FEATURES TO FORM STRATEGY OF ENTERPRISE ON EXTERNAL MARKET

УДК 331.6(477.62)

Лоцкіна Д.А., студентка 1 року ОС магістр
ХНЕУ ім. С. Кузнеця

Foreign economic relations become more and more visible part of the economic activity of enterprises and organizations. The interest in participating in economic, industrial and scientific and technical cooperation with partners from foreign countries is growing. In these conditions, an increasing number of workers in the manufacturing sector, enterprises and government agencies need objective information about the world market, its structure, organization and technique of commercial operations.

A number of authors studying the problems of foreign trade and international trade emphasize the need for strategic management in this field. A special contribution in this direction was made by I. Bagrov, S. Bryu, P. Bunich, A. Voronkov, A. Gradov, V. Grinev, M. Didkivsky, O. Kireev, F. Kotler, A. Kredisov, M. Kruglov, V. Novitsky, E. Saveliev, I. Faminsky.etc.

In today’s globalized economic conditions, foreign economic activity is rapidly developing, gaining new features and forms, therefore, there is a need for constant study of the peculiarities of its organization.

The purpose of this article is to determine the peculiarities to form the strategy of the enterprise in the foreign market.

Strategy is a key element of the concept of enterprise development in the context of internationalization of activities [2].

The term “strategy” comes from the ancient Greek words “Stratos” (army) and “agein” (lead). The company’s strategy is considered a set of measures aimed at achieving the goals set.

The strategy of development of foreign economic activity of the enterprise characterizes the economic and financial aspects of its functioning, gives a feasibility study of concrete measures to improve performance, indicating the complexity of the formation of such a planned and effective mechanism in competitive conditions of management. In conditions of globalization, foreign economic activity is a major component of the evolutionary development of the enterprise. For a long time in the economic literature, the idea was that globalization is one of the strategies of enterprises, which aims to conquer foreign markets. Before forming the strategy of development of foreign economic activity and its realization it is necessary to evaluate the existing strategy, both at the beginning of the enterprise activity and during other life cycles in the national and international markets.

Participation of enterprises in foreign economic operations becomes one of the decisive factors for achieving competitiveness. When adopting a decision on work in foreign markets, enterprises are developing strategies for entering the external market. Formation and implementation of the strategy of entering the external markets of the enterprise has its own characteristics and includes a number of stages. After fundamental analysis and forecasting of the changing environmental factors of the enterprise and setting goals for its development it is necessary to begin to develop plans of the enterprise in the foreign market. The key element is to form promising products based on the consumers’ needs and desires. Next, its potential cost is estimated, which includes costs at all stages of the product life cycle, taking into account the scale of production, the specifics of the various markets in which it will be implemented, the scale of production, operating conditions. In this case, the costs of product development, technological preparation of production, training of personnel, the purchase of materials and components, production, storage and transportation, the creation of a trading network, advertising and promotion of goods. In the future, the competitiveness of products in specific markets and the potential demand for it are estimated. In addition, the form is determined by the output of the enterprise, the development of measures for their development and a selection of the best combination of options for the company to exit to foreign markets using optimization procedures.

Among the main problems of the output of domestic enterprises in foreign markets, scientists identify the following [1]:

  1. high level of physical and moral depreciation of fixed assets;
  2. lack of working capital, which leads to loss of solvency (the share of unprofitable enterprises in industry is more than 42%);
  3. low level of innovation and investment activity of Ukrainian enterprises (the share of enterprises implementing innovations is almost 10%;
  4. is observed the reduction of capital investments, their financing is mainly carried out at the expense of own funds of enterprises;
  5. insufficient qualifications of employees, which, in particular, is caused by low wages;
  6. low level of competitiveness of Ukraine’s economy;
  7. low diversification of export of products, orientation mainly to CIS countries.

According to G. Drozdova, the strategy of participating company in foreign economic activity should be formed depending on the stage of development of company internationalization [3]:

  1. traditional – is usual sale of goods abroad, when the exporter is responsible only at the time of delivery of the goods;
  2. export – involves the systematic study of the target foreign market and the adaptation of production to the requirements of a changing market;
  3. international – is characterized by a deep study of the market and involves not only purely commercial operations, but also other types and forms of foreign economic activity (joint ventures, subsidiaries, technological exchange, provision of transport, insurance, tourism and other services).

In the process of penetrating foreign markets, the firm should select segments in which its base has advantages that are not sufficiently developed or are only emerging in foreign countries. The attention of local firms or international competitors is often focused on other issues, so they are poorly trained to fight. The second guideline of penetration into foreign markets is to follow the example of multinational companies. This will not only provide a “clutch”, but will also allow you to operate in segments where local firms can find themselves in disadvantaged positions.

Successful implementation of the strategy contributes to the fulfilment of the following requirements: the goals of the strategy should be well structured, brought to the attention of the employees and perceived by them; it is necessary to have a clear action plan for implementing a strategy that involves the availability of all necessary resources.

To choose the direction of strategy development, we must first focus on the competitive advantages of the enterprise. Depending on the available competitive advantages and competitive barriers, all firms can be divided into two groups: strong and weak.

Ukrainian economists point out three main ways to enter foreign markets: exports; joint entrepreneurial activity; direct investment strategy.

Applying the export strategy, the company makes its products in its own country, offering them for export. The advantages of this method are as follows: requires minimal changes in the product range of the enterprise, its structure; requires minimal investment costs and current cash liabilities; provides the minimum risk of entering the market and ease of exit.

The strategy of the company’s exit into foreign markets through the creation of joint ventures is based on the combination of its efforts with the resources of the commercial enterprises of the partner country in order to create production and marketing capacities. International marketing distinguishes four types of business entities: licensing; contract manufacturing; contract management; joint ownership enterprises.

The strategy of direct investment is the course of foreign trade, the enterprise establishes its own production branches for the manufacture of goods of foreign economic activity.

To form strategic goals of foreign economic activity it is necessary to obtain maximum profit taking into account the specification of tasks and features of the future development of foreign economic activity of the enterprise.

The choice of the way to enter the foreign market depending on the level of internationalization of business, which is the main stage that takes into account the search for alternative directions of foreign economic activity of the company from the standpoint of the company’s potential, as well as the life cycle of demand for goods, determines the strategy of activating the foreign economic activity of the enterprise.

If it is necessary to leave the company to a new stage of internationalization of its business, the company may review its foreign economic activity, diversify production and, taking into account the life cycle of demand for goods in the new market, choose a new strategy to expand the activation of its business.

The proposed scheme of planning the strategy of foreign economic activity is a closed system, the functioning of which is associated with the study of the effectiveness of foreign economic activity and the achievement of flexibility when entering the changing external markets.

In today’s conditions of globalization of economic relations before domestic enterprises the question of consolidation into the international economic space has emerged. To achieve this goal, first of all, an effective strategy of foreign economic activity is necessary, which should be developed only in conjunction with the general strategic plan of the operation of the enterprise. Only the development of a specific action plan will allow domestic enterprises to determine the main types of action to enter the external markets and consolidate their positions as competitive business entities. There are a significant number of strategies for penetrating the foreign market. A detailed analysis of the company’s activity, its potential, product competitiveness will allow us to choose the one that most fully satisfies the tasks.

REFERENCES

  1. Baula O.V. Features of the formation of the strategy of foreign economic activity of the enterprise in the modern globalization space / O.V. Baula, A.V. Sachuk // Materials for IX-th international scientific practical conference “Real investigations and development 2013”. – Sofia: “Byal GRAD-BG” OOD, 2013. – Economics. – Vol. 7. – P. 64 -68.

  2. Grebelnik O.P. Fundamentals of foreign economic activity: Handbook. – K.: Center for teaching, 2004. – 384 p.

  3. Didkovsky M.I. Foreign-economic activity of the enterprise: teaching. manual / M.I. Didkivsky. – K.: Knowledge, 2006. – 462 p. 

Науковий керівник

к.ф.н., доцент Савицька Л. В.