International Strategy Essay Example | Topics and Well Written Essays - 750 words

International Strategy - Essay Example It is also in a way the need of the hour as domestic based companies can no longer shield themselves from the effects of multinational corporations. International diversification carries with it significant advantages. Taking into account the obvious advantages in terms of the increased market size and a higher return on investment, there are also other advantages that help the company take down its per unit costs and hence increase profit margins. These accrue from taking advantage of economies of scale to drop down fixed costs or per unit costs. This is further aided by the domestic incentives that the other countries may provide to aid their own economies which would give the expanding firm a comparative advantage. The development of international business level strategies however does depend on some factors. One of the chief is the amount of risk averseness of the management who may or may not be willing to take such a big step requiring possibly high capital expenditure. There is also the degree of environmental scanning performed by the firm and the degree of planning formality used to guide the planning process. Finally a crucial element in the decision to go international is the amount of munificence in the domestic industry environment. Entrance into the international markets can be made by exporting directly to the market, making use of possible domestic incentives. ... company wants to retain greater control, acquisition of a company or formation of a whole owned subsidiary may be the best option in terms of allowing greater autonomy in decision making. Amazon is a company that enjoyed considerable growth since its inception and enjoys an international market of customers through its online store. The company now decided to go global with Amazon's DRM-free MP3 digital music store. This is an important decision as it would expose the company to a whole new horizon of opportunities and risks ("Amazon to Begin International Rollout of Amazon MP3 in 2008."). The motive for this expansion seems to be the traditional need to expand beyond the domestic market and tap in that reserve of international customers. However more than that, this seems like an inevitable choice for Amazon given that competitor multinational firms such as Apple with its I-pod and I-tunes store already have an international base and may keep creeping on Amazon's customers. Apart from being the need of the hour, this expansion will allow the company to enjoy possibly higher return on investment given the rise in its customer base and increased sales could see quarterly profits rising steadily. The company may also be able to enjoy economies of scale in terms of learning as handling a diverse customer base will allow it to come into contact with and become adept at fulfilling unique customer requirements. This experience the company can use to bring innovation to its operations in the domestic market and other areas of the business, something other competitors in the domestic market may not be able to enjoy. Since the main focus of sales will be online, the company has the benefit of not having to make an alliance or acquisition of any companies as it is able to