Companies who transition to a global market could potentially see lower costs with an increase in revenue. Focusing on reducing the cost strategy will decrease operating costs while maximizing labor productivity and increasing profits. However, it can be quite the challenge as the companies will have to face a many different policy challenges.
“The meaning of global competitiveness is the ability to create and capture higher value in the global supply chain network. Companies must create high value through innovation, in order to move up on the global supply chain”. However, pursuing the global economy not only requires innovation but also market competition as well as the various regulations and laws. In order to maximize on the value creation, cost-leadership strategy is essential for economic development.
Additionally, international business consists of many different aspects such as politics and the government which can complicate things. Like most risks, this could pose a major issue as entering into these foreign countries could lead to devastating results. “Often there is a high degree of uncertainty when performing operations in a foreign country, and this risk is often called the political risk and sovereign risk. The political environment may affect the business of the organization in many ways”. Therefore, companies need to be aware of all external factors prior to entering global markets.
References
Lee, Chung-Shing & Ho, Jonathan. (2014). National and Industrial Strategies for Value Creation in a Global Context. International Journal of Innovation and Technology Management. 11. 10.1142/S0219877014400100
Albugar, M. (2017). Impact Of Government Policy On International Business. Varazdin: Varazdin Development and Entrepreneurship Agency (VADEA). Retrieved from https://libauth.purdueglobal.edu/login?url=https://search-proquest-com.libauth.purdueglobal.edu/docview/2070393446?accountid=34544
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