How to Go International: The Global Business Value Chain

The Global Business Value Chain

Canadian businesses are closely transitioning into a more global business environment. With the emergence of new technologies, companies of varied sizes can now market products and services to any potential customer around the globe. Businesses are also consciously adopting a global value chain so they can open up more opportunities for their business.

A value chain indicates the integral processes a business takes to produce and deliver its products or services. This includes planning, research and development, production, marketing, distribution, and consumer support. A firm can concentrate on one link or the entire value chain, depending on its expertise and scale. What is important to note is that every time a company moves up a process on the chain, its product or service increases in value.

A company may perform several activities contained on one or several chains. When these integrated activities are scattered in different areas internationally, a global value chain then exists. This concept is relatively not new: large-scale businesses already looking outside their borders for new suppliers, processors, marketers, and distributors that can support their business goals.

 

The Global Business Value Chain

 

* Benefits of a Global Business Value Chain Model *

If local companies can manage their chain’s activities strategically, they have competitive advantage. They can leverage core competencies so they can morph their previously local value chain into a global one. Small and medium businesses may encounter some challenges as they may have limited resources. But with a global value chain business model, local firms will experience these advantages:

  • Companies can make adjustments to their operations so they can still deliver greater value to clients at reduced costs and increased product and service quality.
  • They can focus on what they do best and create strategic relationships with other companies that can fill in the gaps of their value chain.

 

Going Global: Are You Ready?

The first thing a company must take into account before transitioning into a global business value chain model is to assess where it currently stands. This process is probably the most important since it will determine whether your company has all the operational requirements necessary to go global. To determine whether your company is ready to compete internationally, go through the following tasks:

 

  • Assess if your company has a clear business strategy. A business strategy must reflect the purpose of the organization, its goals and objectives, and action points to meet these goals. It must both be strong and clear to be effectively understood and embraced by all your employees. Your business strategy must also adapt to new environments and structures to help maintain organizational solidarity since it also serves a tool that provides direction to the company’s internal and external stakeholders.
  • Strengthen core competencies that your business can leverage. As defined, core competency is the company’s defining strength which is critical to its success and growth. If distinctive enough, your core competency can provide added value and leverage this competitive advantage in the industry. What makes it important is that in the context of global value chains, your core competency determines where and how you can effectively contribute in the international arena.
  • Build your business compatibility. To be globally competitive, your company must be compatible enough to engage in business relationships. A global company must effectively collaborate and partner with strong companies that can provide mutual benefit for each other. Companies that can easily function as partners can leverage each other’s core competencies, making each more productive and competitive.

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