International Business Strategies

Strategic Outsourcing

The opposite of integration (a firm’s growth, in number of businesses) is outsourcing value-creation activities to subcontractors. In recent years there has been a clear move among many enterprises to outsource  non-core  or non-strategic activities.  Any function can be outsourced, if it is not critical to a firm’s success (is not one of its distinctive competencies).

Outsourcing begins with a identification of a firm’s distinctive competencies–these will continue to be performed within the company. All other activities are then reviewed to see whether they can be performed more effectively and efficiently by independent suppliers. If they can, these activities are outsourced to those suppliers.… Read the rest

Abey Francis

What Is International Franchising?

Franchisers sell a defined, proven business format or method of operation, offering a product or service that has sold successfully. An independent business is based on both an untried idea and operation. Franchisees can often buy lower-cost goods and supplies through the franchiser, resulting from the group purchasing power of all the franchises. Franchising provides a uniform system of operation, so that consumers receive uniform quality, efficiently and cost-effectively. A uniform system brings with it the advantages of mass purchasing power, brand identification, and customer loyalty, capitalizing on the proven format. A franchiser also provides management assistance, including accounting procedures, personnel and facility management.… Read the rest

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Multinational Corporations (MNCs) – An Overview

Multinational Corporations (MNCs) are businesses that extend outside of their own country, whether they are located throughout the world or only in a couple other countries, they are considered multinational. The value adding activities which are owned by these companies are used to produce tangible goods or intangible services or the combination of both. There are many reasons as to why firms become multinational and there are various strategies for a firm to become multinational.

The immediate motives of the Firms can be to expand business, to seek new market, or for additional profits and revenues. It may also be to concentrate on the economics of scale that a larger international demand can bring.… Read the rest

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Case Study: Frequent Restructuring at Sony Corporation

Sony Corporation is a multinational conglomerate based in Japan. The organisation’s core business is in Electronics and Entertainments. It has grow from barely 20 employees with about ¥190,000 as its capital in 1946 to today with about 150,000 employees worldwide and worth about $15 billion dollars on the share market as of May 2012.

Sony has always put innovation as its main business focus. Due to its innovative business model Sony was able to bring us the very innovative products such as Walkman, Playstation, CD player and Camcorders and others. In the way all these products made Sony become a premium brand in the world, it can command the premium prices for its products.… Read the rest

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What are the Driving Forces behind Globalization?

Globalization can be characterized by four factors; the growing worldwide interconnections, rapid, discontinuous change, increased number and diversity of participants, as well as growing complexity. According to the Dictionary of Economics the term; globalization, is defined as the geographical shifts in domestic activity around the world and away from the nation states. It can also be referred to the interdependence of economies, through the increase in cross-border movement of goods, service, technology and capital. Examples of such integrations can be seen in the growing presence of many multinational companies as they expand into new regions (i.e. McDonalds) and the outsourcing of manufacturing and services.… Read the rest

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Evaluation of Subsidiary Performance in Multinational Operations

A parent company may employ several criteria to evaluate the performance of its foreign subsidiaries. Sales growth, market share, stability in output, asset growth and returns on investment are some of these criteria. Out of these, Return On Investment (ROI) is the most widely-used criteria-because the interest of the parent company ultimately lies in the Return On its Investment. The ROI as calculated on the basis of reported profit repatriation may however not show the true return from the subsidiary. This is because it may be grossly-distorted, due to the following reasons.

(i) The subsidiary’s profits are taxed in the host country and repatriation of profit may be subject to further tax.… Read the rest

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