Contemporary competitive strategies of international companies

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ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ АВТОНОМНОЕ ОБРАЗОВАТЕЛЬНОЕ УЧРЕЖДЕНИЕ

ВЫСШЕГО ОБРАЗОВАНИЯ

«НАЦИОНАЛЬНЫЙ ИССЛЕДОВАТЕЛЬСКИЙ УНИВЕРСИТЕТ

«ВЫСШАЯ ШКОЛА ЭКОНОМИКИ»

Выпускная квалификационная работа

Современные конкурентные стратегии международных компаний

Contemporary Competitive Strategies of International Companies

М.А. Чепурин

Москва 2020



Contents

Introduction

Chapter 1. Theoretical analysis of contemporary competitive strategy

1.1 Methodology and design of the research

1.2 Strategy definition

1.3 Strategies of international companies

1.4 Specifics of IT companies' strategies

Chapter 2. Case studies research

2.1 Case study of ecommerce retail

2.2 Case study of sharing economy sector

2.3 Case study of streaming video services sector

Chapter 3. Defining best practices

3.1 Method

3.2 Electronic retail

3.3 Sharing economy sector

3.4 Video streaming services sector

3.5 Summary

Conclusion

References



Introduction

In the modern world, rapid progress contributes to the emergence of many new areas of activity, changing customer requirements, and increasing the supply of goods and services. Owing to changes in market conditions, demand, and supply factors, companies have to conduct their activities in a dynamic highly competitive environment. This leads to the fact that modern international companies, market leaders, resort to the creation of new strategies for doing business, as long studied standard principles of competition are not always relevant and suitable for the current business environment. This paper aims to analyze the most successful modern solutions among the competitive strategies of international companies, to reflect the results of their effective application, and to identify the most significant highlights for the competitive strategy of modern companies.

This bachelor's thesis is intended to find out how modern companies compete and why the strategies they choose are relevant in their industry. Nowadays, the topic of strategies for entering new markets is important as more and more IT companies are seeking to expand their presence in different countries and operate worldwide. The technology, telecom, and e-commerce sectors are convincingly outperforming the rest of the non-health private sector in all the most important economic indicators. Since 2007, the sector's productivity has grown by about 60 percent compared to only 5 percent in the rest of the private sector, according to data for 2018. In the same period, sector prices in technology fell by 15 percent compared with the growth of 21 percent in the rest of the private sector. Since 2010, prices for online advertising have fallen by more than 40 percent. Cloud computing prices have declined by 7 percent a year. Real margins in the e-commerce industry have fallen by 13 percent since 2007, and these pricing trends are indicators of increased competition. The performance and changes in the sector described illustrating the highly challenging environment in which companies have to develop a competitive strategy to succeed in the industry.

Problem Statement. In such a rapidly changing environment, it is not enough to use the methods generally accepted and proven over decades, developed in the 20th century. To remain a participant in such a highly competitive economy, companies have to build their strategy taking into account the latest trends and develop individual solutions based on them, which will allow them to form a competitive advantage of the company and increase the efficiency of the enterprise.

The purpose of this research is to identify best practices for building a contemporary competitive strategy in international companies.

To achieve the research purpose, the following tasks have been formulated:

To analyze modern competitive strategies on the cases of leading international companies. To identify the most effective options for their competitive strategies.

To identify the features of companies that affect the formation of strategy.

To identify the principles of building their strategies.

To formulate the highlights necessary to create a competitive strategy in a modern international company in the fields of e-retailing, sharing economy, and streaming video services.

The object of the study: Leading international companies in fast-developing industries: electronic retailing, sharing economy, and streaming services.

The subject of the study: Competitive strategies of international companies.

Professional Significance. At present, the topic of competitive strategies plays an important role in the development of the company. Factors such as the constant growth of competition, trends in society, the development of globalization and innovation affect the conduct of business. The formation of a competitive strategy by the current economic situation is an obligatory aspect of creating a long-term successful company. This research analyzes the most effective methods of strategic management and development of an international company in such rapidly growing industries as electronic retail, sharing economy, and streaming video services, where each sector requires a special approach. Besides, in this study the main highlights of competitive strategy in the international market for modern enterprises are formulated, implementation of which will allow to plan successful business development according to business environment tendencies and create a more efficient company.

Delimitations of the study. First of all, there is currently plenty of research on competitive strategies. However, many fundamental studies are too general and do not consider the individual peculiarities of business directions and market position. This paper aims to cover the sphere of strategic management in international companies of rapidly developing industries considering their specifics. competitive strategy commerce retail

Secondly, the analysis of modern competitive strategies will be based on open data sources and without taking into account confidential information of firms. Lack of insider data may affect the results of the research and the identified best practices. Nevertheless, the study will use relevant sources to summarize the experience of the companies under consideration. Besides, the proposals formulated are intended for specific rapidly developing business industries, and in the long term should be used in consideration of changes in the markets, society, and technological development.

Results anticipated. The results of this research should be the development of highlights that are most effective in the competitive strategies of leading international companies in the selected business areas and an analysis of the causes of the effectiveness of the described practices. The results will contribute to clarifying the situation in global markets in specific industries and help modern companies to build a competitive strategy for growth in the niches.

Overview. The structure of the research consists of three chapters, a conclusion, and references. The first chapter contains a description of the methodology and design of the study, presents theoretical approaches to the definition of competitive strategy, reflects the specifics of international companies and businesses in the IT industry. The second chapter represents a qualitative study of best practices of companies and the interpretation of the findings. The third chapter presents the results of the conducted research, which could be further used by companies that operate in the investigated industries. The results and summary of this bachelor's thesis are formulated in the conclusion.



Chapter 1. Theoretical analysis of contemporary competitive strategy

1.1 Methodology and design of the research

This research is based on the application of the case study method to collect and process information about the contemporary competitive strategies of international companies. In this study, it is important to examine the theoretical basis, which is described in the first chapter, it is used to investigate individual features in the strategies of selected companies. The second chapter is a research of the best strategic practices of international companies that they use to achieve leadership. Data collection for company cases is carried out using a qualitative approach and is an analysis of existing studies on competition in selected industries, reports of consulting companies, and publications of analytical agencies. The received data allow to analyze cases of the companies-leaders in the fields of electronic retailing, sharing economy, and streaming video services. Based on the analysis conducted in the second section, the best practices in the selected industries are synthesized, and, on its basis, highlights of the development of the company's competitive strategy are developed, considering the specifics of the sector and the company's position.

The design of the case study consists of a set of steps, they are the same for all the sectors under consideration and described below.

The first stage of this study is the investigation of scientific papers on the companies' strategies, it allows to establish a theoretical base with the implementation of which the analysis of industries and competitive strategies of the selected companies will be conducted.

The second stage is the selection of an industry by its attractiveness. It involves the evaluation of the niche using data on growth rates in the global segment. In this study, the analysis of companies from three industries is conducted: electronic retail, sharing economy, and streaming video services.

The further stage of the research is a description of the main characteristics and peculiarities of the industry by using the analysis of scientific papers and publications of statistical data on the segment. The second and third stages are linked and represented together in each section.

The next stage in the study is the identification of key participants in the chosen direction, it is carried out based on information obtained during the analysis of the first stages. To select the companies that are presented in the research, economic performance indicators are used to determine the business model of the company, to assess its size, markets of presence, growth rates, and performance. After selecting the companies, the results are summarized and described.

After substantiating the choice of companies for analysis, the research moves to the stage of identifying the key components of their competitive strategies. At this stage, there is an analysis of scientific publications about the performance of the selected companies, analytical reports, and articles, information provided by the companies themselves. This bachelor's thesis presents three industries, and the competitive strategies of their participants were studied according to certain criteria, which are presented in the table below. The impact and success of the companies' selected competitive strategies have been analyzed and presented based on information from the sources reviewed.

After the research of the key industry participants, there is a transition to the next industry, and it represents a repetition of all stages of the research.

When the analysis of the competitive strategies of international companies in the three industries is completed, the final stage is reached, which is presented in the third part of this undergraduate thesis. This stage is the formulation and reflection of the best practices of modern companies in the selected industries based on the interpretation of the results. This is the output of the research and provides insights for strategy formation to achieve leadership based on industry, business model, and market position.



Table 1 Design of the research

Investigation of scientific publications on competitive strategies
Defining a rapidly growing industry
Creating an industry characterization
Selection of industry participants for the research and identification of their characteristics
Research of the company's strategy by established criteria
Electronic retailing	Sharing Economy	Streaming services
1. Analysis of peculiarities of the company's position on the market. 2. Analysis of resource management in the company's strategy. 3. Analysis of the company's interaction with external market players to enhance competitiveness. 4. Analysis of the company's exposure to competitors	1. Analysis of peculiarities of the company's position on the market. 2. Analysis of resource management in the company's strategy. 3. Analysis of the company's actions aimed at increasing market coverage.	1. Analysis of peculiarities of the company's position on the market. 2. Analysis of resource management in the company's strategy. 3. Analysis of company actions undertaken to create competitive advantages. 4. Analysis of the company's interaction with external market players to enhance competitiveness
Defining best practices based on the obtained information

Source: By the author

1.2 Strategy definition

The concept of strategy, unlike most terms of modern management, originated in ancient times and came from the Greek language. It meant "art of troop leader" and included many factors. This term appeared in the 6th century B.C. and was used in this context until the 19th century.

A great contribution to the development of the term was made by the German military leader Carl von Clausewitz. He still defined "strategy" as a term for military activity, but he distinguished from its tactics - planning and conducting individual battles, and strategy - their correlation with the common goal of war. According to Clausewitz, tactics are a tool for the successful implementation of a strategy that is used to organize the effective use of resources to achieve a particular goal (Clausewitz, 1956).

Carl von Clausewitz presented a new view on the concept of "strategy", but in the field of business, this term has been used only in the second half of the 20th century. During this period, the strategy became an integral part of the organization of any company and the concept was constantly expanding through the development of management theory.

Henry Mintzberg defines strategy through a so-called combination of five "P":

Strategy as a plan

Strategy as a pattern

Strategy as a ploy

Strategy as a position

Strategy as a perspective

All considered definitions of a strategy are interconnected, each of them is inconceivable without the others. Each of the five definitions complements the combination, defining the main components of the company's strategy. Thus, the strategy is not just an idea of how to behave with an opponent or competitors in the market (the prevailing opinion in popular literature) (Mintzberg, 1987).

Michael Porter defined competitive strategy as "the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs". According to Porter, "Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition". He distinguishes four main directions of the company's competitive strategy: cost leadership, differentiation, cost focus, and focus on differentiation.

Competitive product leadership strategy or differentiation means creating a unique product in the industry;

Competitive strategy of leadership in costs means the ability of the company to achieve the lowest cost level;

Cost Focus and Differentiation Focus strategy means focusing all of the company's efforts on a specific narrow group of consumers;

In case the company does not follow a specific direction in building a competitive strategy, it 'gets stuck in the middle' - its performance is ineffective, and it functions in an extremely unfavorable competitive situation. A company without a clear competitive strategy loses market share, ineffectively manages its investments, and gets a low-profit margin. In this situation, the company loses customers interested in low prices because it cannot offer them an acceptable price without losing profit; and, on the other hand, it cannot get customers interested in specific product properties because it does not concentrate its efforts on developing differentiation or specialization. Michael Porter's approach emphasizes the firm's ability to freely decide on its strategy by implementing one of three approaches: price-based, differentiation-based or focused (Porter, 2008).

Robert Grant. Strategy as a way of achieving goals. Robert Grant argued that strategy is what makes a company survive and prosper. He defined strategy as "planning how an organization or individual can achieve its goals (Grant, 2016).

In the 1980s, a resource-based view emerged that has since become extremely popular and remains so today. The resource approach is based on two main ideas:

Organizations within the same industry differ greatly in their ownership and control of the resources available to them.

Resources are not mobile and therefore resource differences among firms within the same industry may persist for quite a long time.

Some resources cannot easily be transferred from one firm to another and between firms and the market. Creating long-term competitive advantage depends on the specific features of the firm and the resources that are not easily transferable.

The concept emphasizes the uniqueness of each enterprise and states that the secret of profitability is not to conduct business as other enterprises but to use their differences. The problem for many enterprises is to correctly classify the resources available to them and direct their activities towards the realization of strategic resources. By comparing its potential with that of its competitors, the enterprise can identify the composition of strategic resources and key competencies (Parnell, 2006).

The Grant Model can be used as a tool to apply the resource-based view. It presupposes the classification of enterprise resources into material ones, which include financial and physical, non-material: technologies, brands, reputation, culture, and human: skills, abilities for communication and cooperation, motivation.

In the five-step model of the Grant, the following stages are distinguished:

Identifying the firm's resources and its strengths and weaknesses compared to those of its competitors;

Identification of the firm's capabilities;

Assessing the potential of resources and capabilities to create and maintain competitive advantage;

Strategy selection based on the ability to realize favorable opportunities in the external environment;

Identification of gaps in resources that need to be filled.

This model is not linear but iterative, as it implies a return from step 5 to step 1. This is necessary because resources and capabilities are dynamic and subject to obsolescence (Grant, 1991).

Another proponent of the resource-based view is Jay Barney, who identifies three key categories in the organization's resource classification: material resources, human resources, and organizational resources. Material resources include specific industrial technologies used by the organization, plants and equipment, buildings, geographic location, and raw materials. Human resources include education, experience, professional development, and competencies of managers and employees of the organization. Organizational capital includes company reporting, planning, control, and coordination mechanisms (Barney, 2001).

An organization has a competitive advantage when it implements a strategy to create added value that is difficult to copy to its competitors. If many companies have access to a valuable resource, then each of these companies can use the resource in the same way to implement the same strategy, which is unlikely to create a competitive advantage. However, the common resources are also valuable because their presence is what determines an organization's degree of survival in times of crisis. Such resources in a situation of a competitive struggle though do not create obvious competitive advantage but increase the possibility of survival of the organization.

The contribution of G. Hamel and C.K. Prahalad to the development of the resource-based view also deserves to be noted. Based on the experience of the best companies in the world in the 1980s, scientists have concluded that the real sources of competitive advantage are the ability of the corporation to transform technology and production skills into competencies that provide the potential for rapid adaptation to changing market realities. The authors have shown that during the study period the leading Japanese companies, compared to American companies, have been much more successful in developing key competencies. Hamel and Prahalad's research popularized the resource-based view and emphasized the need not to focus all efforts on suppressing competitors in market competition, but rather to create their competencies, which are difficult to copy by other firms and will be the key to leadership in business (Hamel & Prahalad, 1990)

Kim Chan and Renee Moborn, in their bestselling book "Blue Ocean Strategy", presented the concept of blue and scarlet ocean strategies, which is one of the most popular concepts in business strategy. According to it, any business operates in one of two completely different spaces, two oceans - red and blue.

The red ocean is the majority of modern industries, almost the entire existing market. The boundaries are clearly defined here, and competition dictates the rules of the game that are understandable to everyone. Companies are trying to outperform each other for the sole purpose - to get a larger share of consumers. And the stronger the competition in the red ocean becomes, the fewer opportunities the company has to develop and increase profits, the waters of the ocean become bloodier as the competition gets harder.

The blue ocean is an undeveloped marketplace, unaffected by the struggle for survival. In the blue oceans, demand must be created, not driven by competition. There, one can grow rapidly and make high profits. The blue oceans originate either when companies open up entirely new industries or when a company changes the boundaries of the established economic space: in this case, the blue ocean is formed inside the red ocean through product differentiation (Kim & Mauborgne, 2005). Cirque du Soleil, for example, has gone the second way. By breaking the boundaries that traditionally separated the circus and theater, the company created something fundamentally new: a new blue ocean was formed in the red ocean of the circus industry.

Technological progress has increased the productivity of the existing industries, thus offering a huge number of products and services in the market. As trade barriers between countries and regions are removed and suppliers, wherever they operate, are instantly informed about products and prices, niche markets disappear one after another and monopolies collapse. Therefore, most markets that have existed for decades have become red. However, the development of innovation and information technology contributes to the creation of new niches and product differentiation, and new business participants are appearing in the blue oceans.

1.3 Strategies of international companies

Strategies for operating business in the international market.

The approach proposed by Bartlett and Goshal is one of the most popular classifications of international strategies. It is based on four types of strategies of international companies: global, international, multi-domestic and transnational.

Global strategy is characteristic of companies that operate in all countries where they have a presence as a single market. The strategy focuses on the production and sale of standardized goods and services that meet the requirements of most consumers around the world. Global companies are characterized by centralizing management and control and taking advantage of economies of scale. Enterprises with this strategy are characterized by the expansion of production and sales of products, there are highly efficient structural units, united by a common marketing and advertising campaign, as well as the unity of production processes.

An international strategy involves a company applying in foreign markets the strategy that it usually uses in its own country. The reason for this choice may be the success of the company's performance in the domestic market, as well as the initial stage of international business when the company does not have sufficient experience to take other strategies as a basis.

The main difference between an international strategy and a global strategy (because each of these strategies involves doing business in a single format in any country in the world) is that the global company is not subject to excessive influence of the preferences and methods of work in the domestic market of its home country. It offers a worldwide product to the global market, determining for itself the best way to meet the needs of all consumers in all countries of the world.

A multi-domestic strategy implies a set of relatively independent subsidiaries, each serving a specific national market. In this case, the company can adapt its products, as well as to build a marketing campaign and methods of production of goods and services to meet the needs of consumers who differ in their preferences. A company with a multinational strategy creates a decentralized structure and a widely diversified product line adapted to the specific needs of consumers around the world.

Transnational strategy combines the advantages of efficiency gains from the globalization of operations with the advantages of delegating authority to the management of local subsidiaries (as in multinational companies. Such a strategy is created through an informal approach to delegation of authority and allocation of responsibility among the most efficient and flexible units. Companies using transnational strategies often develop new products in the region with their head offices, and responsibility for their sales is transferred to the relevant foreign offices, which are better acquainted with the national specifics of different markets and able to form a country-specific approach to product sales (Bartlett & Ghoshal, 1989).

The main task of an international company while operating in the markets of different countries is to choose the right strategies following the specifics of the company, as well as improve business performance, taking into account the specifics of each country where it operates. At the same time, all commercial organizations work in the market to maximize profits, so companies that are effectively operating in their segment, operating in one or more countries, and showing success in the dynamics of their development and an annual increase in profits, often begin to consider a strategy to expand the geography of distribution of goods or services, thereby expanding markets and expanding the scope of business. This is mainly since the dynamics of development and profit growth, in this case, tend to slow down gradually, as they have already almost reached the maximum value at this stage of the company's activity and require a much greater push. Other motives for business expansion are the need to strengthen and shape the image of the company, the desire to get access to innovative technologies or cheaper prices for resources or production, as well as various attractive programs of state support of international trade in this or that area. Another reason could be the spread of a firm's innovative product on the global market.

To expand markets, firms choose one or more strategies to enter and compete in a foreign market, which can be divided into three blocks: trade, cooperative and investment. The most common of these are:

Exports;

Licensing;

Franchising;

Joint venture;

Strategic alliance;

Wholly owned subsidiary

Companies choose one or more strategies from the above list based on such indicators as firm size, areas of activity, strategic goals and individual features of the company's development, since a single strategy applied in each case under different initial conditions requires a different level of both financial and time costs, each carries a different degree of risk and provides the company with different opportunities, such as the level of process control in the new market.

Thus, the differences in the benefits that the implementation of the particular internationalization strategy brings to the company, build the process of entering the international market in the following way: it begins with the definition of objectives for the expansion of the company to new markets, which together with the analysis of available resources of the company and the forecast of future risks allows the company to conclude the expediency of entering the international market. Then the company chooses the markets to enter, analyzing in parallel the attractiveness of the market for indicators of demand, existing in a particular competition market, as well as barriers to entry, which may include the largest competitors. Once the main directions of the company's expansion have been defined, the development of the exit strategy and further operation of the company in new markets begins directly. At this stage, it is the evaluation and selection of a suitable strategy for entering international markets (Buckley & Casson, 1998).

The main barriers to entry into the international market are customs barriers, the consumer characteristics of the country, various legal aspects and government regulation of certain areas of activity, as well as a high level of competition in the area of the company's activities. The barriers increase the level of costs and risks that a company may incur when trying to enter a new market.

Factors affecting the choice of strategy on the international market.

In the modern world, one of the main resources is information, which is impossible to imagine without technologies that are being introduced into all spheres of people's lives. The IT sphere is a huge sector of the economy and continues to develop at a huge pace every year.

During the construction of a competitive strategy, companies should take into account several factors that eventually affect the chosen approach to conducting business in a particular market, they should be divided into external and internal.

Internal factors.

The policy of the company and its objectives are the most important factors that form the choice of a competitive strategy. Resources are another factor; they represent a set of information, knowledge, specialists and other assets that can be applied for the effective work of the company. Enterprises with more resources are more successful at conducting international operations and entering new markets than companies that lack them. Of course, to choose the most effective strategy, companies must rely on risk-adjusted projected profitability, but resources affect the breadth of options available to the company. A company's international experience is important when choosing a strategy in a global marketplace, and it allows the company to make more resource-intensive or risky decisions that have proven effective. Besides, the personal experience of international business among the management of the company will allow to implement the chosen strategy with the greatest efficiency. Availability of experience reduces the level of uncertainty and, consequently, prevents potential threats and risks. The uniqueness of the company's product is a controversial factor - certainly, it gives the company a competitive advantage in any market, however, businesses should take it into account when choosing a strategy. When entering new markets, it becomes a potential threat to the success of the company: the choice of such methods as franchising or licensing, the business risks losing the advantage of its business model (Johanson, 1990).

External factors.

Businesses cannot influence external factors, as opposed to internal factors. Therefore, companies must adapt to them, without being able to influence them. The specificity of a country is one of the most important aspects, it is necessary to take into account the potential of the market, its size, and intensity of competition. In a highly competitive market, companies often operate through licensing or export, while a less saturated market is an argument to establish their enterprise. Markets with oligopoly and high support for local enterprises can create many problems for a foreign company, which can cause price wars and various restrictions aimed at reducing the influence of an international company in a particular country. Political peculiarities are another important factor in the formation of competition in the market, in countries with stable and open political system, foreign companies tend to choose equity forms of ownership, while in markets with the unfavorable environment, enterprises are more likely to use export forms of business. Cultural differences are the next aspect, companies adapt their products to the users' preferences and their cultural characteristics in the region. Entry barriers can influence a company's decision to choose a strategy and justify entering the market. Barriers may also be expressed by the government's policy on foreign business and legal peculiarities, in which case companies will choose the business form that is less affected by such characteristics (Koch, 2001).

1.4 Specifics of IT companies' strategies

In previous decades, IT strategy was an auxiliary strategy at the functional level, it only complemented the basic strategy of the company. In modern business, the importance of information and communication technologies plays a crucial role; they provide companies with such advantages as cost reduction, increased productivity and the possibility of creating new business models. The IT market is extremely broad and constantly growing, its participants have to apply the strategy under the specifics of the technology, it can be defined as "digital business strategy". Anandhi Bharadwaj defines such strategy as "organizational strategy formulated and executed by leveraging digital resources to create differential value" (Bharadwaj, El Sawy, Pavlou, & Venkatraman, 2013).

Developing a digital business strategy involves creating products and services and making them compatible with the characteristics of other products and services. A large number of businesses build on the capabilities that are created by other digital solutions, products, and services. For example, Amazon offers a wide range of digital products from which other companies can build their business model and strategy. Areas such as hardware, the provision of digital computing power and the retail marketplace form a connected ecosystem of products that provide complete solutions and create a competitive advantage.

The strategies of most leading IT companies are based on this concept: Microsoft, Google, Apple. They create corporate ecosystems and build their activities in a combination of software, hardware, and Internet technologies. Internet of Things is a new direction for expanding the range of digital products and represents a promising direction for the development and expansion of IT companies' ecosystems (Kraus, Palmer, Kailer, Kallinger, & Spitzer, 2019). Thus, competition in the modern market of information technologies can be carried out at the expense of advantages of a portfolio of products provided by the companies, at the expense of its convenience and the list of tasks which it solves.

Besides building a corporate ecosystem of products, today's international technology companies are also building inter-corporate ecosystems. The main idea is that the products of other market participants should be integrated into the company's infrastructure and create synergies. Through interconnection, elements of the ecosystem continue to grow (Pellikka & Ali-Vehmas, 2016).

An example of such ecosystems is when some technology companies' products are well adapted for use in combination with the solutions of other market agents. An ecosystem allows other companies to offer the value of their core product through integration with the products of other companies. In this way, one product becomes an intermediary that will deliver the value of a large number of services to the end-user. This creates synergies - the value of one product is enhanced by the value of other ecosystem solutions.

Modern IT companies also often follow the platform business model. Businesses with this approach create value for customers through the use of digital technologies that allow different economic actors to interact in real-time through the use of digital channels that ensure equal access to information for all participants and its accuracy (Tдuscher & Laudien, 2018). Prominent examples of platform business models that have replaced traditional business models are such companies as Uber taxi service, AliExpress international B2C marketplace, and Airbnb accommodation booking service. In applying this business model, the company does not sell the product directly but provides free access to the service and profits through commissions as an intermediary. This model combines the ability to reduce the transaction costs of interaction between market participants by drastically accelerating communications and eliminating intermediaries.

Nowadays, the companies in IT areas often apply the Free Trial model. It represents granting the client access to services or products of the company free of charge during the starting period. This allows the user to gain insight into the value of the product and make a decision about purchasing it. Thus, this method assumes that by the end of the free trial period, consumers will have paid for the product because they are aware of the value it provides (Cheng & Liu, 2012).

According to the Deloitte review, there are several other important directions in the strategies of technology companies at the moment, the first of which is the growing importance of partnership as a strategic tool. With the rapid development in certain industries, partnerships can be critical for companies seeking to improve their existing products. Based on the professional experience and knowledge of the partners, companies can offer more integrated solutions based on their equipment, network, platform, or software, and target different markets in general. Technology companies widely use this model to offer improved products and services in areas such as AI, clouds, or data processing.

Also, Deloitte's Technology Sector Review highlights mergers and acquisitions as an important strategic development area. Which is an effective growth strategy for technology companies, with companies not only seeking to improve technology through mergers and acquisitions but also applying this method to enter new markets and create a new consumer base (Sallomi, 2019).

The business strategy of modern IT companies expands the scope of activities and goes beyond the limitations for firms that were adopted in the past or are typical of traditional industries. In a world of intensive use of digital technologies, companies create the conditions for working in business ecosystems that are formed from market participants: alliances, partnerships, and competitors. Besides, the use of digital platforms enables companies to cross traditional industry boundaries and work in new spaces and niches that were previously unavailable. However, implementing a digital business strategy may require the ability to combine and share it with other members of the business ecosystem, whether they are partners or competitors.

In addition to the ecosystem, companies must focus on the scale of the digital business when developing their IT strategy. Scale was a major contributor to profitability in the industrial era. Scaling brings the benefits of lower unit costs and helps increase profitability. As infrastructure becomes increasingly digital, rather than thinking of scale only in terms of physical factors of production, supply chains or geographic reach, it becomes easier for companies to think of scale in digital terms.

The potential for rapid scaling can be a network effect. It occurs when the value of a product or service grows as more consumers use it, or as more partners on the supply side complement the service (e.g. when streaming services expand the range of products available, attracting more users, or delivery services connect more companies that bring their customers). As more products and services become digital, the network effect becomes a key differentiator and driver of value creation (Nylйn & Holmstrцm, 2015). In the last decade, networking effects have become key to software, with systems such as Apple iOS and Google Android increasing their reach, largely due to this phenomenon.

In the sphere of information technology, the development of strategy is also influenced by the predictable factor of performance development, which can be defined by Moore's law. Continuous improvement in equipment capabilities is taken into account by companies when planning activities. To remain a leader in their niche, companies create long-term plans to improve their products. A good example is the mobile electronics industry. Stable and predictable improvements in device performance can be seen, for example, at Apple. Each year, products are either improved or replaced by more technically advanced devices.

Value creation is another important aspect of strategies in information technology companies. Leading companies strive to generate multiple revenue streams from their product portfolio (Hacklin, Bjцrkdahl, & Wallin, 2018). Also, the value of information that can be collected by digital services is growing. For example, Google has a diversified business model for supplying electronics to the market, as well as free software and services that allow it to generate revenue from information obtained from users. The network effect allows to multiply it.

Therefore, the specifics of strategies in the IT industry lies in the different approaches of companies to business models and methods of pricing. The technical capabilities provided by this area enable the creation of new business methods, easier expansion and scaling of business activities, creation of ecosystems within the product line, and obtaining synergies from product integration into existing market offers. Due to the specifics of the industry and the rapid development of business areas in it, this study was conducted to find out what factors in the strategies of international market leaders are the most effective, and what should be paid attention to companies that enter the considered industries.



Chapter 2. Case studies research

2.1 Case study of ecommerce retail

Industry profile

Ecommerce sphere is growing rapidly, especially in emerging markets, and retailers are increasingly seeing e-commerce as a key element in their global expansion strategies. The ability of companies to participate in international e-commerce helps stimulate the growth of online retailers. In recent years, eMarketer has reported global e-commerce market growth rates of over 20% per year. At the same time, the world average is about 15% of the total retail market in the world. As online sales increase without the accompanying growth in offline sales, the share of internet sales in total retail volumes is growing. The share of e-commerce in total retail sales is projected to reach 22% by 2023 (eMarketer, 2019). For companies in this sector, ignoring the online market today could lead to a loss in the coming years.

Based on the analytical research of the consulting company Deloitte and reports of research organization eMarketer, it is possible to trace the rapid development of the e-commerce world. Thus, according to data from 2018, the U.S. company Amazon continued to dominate the world of e-retail, with net sales of more than $ 141 billion. JD.com, formerly known as Beijing Jingdong Century Trade Co., Ltd. ranked second with electronic sales of approximately $62.9 billion. It is followed by the world-famous American giant, the world's largest retail multinationals, Wal-Mart, and its $20.9 billion in e-commerce sales. It is important to note that this report did not take into account companies that operate exclusively as marketplaces. Therefore, another major player in Internet retailing - Alibaba Group - was not included. Their net sales for 2018 in China alone amounted to $853 billion, which is several times more than the leader in e-commerce ranking, Amazon (Kalish & Eng, 2019).

In particular, these studies do not examine the specific characteristics of the strategies chosen by companies, and it could be said that, in general, the analysis presented is too broad. Therefore, this section explores examples of the practices of Amazon, Walmart, and Alibaba - international companies with a large number of countries of presence, each of them a leader in its area of specialization. However, it is sufficient to have an overview of the e-commerce industry and can be used to conclude the business of this sector.

Table 2. Top 10 global ecommerce leaders

Global rank	Retailer	Web sales growth, 2018	Merchant Type	# Countries of operation
1	Amazon.com Inc.	20.0%	Web Only	16
2	JD.com	29.8%	Web Only	1
3	Suning commerce group	32.3%	Retail Chain	2
4	Apple Inc.	20.0%	Consumer Brand Manufacturer	24
5	Walmart Inc.	38.8%	Retail Chain	28
6	Dell technologies Inc.	4.0%	Consumer Brand Manufacturer	34
7	Vipshop holdings ltd.	14.5%	Web Only	1
8	Otto group	-0.6%	Retail Chain	30
9	Gome electrical appliances	14.9%	Retail Chain	1
10	Macy's	14.3%	Retail Chain	1

Source: Internet Retailer, company reports; November 2019

Figure 1 Retail ecommerce sales worldwide, 2017-2023



Source: eMarketer, May 2019

Amazon competitive strategy

1. Company overview: characteristics and peculiarities of the company's position.

Currently, Amazon is a leader in e-commerce, and its business model has proven its value in one of the wealthiest and most competitive markets, the United States. The company is not only the leader in the U.S. market, but also a major global player in electronic retailing - the Amazon's presence in 17 countries with more than 310 million customers. Amazon's sales are almost half of the e-commerce market in the U.S. The company is growing by 20-30% year-on-year with sales of over $200 billion per year (Davis, 2020). The company's market share is growing at an impressive rate. The company's international strategy is the same in all markets and represents an active presence in markets where the company has distribution centers and offers the same opportunities as in the United States. Amazon is also able to deliver goods to any country in the world where it does not operate. By entering new markets, the company creates the infrastructure to support its operations and also uses mergers and acquisitions to do business. For example, the company acquired the French delivery service Colis Prive to create suitable opportunities in its logistics (Slater-Robins, 2016).

Figure 2 Annual net revenue of Amazon from 2017 to 2019

Amazon is known primarily for its online store, but in pursuit of growth, the company has begun to dominate not only e-commerce. Nowadays Amazon is the largest provider of cloud services and smart home systems, advertising platform, TV and movie producer, book publisher, and owner of a crowdsourcing platform.

Source: eMarketer, Feb 2019

2. Analysis of resource management in the company's strategy.

Amazon Prime

Amazon Prime is a service that offers users free two-day delivery on all goods sold by Amazon itself, as well as on a small part of what is sold on Amazon by third-party traders. Amazon Prime has 112 million Americans who subscribe to the paid service. In real terms, it gives the company revenue of $ 15 billion. However, the subscription is a fee for the service that buyers make to the company before they begin to make purchases.

Amazon Prime provides fast free shipping for orders of any amount for $13 a month or $119 a year. Subscribing to Prime is effective even by zeroing the shipping cost of any order. Besides, the company provides additional benefits to clients-owners. Paying for the service, the user gets access to a variety of bonuses from the company, including free e-books, music and video service, regular discount promotions on certain groups of goods, the ability to choose a specialization, and get additional discounts on products, this subject. Amazon Prime is an extremely popular service - for 2019 almost 2/3 of the company's clients were subscribers of the service (Reisinger, 2020).

This solution has proved its success (more than 150 million subscribers worldwide) and is aimed at increasing customer loyalty. The customer who has access to the service automatically begins to look for products primarily on Amazon, to cover part of the subscription. The highly competitive environment within the marketplace is highly capable of finding the right product on the comfortable conditions. This is one of the factors that distinguish Amazon's product, making it more advanced and suitable for customers' needs, forming a differentiation in Amazon's strategy.

Delivery

Amazon ships 4 million deliveries a day. To cope with this flow of orders, the company - mainly in warehouses - employs 270 thousand people. That's four times more than the entire Google corporation. The company has been improving its logistics system for many years. With an extensive warehouse system, efficient organization, and the application of the latest technology in this area, Amazon can offer better delivery terms than its competitors. In addition to the construction and development of full-function centers, the company has actively invested in the development of its delivery service. Logistics is their strong advantage in highly competitive markets.

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