International Economic Strategies Analysis Paper

International Economic Strategies Analysis Paper
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International Economic Strategies Analysis Paper
Undoubtedly, the success of a business, more so a multinational, relies on the strategic management adopted. A multinational company must establish new ways to organize and operate so as to deal with the changes and cope up with the different conditions in different parts of the world (Harper, 2015). A multinational must organize itself in a way that it can enhance efficiency, facilitate innovation and to deal with the challenges and issues that arise in the business environment. There are various methods that companies adopt when going international and one of them is developing subsidiaries. Subsidiaries are self-contained business units belonging to the parent company but operating as separate entities in the foreign country. However, developing subsidiaries may present benefits and drawbacks to the company. The intent of this paper is to examine the international economic strategies that a firm can adopt when going international. To achieve the said purpose, the paper shall adopt a case study of a cookware company that intends to manufacture its products in low-cost offshore and sells it in the United States and Europe.
There are many multinational models that have evolved and helps businesses to decide how they want to approach the global market. One such common model is the subsidiary model (Hood & Birkinshaw, 2016). In the subsidiary model, a company establishes self-contained units with their operations, finance and human resources functions in each country that it intends to set up operations in. the subsidiary model bears in mind other considerations beyond the simple geography (Hood & Birkinshaw, 2016). The main aim of setting up subsidiaries is to allow the business to respond better to the geographic-based threats and reap from the opportunities.
The business should expect cultural differences in different countries and plan to respond to these differences. It implies that each subsidiary group should have employees drawn from within the locality so as to align the business operations with the local culture. For instance, there are certain countries that do not use English language, and for such cases, the company has to employ the local people to carry out the business operations such as marketing and selling.
The company will set up fully established subsidiary groups in different countries. The subsidiary groups will include the manufacturing units in different low-cost countries and the sales agent-subsidiary groups in the United States and Europe. Each of the subsidiary group should be fully funded and structured with complete management comprising of the manager, supervisors and the employees (Hood & Birkinshaw, 2016).. Although each of the subsidiary managers will be answerable to the main headquarters, they should be left to operate autonomy so as to facilitate efficient decision making and be able to take quick actions to respond to the changes in a particular environment.
The subsidiaries should receive enough funds to enable them to run independently. Allowing the subsidiaries to run independently shall give the subsidiary manager full...