7 Types of Corporate Strategy for Export Management

Corporate strategy is the overall direction and vision of a company that guides its decisions and actions. It defines the scope, goals, and objectives of the business and how it will achieve them. Corporate strategy also determines the allocation of resources, the competitive advantage, and the value proposition of the company.

One of the key aspects of corporate strategy is export management, which is the process of planning, implementing, and controlling the export activities of a company. Export management involves identifying and selecting foreign markets, developing and adapting products and services, establishing distribution channels, setting prices, promoting and communicating with customers, and complying with legal and regulatory requirements.

Export management can help a company to expand its customer base, increase its revenues, diversify its risks, enhance its reputation, and gain access to new technologies and innovations. However, export management also poses many challenges, such as cultural differences, language barriers, political instability, currency fluctuations, trade barriers, logistics costs, and competition.

Therefore, a company needs to adopt a suitable corporate strategy for export management that aligns with its vision, mission, values, and capabilities. There are different types of corporate strategy for export management that vary in their level of commitment, risk, control, and profitability. Here are some of the most common types of corporate strategy for export management:

1. Indirect exporting

This is the simplest and least risky type of corporate strategy for export management. It involves selling products or services to an intermediary in the home country, such as an export agent, a trading company, or a distributor, who then exports them to foreign markets. The company does not have to deal with foreign customers or regulations directly and can rely on the intermediary’s expertise and network. However, the company also has less control over the marketing mix and the profit margin and may face competition from other suppliers who use the same intermediary.

2. Direct exporting

This is a more active and risky type of corporate strategy for export management. It involves selling products or services directly to foreign customers or intermediaries in the foreign country, such as importers, wholesalers, retailers, or agents. The company has to handle the export process itself and deal with foreign regulations and customs. The company has more control over the marketing mix and the profit margin and can build closer relationships with foreign customers. However, the company also has to invest more time, money, and resources in market research, product adaptation, distribution channels, promotion strategies, and customer service.

3. Licensing

This is a type of corporate strategy for export management that involves granting a foreign company the right to use the company’s intellectual property, such as patents, trademarks, designs, or know-how, in exchange for a fee or royalty. The company does not have to produce or sell the products or services itself and can avoid many of the costs and risks associated with exporting. The company can also benefit from the licensee’s local knowledge and market presence. However, the company also has less control over the quality and reputation of the products or services and may face competition from other licensees or licensors.

4. Franchising

This is a type of corporate strategy for export management that involves granting a foreign company the right to use the company’s business model, brand name, products or services, and operational support in exchange for a fee or royalty. The company does not have to operate or manage the business itself and can leverage its established brand image and customer loyalty. The company can also benefit from the franchisee’s local knowledge and market presence. However, the company also has less control over the quality and consistency of the products or services and may face competition from other franchisors or franchisees.

5. Joint venture

This is a type of corporate strategy for export management that involves forming a partnership with a foreign company to share ownership, control, resources, risks, and profits of a new business entity in a foreign market. The company can combine its strengths and capabilities with those of the partner to create synergies and competitive advantages. The company can also benefit from the partner’s local knowledge and market presence. However, the company also has to share decision-making authority and profits with the partner and may face conflicts or disagreements over goals, strategies, or operations.

6. Strategic alliance

This is a type of corporate strategy for export management that involves forming a cooperative relationship with a foreign company to pursue common goals or interests in a foreign market without creating a new business entity or sharing ownership or control. The company can access new markets, technologies, or resources that are complementary or supplementary to its own. The company can also benefit from the partner’s local knowledge and market presence. However, the company also has to coordinate and cooperate with the partner and may face competition or opportunism from the partner.

7. Foreign direct investment (FDI)

This is the most complex and risky type of corporate strategy for export management. It involves establishing or acquiring a wholly owned subsidiary or a majority stake in a foreign company in a foreign market. The company can have full control over the production, marketing, and distribution of its products or services and can integrate its operations with the local environment. The company can also benefit from economies of scale, scope, and learning. However, the company also has to invest a large amount of capital, resources, and management in the foreign market and deal with political, legal, cultural, and economic uncertainties.

These are some of the types of corporate strategy for export management that a company can choose from depending on its objectives, capabilities, and resources. Each type has its own advantages and disadvantages and requires different levels of commitment, risk, control, and profitability. A company should evaluate the opportunities and challenges of each type and select the one that best suits its needs and goals.

Types of Corporate Strategy and Global Demand

Corporate strategy is a long-term plan that outlines clear goals for a company. It helps the company create value, outperform competition, and capture market share. There are different types of corporate strategy that a company can adopt depending on its situation and objectives. Some of the common types are growth, stability, retrenchment, and combination. These types of corporate strategy can affect the global demand for the company’s products or services in different ways.

Growth Strategy and Global Demand

A growth strategy is a plan or goal for the company to create considerable growth in different areas, such as sales, revenue, following, or company size. A company can achieve growth through concentration or diversification. Concentration means developing the core of the business, such as a bookstore investing in selling more books. Diversification means entering new markets or industries to expand the business, such as a bookstore selling e-books or coffee. A growth strategy can increase the global demand for the company’s products or services by reaching new customers, creating brand awareness, and offering more value. For example, Apple has used a growth strategy to enter new markets such as music, smartphones, tablets, and wearables, and has increased its global demand by offering innovative and high-quality products . However, a growth strategy can also decrease the global demand if the company fails to meet customer expectations, faces strong competition, or loses its core competencies.

Stability Strategy and Global Demand

A stability strategy is a plan or goal for the company to stay within its current industry or market because it is already succeeding in its current situation. A stability strategy maintains the company’s success by continuing practices that work for the company, such as customer satisfaction, quality control, or operational efficiency. A stability strategy can maintain or increase the global demand for the company’s products or services by retaining loyal customers, building trust and reputation, and offering consistent value. For example, Toyota has used a stability strategy to focus on its core business of producing reliable and efficient cars, and has maintained its global demand by satisfying customer needs . However, a stability strategy can also decrease the global demand if the company becomes complacent, ignores market changes, or misses opportunities for innovation.

References:

http://www.eatonprogram.com/wp-content/uploads/2013/01/Strategy-and-the-Internet.pdf

http://www.cs.cornell.edu/home/kleinber/networks-book/networks-book-ch17.pdf
https://www.indeed.com/career-advice/career-development/what-is-corporate-strategy

https://www.investopedia.com/terms/c/corporatestrategy.asp

https://www.investopedia.com/terms/e/export-management-company.asp

https://www.investopedia.com/terms/l/licensing.asp

https://www.investopedia.com/terms/f/franchising.asp

https://www.investopedia.com/terms/j/joint_venture.asp

https://www.investopedia.com/terms/s/strategic-alliance.asp

https://www.investopedia.com/terms/f/fdi.asp