility are some of the challenges that a global business strategy tries to advance. A firm national , however, has far fewer options when the host government implements regulations. For example, a global business can move its operations to a new, less expensive if the local government mandates higher wages country. A firm national has to absorb the higher costs. Hans Jansson, author of “International Business Strategy in Emerging Markets”, explains that multinational companies must develop a relationship with the government abroad as a means of obtaining permits and pass bureaucratic procedures. Companies national usually can avoid establishing this kind of relationship.
Strategies national distribution require different tactics to global business strategies. Distribution is an easy task for enterprises operating within a country. The internal infrastructure of developed countries also means distribution channels tend to be more reliable and efficient. Global companies are subject to the reliability of external infrastructure and foreign contractors, who are at greater risk. Charles Hill and Gareth Jones explained in his book “Theory of Strategic Management” how Walmart experienced several obstacles to its expansion in Mexican markets, due to poor roads and little influence with local suppliers.