Discuss the factors that need to be considered in aligning company capabilities with company strategy.

Question

What will be an ideal response?

Answer 1

It is a well-documented fact in management literature that poor performance results when a company fails to align its capabilities with its business strategy. Whenever a company decides to internationalize its business, it should reassess its capabilities or strengths and weaknesses and try to find a fit between its capabilities and the internationalization process. This may involve an evaluation of the company’s resources, technology, business processes, and products or services that the company wishes to sell from the target foreign market perspective. We recommend five key areas that a company must investigate before committing resources to exporting or other forms of internationalization. These areas are:

• Business background (the size and the resources of the firm, experience in international operations, the availability of resources for expansion);
• Motivation for going international (the reasons that the company wants to internationlize, for instance does the company want to increase its market, reduce risks, utilize know-how, increase global presence etc?);
• Top management commitment (management approach, experience and commitment to internationalization);
• Product strengths (the unique value associated with the product, the transferability of the value and the ease of marketing the product in multiple markets);
• Market-specific strengths (the compatibility of the product in other markets and the feasibility regarding the production/sales process of the product in other markets).