The biggest risk to an established business in U.S which attempt to globalize
The expansion of business is one of the central objectives of any business organization. Most companies aim at penetrating the global market after saturating the home markets. However, various risks are associated with business expansion particularly global expansion. The mitigation of some of these risks is easy while others are more or less perpetual, and organizations only strive to cope with them. As far as business risks are concerned, competitive risk stands to be the biggest risk facing companies with the intention of going international.
Competitive risk entails the possible loss to the business organization due to the decline of its competitiveness. This risk relates to the strategic marketing as well as the positioning of the company. The relative competitive position of the business is crucial to the size of its market. In the modern global market, business corporations need to be highly competitive with strong operational as well as logistical capabilities to survive global competition. Most of the global business opportunities have already been identified and various companies have been established to exploit them. As such, the level of competition has increased in the contemporary global market. Therefore, a firm with intentions of expanding to serve the international market must consider its competitive capacity. Otherwise, it stands a high risk of loss due to lack of market. For example, if a local motor firm in the U.S is contemplating going international, it should assess its competitive position by considering the market share of the General Motors which faces stiff competition from the Toyota Company.
Most companies have a significant competitive advantage in their home markets, but when they attempt to go international, they fail due to inadequate competitive capacity. Therefore, a company whose objective is to globalize should begin by designing the strategies for improving its competitiveness and reducing the chances of exposure to competitive risk for it to be successful.
Bibliography
AlKhattab, Adel and William Stein. “Informing Country Risk Assessment in International Business.” International Journal of Business and Management 5, no. 7 (June 21, 2010).
Laudicina, Paul and View Bio. “MANAGING GLOBAL RISK TO SEIZE COMPETITIVE ADVANTAGE.” 2015. Accessed June 13, 2016. http://iveybusinessjournal.com/publication/managing-global-risk-to-seize-competitive-advantage/.
Ziemba, Rachel and William Ziemba. Scenarios for Risk Management and Global Investment Strategies. United Kingdom: Wiley, John & Sons, 2007.
