THE ACADEMY OF ECONOMIC STUDIES

FACULTY OF INTERNATIONAL BUSINESS AND ECONOMICS

BUSINESS COMMUNICATION MASTER
1ST YEAR

INTERNATIONAL BUSINESS
PROJECT

Dragomir Vasile Valentin

Comment the following statement: “International Business Strategy, especially in
turbulent times, deals with change and, often, with irreversible decisions”.

Today, business is acknowledged to be international and there is a general

expectation that this will continue for the foreseeable future. International business may
be defined simply as business transactions that take place across national borders. This
broad definition includes the very small firm that exports (or imports) a small quantity to
only one country, as well as the very large global firm with integrated operations and
strategic alliances around the world. Most prior research has focused on vertical
integration or strategic outsourcing in isolation to examine their effects on important
performance outcomes. Baseline proposition is that balancing vertical integration and
strategic outsourcing in the pursuit of taper integration enriches a firm's product portfolio
and product success, and in turn contributes to competitive advantage and thus to overall
firm performance.

• Outsourcing
We live in the age of outsourcing. Firms seem to outsource more and more
activities, ranging from product design to assembly, from research and development to
marketing, distribution, and after-sales service. The rising integration of world markets
brought a disintegration of the production process, in which manufacture or services
activities done abroad are combined with those performed in the home country. So,
outsourcing refers to a company that contract with another company to provide services
that might otherwise be performed by in-house employees. Many large companies now
outsource jobs such as call centre services, e-mail services, and payroll. These jobs are
handled by separate companies that specialize in each service, and are often located
overseas. There are many reasons that companies outsource various jobs, but the most
prominent advantage seems to be the fact that it often saves money. Many of the
companies that provide outsourcing services are able to do the work for considerably less
money, as they don't have to provide benefits to their workers and have fewer overhead
expenses to worry about. Outsourcing also allows companies to focus on other business
issues while having the details taken care of by outside experts. This means that a large

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amount of resources and attention, which might fall on the shoulders of management
professionals, can be used for more important, broader issues within the company. The
specialized company that handles the outsourced work is often streamlined, and often has
world-class capabilities and access to new technology that a company couldn't afford to
buy on their own. Plus, if a company is looking to expand, outsourcing is a cost-effective
way to start building foundations in other countries. There are some disadvantages to
outsourcing as well. One of these is that outsourcing often eliminates direct
communication between a company and its clients. This prevents a company from
building solid relationships with their customers, and often leads to dissatisfaction on one
or both sides. There is also the danger of not being able to control some aspects of the
company, as outsourcing may lead to delayed communications and project
implementation. Any sensitive information is more vulnerable, and a company may
become very dependent upon its outsource providers, which could lead to problems
should the outsource provider back out on their contract suddenly. While outsourcing
may prove highly beneficial for many companies, it also has many drawbacks. It is
important that each individual company accurately assess their needs to determine if
outsourcing is a viable option.

• Vertical integration
Vertical integration was popular in the latter part of the 19th century and the first
half of the 20th century as a means to assure consistent and predictable supply chains for
large-scale enterprises. So, vertical integration is integration along a supply chain. For
example, if a retailer starts manufacturing the products it sells, it is increasing its level of
vertical integration. Vertical integration may be backward or forward.
The advantages of vertical integration include the ability to secure supplies and
future orders. This can also mean that the parts of the business sheltered from
competition can become less efficient as they are no longer subject to the discipline of
competing in an open market. Vertical integration is most often justifiable where it leads
to either operational efficiencies or some other source of strategic advantage.
Vertical integration makes complete sense for a company that innovates by
dramatically changing the customer's experience. Why? Because a customer-experience-

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innovation strategy depends on creating experiences that are easy, seamless, affordable,
and, if possible, more pleasant than alternatives. In most product categories, where
customers have to put their offers together by acquiring products and services from
different providers, the chain breaks down. An innovator who can figure out how to
eliminate annoyances and poor interfaces in the chain can build an incredible advantage,
based on the customers' desire for that unique solution. Of course, until the unique
solution is available, customers will put up with "broken" chains. Fix the problems,
however, and the rewards can be substantial.

• Core competence
A core competence is the result of a specific unique set of skills or production
techniques that deliver value to the customer. Such competences give an organization
access to a wide variety of markets. They are interesting from a traditional marketing
point of view since it could be argued that they take a product or production orientation
rather than a market orientation.
If you focus on production techniques and skills, aren’t you looking at your
business from an internal point of view? The answer is yes. However the core
competences give a business a competitive advantage in a number of markets, markets
where customers perceive a benefit from the product. So if needs are being met better
than the competition, there is an argument that core competences are indeed market-
oriented1. So, let’s summarize: core competence provides potential access to a wide
variety of markets, it should make a significant contribution to the perceived customer
benefits of the end product, and also, should be difficult for competitors to imitate.

• Core business
The core business of a company is the business that is primarily in. In today’s
business environment, organizations know that to be competitive, they need to respond to
change, especially as customer expectations increase. Customers are more mobile today,
and so expect a certain level of quality of service regardless of where and how they
conduct business. Customers also expect organizations to respond with a significant

1
. http://www.marketingteacher.com/Lessons/lesson_core_competences.htm

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amount of personalization. It is extremely difficult to meet these challenges in a timely
manner if business processes are widely dispersed and inconsistent. That’s why, it “is
generally considered good for a company to focus on its core business and get rid of
other businesses unless it has strong synergies or strategic reasons to justify operating
other businesses. Companies are usually run by managers who understand the core
business best (because that is what is most important), so they can generally run the core
business better than non-core businesses”2.

• Delocalization
Delocalization originated due to the market expansion that has come along with
globalization. This expansion has bolstered international competition and has fomented
the exchange of goods, services, capital, knowledge, technology and working population
between countries. This enables many companies to reduce both direct and indirect costs
by taking their plants elsewhere or by looking to get their supplies from other companies
already established abroad, where labour ends up being cheaper (China, India).

• Vision
“Leadership is about making the organization more productive by impelling others
to act” responded Gary Burnison, CEO, Korn/Ferry International at an interview.
Irrespective of the current recession, the drivers of retention remain fairly consistent
through economic cycles. Ultimately, people want to be part of something – a common
purpose, a journey. Today’s professionals are concerned with individual and
organizational growth. They want to be treated equitably and will seek out and stay with
organizations that provide them with ongoing development, career opportunities and
professional challenges. Employers need to have a continuous focus on developing and
engaging their talent. Think about it as an ‘annual contract’; over time, this focus turns
into loyalty and long-term commitment. While monetary incentives must reach a
reasonable threshold and competitive levels, they are secondary drivers of retention for
most people3.

2
. http://moneyterms.co.uk/core-business/
3
. http://www.busmanagement.com/article/Communicating-the-Vision/

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 CONCLUSION:

Everyone should agree that the most important asset of an international company is
represented by employees. The “common purpose” sense must be seen as an internal and
external source of productivity. The manager should insist on core business, that at his
turn should be delocalized, and that in the long run, will generate a vertical integration by
outsourcing. This is how an international company should act in order to create jobs, to
be able to respond to customer expectations, and show that they and customers are equal
partners, they share a long-term commitment, “The VISION”.

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 BIBLIOGRAPHY

1. http://www.marketingteacher.com/Lessons/lesson_core_competences.htm

2. http://moneyterms.co.uk/core-business/

3. http://www.busmanagement.com/article/Communicating-the-Vision/