International competitiveness can guarantee success of a multinational company. International competitiveness is a non-price factor.
It must not be thought that low prices alone will guarantee the success of a business product, if they are only slightly less than those of competitors. It is because consumers consider many non-price factors in making purchasing decisions.
Factors that determine international competitiveness
The following factors, other than product prices, can determine the international success of a business:
1. Innovative products with unique design. Innovative products attract local customers, even though they might be sold at premium prices when they first enter the market. It is because high technology companies use price skimming pricing strategy to recoup some of the costs of Research and Development (R&D) of new products. Good design also adds value, hence higher price.
2. High quality and reliability. Well-made products of high quality such as German cars, American Internet services, Swiss wristwatches, British K-12 education or Italian leather handbags are known for its reliability. Despite very high prices, customers from around the world are consistently buying those goods and services.
Example 1: Watches from Switzerland have a reputation for being of the highest quality both when it comes to reliability of how they operate and the quality of raw materials used in production. Swiss wristwatches have always been the best on the market.
3. Highly trained staff. Experienced workers with up-to-date knowledge and high-end skills can provide outstanding labor productivity. By producing products fast and without defect, the company can overcome the problem of higher costs of labor.
4. Modern technology. Using advanced machinery and equipment allows the business flexibility of production in order to meet frequent changes in consumer tastes. The firm will be able produce standardized goods of good quality without the need of reworking.
5. Effective promotion and extensive distribution. These two aspects of the Marketing Mix explain the success of many multinational businesses. Multinational companies cannot function effectively without setting appropriate marketing strategies and implementing those strategies. A clear marketing strategy can help the business entity to make strategic decisions for foreign market operations.
6. Impeccable after-sales services. Most of the businesses provide after-sales services to its customers after they buy the product. Outstanding after sales-services are the most effective for the business to satisfy and retain its customers. After-sales services can include extended guarantee periods, online support 24/7, pre-installation services, initial training and onboarding guides, returns and replacements within a certain period of time, free upgrades, etc.
Example 2: IKEA does have a great return policy. IKEA customers can return products up to 365 days after initial purchase, even if the furniture has already been assembled at home or in the office. If the product is unused, the store will issue a full refund to the customer.
7. Ethical and trustworthy management. Highly ethical leaders will be protecting their employees, customers and the society as the whole from any negative consequences that arise from running the business. Honest and competent managers will be straightforward and opened about their decisions, and all the actions that the business is taking and will be taking in the future.
Example 3: Warren Buffet, the CEO of Berkshire Hathaway, said that in looking for someone to hire, you look for three qualities: integrity, intelligence and energy. But, the most important is integrity, because if employees do not have that, the other two qualities are going to kill the business.
Also, for any multinational company to be successful, the host country needs to provide a positive environment in which the business can be established, operate effectively and grow. If the environment in the country is or becomes hostile, the business will most likely not be able to achieve success in that particular country.
