Please, respond to the attached classmate discussion posts (250 words each). Thank you
Please, respond to the below classmate discussion posts (250 words each). Please, respond to the below two classmate main posts. (Please, the responses need to be a discussion, not an evaluation. You can agree with them and add information regarding the topic discussed. No citation required) Thank you Classmate discussion posts Discussion 1 Maria Valenzuela Going from an international to a transnational business implies major changes to which a company needs to adapt in order to have a successful transition. The strategies used for managing the business also need to be changed. The business model of an international business is less complex to a transnational business due to that these are basically importers and exporters and all financial, operating and managerial decisions are centrally located at the company's main office, making the management of the company easier. Furthermore, international businesses do not make direct investments in the host countries where they operate. Another thing is that product or service customization is not a priority for international businesses, even though they may customize them for local markets on a limited basis. On the other hand, some of the negative aspects of an international business is that it has little need for local adaption and global integration. “Products are produced in the company’s home country and send to customers all over the world. Subsidiaries, if any, are functioning in this case more like local channels through which the products are being sold to the end-consumer. Large wine producers from countries such as France and Italy are great examples of international companies.” (Business to you, 2017). The transnational strategy is different from the international strategy, the main difference according to Boykin, 2019, gets reflected “because the control is more about coordinating the activities of local-market operating units to achieve integrated and interdependent synergies among the operating units. Each operating unit specializes in what it does best to make its own contribution to the organization. For example, an operating unit in China might do the manufacturing. Another operating unit in India might be responsible for technical support. One overarching theme of transnationals is adaptability to local markets.” Transnational businesses are more adaptable, flexible and agile to respond to local-market conditions, furthermore they develop standardized products and services that can be readily customized for local markets. Even some transnational companies take a step further with mass-customized products that are made in mini-factories strategically dispersed around the world that makes it easier to take to a nearby country. On the other hand, the disadvantages of transnational companies include that they can choose where they will manufacture and often select countries with low wages and minimal restrictions for cost-saving purposes. Also, transnational companies often face criticisms when they avoid higher tax rates, form monopolies, and cause smaller businesses in the region to suffer. Because of this, management must determine strategic ways to make a profit while maintaining a respectable reputation, and one of these strategies is to give back to the community in order to minimize the negative image of the company. Going from an international business to a transnational business means that some barriers would be faced including language and cultural barriers, local competition, taxes, regulations and compliance issues, supply chain risks, and operational risks with hiring staff because the culture is not well known. And at this point, the business would not only be shipping products to another country but will operate in that country, all of these barriers should be considered, and the company must get prepared before taking the step to transition because if the staff does not learn from these challenges, adapt and adjust to them, it can become a failure for the company. Hiring a company in the country where they plan to do business who can give them advice on HR, policies, laws and regulations, also on what to do, and how to conduct business would be very helpful in making a successful transition. Reference: Boykin, G. (2019, May 8). The differences in international & transnational businesses. Retrieved from: https://bizfluent.com/info-8721175-differences-international-transnational-businesses.html Business to You. (2017, January 27). International Business Strategy. Retrieved from: https://www.business-to-you.com/international-business-strategy/ Discussion 2 Alexis Nunez The international strategy takes products produced for domestic markets and sells them internationally with little local customization (Hill & Hult, 2019). Internationally sold products serve universal needs and don’t have many competitors so they are not faced with pressure to reduce cost structures (Hill & Hult, 2019). With this strategy product development functions tend to be centralized with manufacturing and market functions in each country or region where they do business with the head office maintaining tight control. “The resulting duplication can raise costs, but this is less of an issue if the firm does not face strong pressures for cost reductions (Hill & Hult, 2019).” On the other hand, with transnational strategy firms are trying to “simultaneously achieve low costs through location economies, economies of scale, and learning effects; differentiate their product offering across geographic markets to account for local differences; and foster a multidirectional flow of skills between different subsidiaries in the firm’s global network of operations (Hill & Hult, 2019).” This system is focused on finding a balance between standardization and local adaptation to countries' specific requirements in an effort to seek the advantages of both international flexibility and global efficiency. Despite the appeal of this strategy, it is complex in trying to pursue because of conflicting demands on the company which can be costly. The main challenges are standardization and localization, knowledge transfer, and internal and external cultural differences. Responding to local demands by differentiating products based on different geographic markets faces issues surrounding increased costs. Additionally, there are issues with this strategy surrounding the creation of a viable organization structure and control systems needed to manage this strategy (Hill & Hult, 2019). Overcoming these challenges requires strong cultural awareness when operating across countries. “The cultural preferences in each country and the right degree of standardization and local preferences are a big issue for the global bed textile industry (Ahrens & Guetz, 2015).” Companies that seek to use transnational strategy need to be able to adapt to a kind of hierarchical strategy that includes intra-organizational trade; strategic coordination and knowledge transfer between headquarters and subsidiaries as well as subsidiaries in different countries. Core investment areas should be identified to take advantage of market opportunities. Knowledge channels should be managed to provide strategic direction for long term success and to ensure that departments are effectively coordinating with each other (Kang & Hwang, 2018). Additionally, being able to overcome managerial challenges faced by expanding operations into international markets in the transnational system. References Ahrens, I., & Guetz, T. (2015). Transnational Strategy Shift: The Importance of Cultural Awareness. Retrieved from http://hb.diva-portal.org/smash/get/diva2:849153/FULLTEXT01.pdf Hill, C. W., & Hult, G. T. (2019). International Business. McGraw-Hill Education. Kang, E., & Hwang, H.-J. (2018). Strategic Management Plan for Transnational Organizations. The Journal of Asian Finance, Economics, and Business, 5(2), 119-128. DOI: https://doi.org/10.13106/jafeb.2018.vol5.no2.119