Competitive Strategy For Internationalization Of Companies

Adaptation

Describe about the Competitive Strategy for Internationalization of Companies.

In this contemporary business world, organizations aim towards internationalization of their companies.  As stated by Berry and Kaul (2015), with increase in internationalization of organizations, the chances of differences also amplifies across market borders. So, it is necessary for the internationalised organizations to reduce the large discrepancies and differences related to culture, structure, working environment and beliefs of the people. Organizations need to chalk out a strategy that addresses these differences and adjust with the local operation under exclusive conditions. According to Collis (2015), one of the approaches used in improving international integration is through “Ghemawat’s AAA Global Strategy Framework”. The three AAA’s is the acronym of Adaptation, Aggregation and Arbitrage. It, therefore, provides a platform for the internationalized organizations for its sustainable growth, stability, and development. This strategy helps organizations in maintaining a right balance between the economics of scale and receptiveness to limited conditions.

This report will be discussing Adaptation, Aggregation and Arbitrage aspects about Computer and ICT industries. The organizations taken under Computer Industry are Altium and Atlassian. Moreover, the organizations took under Information Communications Technology (ICT) are Telstra and Austar. This framework will help in prioritizing the choices that encourage organizations to expand beyond borders and have a sustainable business. 

As opined by Dawson and Mukoyama (2014), Adaptation is one of the most effective strategies that aim towards dealing with workplace differences due to globalization. It helps in increasing both market revenue as well as market share matching with its requirements and preferences. Organizations use this Adaption strategy for penetrating into new and potential customer base and that too in a new market.

Company 1: Altium Limited

Altium Limited is a public software company in Australia that provides PC-based software in major parts of the world like Germany, China, Netherlands and US (Dixit and Skeath, 2015). This organization has implemented Adaptation strategy for creating global value through modification of one or more company elements to meet the local obligations and prerequisites. The Adaptation strategy implies five levels of operation: variation, focus, externalization, design, and innovation. In variation level, Altium Limited aim towards achieving varying products, positioning policies and different metrics irrespective of involving intense complexity and cost in accomplishing it. The company also aim towards reducing variation through focusing on particular geographical areas, products, segments, and verticals. As opined by Ferreira et al. (2014), in externalization, Altium reduced the burden of variation through undergoing franchising, networking and strategic alliances with local markets. While designing the software products, Altium Even more, it also aimed towards designing flexibility over its products for overcoming supply differences. Altium made effective innovations for improving its marketing n both home and globalized countries.

Industry 1: Computer industry (software)

Atlassian is a publicly owned Australian software organization that develops software products for global developers, content team and project managers; serving more than 1lac customers (Ariño, 2015). The organization has adopted several measures and policies that comply well with the requirements of the global customers. It has brought variation in its products that helped Atlassian in positioning itself in the global market. Though it involved certain complexity, the positioning of products is done that matches with local requirements. As opined by Ghemawat (2013), Atlassian can also focus in limited globalized countries with limited products that will certainly help the organization in adapting internal market environment. The organization can also undergo global strategic alliances to reduce the pressure of externalization. Moreover, the products of Atlassian are quite flexible that operates perfectly on global platforms. The innovation within the organization and its products or services should be effective to get readily accepted across borders.

Company 1: Telstra Corporation Limited

As mentioned by Johnston and Purkis (2015), Telstra Corporation Limited is one of the Australia’s telecommunication organizations that provide telephone, the Internet and digital television services and products across Australia and beyond borders. Its outstanding internet network and exclusive entertainment packages can be placed in various overseas countries in spite of variation in cost and complexity. Telstra needs to focus towards limited geographical regions such as developing Asiatic countries through their limited services and products for penetrating a new market and new customers. Lin (2014) stated that Telstra could also opt for certain strategic alliances with the existing local markets for reducing the pressure of internationalization. The costs need to be reduced considerably with increasing flexibility in designing of products or services. This innovative effectiveness will help Telstra in gaining explicit marketing in foreign lands.

According to Jha et al. (2014), Austar Communications is a renounced telecommunication organization that is providing products or services like direct broadcasting satellite and cable television connections across urban and rural Australia. The organization needs to adopt Adaptation strategy that will help in the successful operation. The variation in products, as well as policies, help in the positioning of the organization into a new market with new customers. Austar also needs to focus towards positioning its direct broadcasting satellite to limited geographical regions of developing countries. Ghemawat (2015) also suggested that Austar can adopt strategic alliances as well as franchising that will help in positioning itself in a new market. The outstanding performance and exclusive product in providing television services can also help in reducing the cost of variation of products. These innovations in products or servicing and positioning itself in remote areas of internationalized countries will help the Adaptation strategy to become successful.

Company 1: Altium Limited

Lucea and Doh (2012) stated that Aggregation aims towards the achievement of economies of scale as well as scope for creation of global efficiencies. This strategy exploits similarities among diverse geographies and involves standardization of the approaches. It identifies ways that help in introducing both economics or scope and scale in global business without hampering local responsiveness.

Company 1: Altium Limited

Mauri and de Figueiredo (2012) commented that while Altium provides its products or services globally, it deals with the similarities and differences across various geographical areas. It aims at creating economic of scope and scale about a complete standardized global strategy applicable across all the geographical regions. It aims to identify ways that help in pioneering economies of scope and scale into international business without negotiating the local sensitivity and awareness. As stated by Morschett et al. (2015), Altruism can undergo acquisitions in several countries that would certainly help it with both resources and scale for participating in the international market. It also helps in establishing new relationships with a large number of customers across the world with different culture and background.

According to Martin and van den Oever (2013), Atlassian with its versatility in diverse products can adopt Aggregation Strategy for flourishing successfully in the global market. This organization can adopt this strategy by language diversity so that the global customers can easily use the software in their regional languages. The software products need to have a translating set-up button that on clicked will interpret the entire page along with its operations into the regional language. This will help in serving millions of customers across the world. Moreover, it will also help in maintaining and managing economies of scale and scope for integrating the business together (Mascarenhas, 2013).

Company 1: Telstra Corporation Limited

As opined by Musso and Francioni (2014), Telstra with its exclusive and unique services in digital television can adopt Aggression strategy that will help the organization in developing successfully beyond borders. With its modern technological products, it can easily mitigate geographical differences and create globally standardized business model. It will, therefore, help in integration of business as well as leverage its competitiveness overseas. Based on different countries, Telstra can expand its products from one region to other for capturing a new market with potential patrons (Collis, 2015).

Twarowska and KÄ…kol (2013) mentioned that Austar with its high-speed internet service could approach the different developing countries with reduced geographical barriers. This Aggression strategy will be applicable if the company breaks into new geographical locations with high-speed internet services and with low cost. It will help the organization in generating a balance between economies of scope and scale without any conciliation from the local customers. The cost advantage will, therefore, help the organization in attracting a lot of customers and secure its position in those areas (Mullen and Berrill, 2015).

Company 2: Atlassian

According to Lloyd (2016), Arbitrages strategy focuses towards exploiting differences rather than bridging or adapting them and characterizes the global strategy. It believes in buying low in one market and selling it at a higher price in the different market. It focuses mainly towards performance enhancement of organizations along with aim towards reducing cost and risk while operating globally. 

Company 1: Altium Limited

Johnston and Purkis (2015) commented that Atrium could opt for administrative Arbitrage strategy to create opportunities between the overseas countries having a difference in legal, political and institutional differences. It will help the organization in expanding its business of electronics requirements by manufacturing the products as per customer’s requirements. The organization doesn’t have to employ much time in bridging the differences but have to utilize the differences to create a global strategy of progressing in the foreign lands. The organization has to exploit the administrative differences will leverage the profits of Atrium (Berry and Kaul, 2015).

According to Jha et al. (2014), Atlassian can utilize geographical Arbitrage strategy that helps the company in leveraging its business through geographical differences between local and foreign lands. Since this organization is into software products, it can be easily sent over borders. It not only reduces transportation costs but also helps in creating new opportunities and prospects in diverse geographical regions. It shows how Atlassian uses its resources in expanding overseas and making profits in diverse marketplace. Moreover, this strategy also helps the organization in creating more employment that also results in servicing more customers. As a result, it leads to high profit earnings of the organization (Ferreira et al. 2014).

Company 1: Telstra Corporation Limited

Dawson and Mukoyama (2014) mentioned that Telstra can opt for Economic Arbitrage strategy that helps in focusing towards differences in cost of capital as well as labor. It can seek out to the foreign lands, the developing Asiatic countries, where it can avail low cost but premium quality resources. This outsourcing of the company’s branch to geographical differentiated areas will leverage the organization’s global position, its productivity as well as profit margin. The variations in inputs such as knowledge, skills and talents will definitely help in utilizing the differences and making the best use of it to make the availability of complementary services easy (Lucea and Doh, 2012).

According to Ferreira et al. (2014), Austar can expand its services overseas through utilizing its geographical Arbitrage strategy. It, therefore, helps in creating opportunities in various global countries through utilizing the geographical differences. It makes the best use of resources within the organizations to transfer the products and services overseas and across borders. It may also utilize economic differences of Arbitrage strategy to get into the global market. It also definitely helps organization in marketing as well as developing the services in foreign market with potential customers (Dixit and Skeath, 2015).

Industry 2: ICT industry (Information Communications Technology)

Conclusion

The overall report deals with implementation of AAA framework in different organizations and their level of acceptance of it. This framework helped in developing a summary scorecard that indicates the extent of success that organizations will have on globalization. The Adaptation strategy deals with cross-market differences that help in blending the advantages of local market. In the Aggregation strategy, it is seen that the organizations had aimed towards overcoming cross-cultural groupings like global accounts, regional structures and product divisions. In the Arbitrage strategy, these organizations aimed towards exploiting the differences in market and also aimed towards maintaining a balance between demand and supply. There are several challenges present in these strategies that needs to be mitigated by the organizations for a sustainable international business growth and development. The companies mentioned above needs to focus on these 3A’s for building a competitive advantageous position in this global world. These organizations aim towards maintaining a balance between these strategies that helps in targeting and positioning new markets and customers.

References

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