2 Chapter Synthesis on Business Strategy

2 Chapter Synthesis on Business Strategy
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In the process of globalization, there is the influence of international trade and investment, and these same factors are aided by the impeccable capabilities of information technology. As such, companies tend to be influenced by different motives so as they can expand internationally. To begin, we have seen companies take a global expansion for the mere fact of trying to avoid taxes. Secondly, there is the aspect of increasing revenues, which is tied to the factor of trying to maintain diversification. These are but a few of some of the motives that press on the management of companies and organizations to take the global expansion route. As such, companies have come up with various strategies in which they are able to compete in a global marketplace. Some of these strategies include cost leadership, cost focus, differentiation leadership, and differentiation focus.
Looking at the various modes that companies tend to enter foreign markets, it is safe to say that each one of them contains both merits and demerits. Therefore, there exists a number of modes of entering international markets. They include exporting, partnering, and acquisition. For starters, exporting can be faced with challenges from foreign exchange rate fluctuations to higher taxes. On the other hand, it can be a way for a company to generate more revenue for surplus goods which not be marketable in the host country. Secondly, we have the mode of acquisition. This has various challenges like not being given a proper share and authority within the company. When it comes to the pros, the acquired company can be boosted and venture ahead if, for example, it was on a hole when it comes to financial matters. The mode of partnering shares almost the same principles in relation to pros and cons as that of the mode of acquisition. However, when a business partners with another, there is the aspect shared liability.
The aspect of making decisions within a company that tends to affect the whole operations and business structure of a company is crucial for the strengthening of the company’s business model, together with its business-level strategies. This is because of the type of leadership and business making decision model that has been used. As such, most companies have been known to use the horizontal integration strategy, which is termed as a cooperate-level strategy whereby a company increases the production of goods and services in the same section or area of a supply chain. This strategy is advantageous when the company notices that a specific area of the supply chain has more demand, and therefore more supply should be injected. On the other hand, the increase in the production of goods and services on the same area on the supply chain can also lead to a waste of resources and a lack of creativity when it comes to competition. This brings us to a company’s internal value chain, which is regarded as those activities within a company that tends to add value and create value for the company. Therefore, looking at the horizontal strategy, some companies tend to repeat the same activities if it will mean they are still adding and creating value to the company. On the other hand, it is crucial for a company to really monitor and evaluate the industry value chain, and through this, it will be able to highlight and detect the various activities that need boosting.

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