Risks Strategies Expanding Operations in International Markets Rebecca J
Risks Strategies Expanding Operations in International Markets Rebecca J. Bunetta Keiser University MKT 635 International Marketing Dr. Jordan September 30, 2018 Goinginternationalpresents the firm with new environments, entirely new ways of doing business, and a host of new problems (Spasojevic Tosovic-Stevanovic 2017). The problems have a wide range. They can consist of strategic considerations, such as service delivery and compliance with government regulations.Inaddition, the firm has to focus on start-up issues, such as how to find and effectively communicate with customers and operational matters, such as informational flows and the mechanics of carrying out aninternational business transaction (Spasojevic Tosovic-Stevanovic 2017). Firms that want to internationalize must decide on a fitting mode of entry into a foreign market to make the best use of their resources. According to Zekiri (2016) the age of globalization has both facilitated and necessitated businesses to move towards the internationalization of organizations of all sizes. It is necessary to understand the context within which a countrys political, economic, and social institutions have emerged, its history, geography, culture, and demography while thinking of emerging in foreign markets (Zekiri 2016). It is difficult to understand the business environment in a country without studying the current political system and institutions, government policies, and a variety of data and other information on the countrys economy (Leddy 2013). There are many different modes of entering into foreign markets. Each mode has its strengths and weaknesses in general terms. However, each single organization will be more attracted to a type mode depending on their backgrounds, nature of the company, strategic objectives as well as the resources. In many cases, there are many obstacles that companies must meet while deciding to enter other markets, for example safety, environmental, packaging, labeling, patents, trademarks and copyrights, are factors that businesses depend on being successful (Leddy 2013). According to Ciuchete (2010) another common risk is thatinternationalexpansion could lead to inflexibilityin operationsand an increased amount of bureaucracy. Internationalbusiness holds out the promise of large newmarketareas, yet firms cannot simply jump into theinternationalmarketplace and expect to be successful. They must adjust to needs and opportunities abroad, have quality products, understand their customers, and do their homework to understand the fluctuation ofinternationalmarkets (Ciuchete 2010). Establishingoperationsina newmarketis not simple (Ciuchete 2010). A company that has gapsinits knowledge and which fails to anticipate and prepare for therisksassociated with entry into a newmarketwill likely quickly find itself with anoperationthat adds nothing to the bottom line. There are differentrisklevels depending on what sort of expansion strategy chosen. There are some general challenges with companies that are adapting aninternationalstrategy one of the most common as the challenge of information sharing. Other challenges could be that it is hard to adapt to another national identity that could be devastating since we need to know themarketinwhich we operate (Ciuchete 2010). Once an entry mode has been chosen, the company has to decide the degree of its marketing involvement and commitment. Therefore, the decision should reflect a considerable study and analysis of market potential and company capabilities. According to Aguilar-Barrientos, Robledo-Ardila Serna-Rodrguez (2015) it is very crucial when operating in global gound to try not to make any differences that are culture related, which may impose a major risk between cultures. Businesses need also strategies for ensuring the resource allocation in the most effective way in a potential market. Thus, business people and global marketers need to be prepared to deal with different languages (Aguilar-Barrientos, Robledo-Ardila Serna-Rodrguez 2015). Barriers to entry are anything that makes it difficult for a new competitor to break into a market. They make companies already in the market more valuable as they reduce the risk of new competition (Leddy 2013). There can be tariff and non-tariff barriers. Entry barriers are imposed by governments in order to protect domestic industry or to ensure that companies entering from foreign markets conform to trade relations arrangements with other countries. Barriers to exit are obstacles to market players who realize that they will not turn a profit and would like to quit the market. From an economic perspective, it makes sense to produce and sell an additional unit of product or service if the revenue generated covers at least for the variable costs (Leddy 2013). The legal environment is an important variable to consider in international business due to the impacts that court of law decisions may have upon a companys globalization attempts. Companies face a vast amount of problems in their efforts to develop successful global marketing programs. Just as cultural, political, geographical differences pose as threats to global firms so too do the varying legal systems of the world and their affect on business transactions (Braga, Gonalves Braga 2016). The international marketer needs to pay attention to the economic development and performance of a country in international business. The stage of economic growth within a country has a great impact firms international strategy. Economic growth affects a countries attitude towards foreign business activity, the demand for goods and the distribution system found within the country (Braga, Gonalves Braga 2016). So, Braga, Gonalves Braga (2016) adds that a study of the economic climate is important especially to gain understanding with regard to developing countries and secondly in respect to market potential and market growth. The existing level of economic development allows the firm to estimate the degree of market potential as well as allowing them to prepare for economic shifts and emerging markets. Culture is considered among the most challenging aspects while selecting a market. According to Isa, Saman Preece (2015) culture is integral to the marketing concept, which is based on satisfaction of wants and needs of potential buyers. Culture has also impacts on the way messages concerning the ability of the product or service to satisfy the needs and wants, are received and interpreted. This is even more so in international markets, where cultures differ markedly from one international market to another. When designing a product, style, and other related marketing activities, and if they are to be operative and meaningful, they have to be acceptable to the related cultural market. A marketer should not evaluate other cultures in a sense of what are not right or wrong but, rather, as different. Acting in this way, a marketer will reduce disharmony, alleviate aggravation, improve communications, and pave the way for long-term international business relationships. Understanding high context cultures from low context cultures, and both verbal and non-verbal communication is an asset for a global marketer (Isa, Saman Preece 2015). Technology is vital for gaining a competitive advantage while competing in international markets, and is a major driver of globalization, because it allows companies to produce products or services more cheaply and with a better quality (Leddy 2013). Technologies may offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc. furthermore, technology help companies to better distribute and serve customers, for example books via the Internet, flight tickets, online auctions, etc. Finally, technology helps improving the communication process inside the company and outside the company by offering new ways of communicating (Leddy 2013). The internal political, economic, legal, and technological environment makes it possible for companies to internationalize their businesses (Leddy 2013). To sustain their competitive advantage or market position many companies try to outsource work places to other countries. They seek low competition and entry barriers, and cheap labor. Low home country restrictions imposed against foreign market expansion encourage companies making foreign direct investments. Companies with more international experience are more likely to enter foreign markets are more likely to choose equity-based investment n a foreign market. Otherwise stated, companies with less international experience are more likely to participate into a foreign market (Leddy 2013). The international business environment influences the marketing strategic effort of a firm. These forces that surround businesses influence their life and their development of the firm. Companies that want to expand their activities in global markets need to do some market research and analysis to avoid any risks (Julian Ahmed 2012). The selection of markets to enter should be a strategic orientation that treats market entry selection as part of the firms overall strategy. Selecting an international market can impact on the other activities of the firm since it needs to be aware of its internal capabilities, competencies and restrictions in order to select appropriate foreign target markets. International market entry barriers may include trade barriers such as tariffs, quotas, or local content requirements, exchange rate volatility or lack of currency convertibility, host country industrial policies that favor domestic firms, the existence of dominant competitors in the domestic market, or natural barriers such as geographical distance, transport accessibility, or language (Julian Ahmed 2012). It is very important for companies whether in domestic or international, large or small that want to conduct business without taking in consideration the political environment of the country where they intend to operate. It is imperative for the international marketer to understand the various types of legal systems as well as the various threats the company may encounter as it is open to global business. Marketers need to be very aware of the cultural sensitivity and issues that are very sensitive to ones culture, and firms that want to internationalize must decide on a fitting mode of entry into a foreign market to make the best use of their resources (Julian Ahmed 2012). References Aguilar-Barrientos, S., Robledo-Ardila, C., Serna-Rodrguez, M. (2015). A content analysis of mission statements and its relation with the international expansion. International Marketing. 23(34), 219-236. doihttp//dx.doi.org.prx-keiser.lirn.net/rces.v23n34.a5 Braga, V., Gonalves, A. C., Braga, A. (2016). Informal relationships for international entry. Romanian Review Precision Mechanics, Optics Mechatronics,(49), B52-B60. Retrieved from HYPERLINK https//search-proquest-com.prx-keiser.lirn.net/docview/1812546381accountid35796 https//search-proquest-com.prx-keiser.lirn.net/docview/1812546381accountid35796 Ciuchete, S. G. (2010). Company developing in international business. Economic and Business Review,5(2), 202-214. Retrieved from h HYPERLINK ttps//search-proquest-c ttps//search-proquest-com.prx-keiser.lirn.net/docview/1146581939accountid35796 Isa, C. M. M., Saman, H. M., Preece, C. N. (2015). Determining significant factors influencing Business culture performance in international markets.Journal of Developing Countries,20(2), 1-23. Retrieved from HYPERLINK https//search-proquest-com.prx-keiser.lirn.net/docview/1762443569accountid35796 https//search-proquest-com.prx-keiser.lirn.net/docview/1762443569accountid35796 Julian, C. C., Ahmed, Z. U. (2012). Factors impacting international entrepreneurship in malaysia.Journal of Small Business and Enterprise Development,19(2), 229-245. doihttp//dx.doi.org.prx-keiser.lirn.net/10.1108/14626001211223874 Leddy, C. (2013). Business opportunities and risks plan before you expand overseas. Retrieved from h HYPERLINK ttps//www.middlemarketcenter.org/expert-perspectives/business-opportunities-a ttps//www.middlemarketcenter.org/expert-perspectives/business-opportunities-and-risks-plan-before-you-expand-overseas Spasojevic, M., Tosovic-Stevanovic, A. (2017). Political risks as threats to international business. Retrieved from https//search-proquest-com.prx-keiser.lirn.net/docview/2070392177accountid35796 Zekiri, J. (2016). Motivating factors and the modes of entry in other markets. 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