International Entrepreneurship - Essay Example

? International Entrepreneurship Executive summary This essay discusses the international market in the scope of innovation and entrepreneurship. The international entrepreneurs face challenges in participating in the international market. This assay discusses challenges barriers that the international entrepreneurs face and how they can be conducted to increase globalization of business. The essay has also the international business plan for a travel agency whose location is in Los Angeles. Though most of its business is done within the United Sates, the operations across the global still have some effects. 2. Table of contents 1.Executive summary 2 2.Table of contents 3 1.Introduction 4 2.International Trade Barriers 5 Legal considerations 6 Economic environment 7 Trade Area and Culture analysis 8 3.Tour travel agency (TTA) 10 a.Objectives 10 b.Organizational plan 10 c.Organizational structure 11 4.Product/Services 11 Description of the services 11 Competitiveness 12 Market entry strategy 12 Marketing Strategy Plan 13 Market trends 13 Market growth 14 Competition and patterns of purchase 14 Strategy and implementation 15 6.Recommendations 15 7.Conclusion 16 References 17 1. Introduction Behavioral pattern of the suppliers and the clients and concentration in the supply makes entrepreneurs more competitive in the global market. In the market where the customers are diverse, a different approach to the market may be of great benefit to entrepreneur in a new market (Keillor 2011). The trends of innovating products and services in a particular environment have been used by multinational companies in their new products. Taking for instance the travel business in the United States, the business involves serving both the natives and the international visitors. Globalization and liberalization of economies have allowed companies to invent new ideas suitable for the developing markets. Globalization has pressurized companies to continue innovating new ideas of conducting businesses. Though much innovation has been witnessed in the global market, entrepreneurs have found it harder to penetrate the market to ever changing business environment and competition (Griffin 2005). There is more opportunity for growth due to innovation and completion in the global market. Entrepreneurs in the global markets seem to prefer working centrally and doing business from a central position. However Companies benefit international market therefore centralization of business no longer applies in the global markets (Keillor 2011). The trend of business innovation is moving towards decentralization of markets. Entrepreneurs are considering a more involving business venture where the customers, suppliers and other stakeholders are closely involved in the product and services development. Such approach proves more beneficial in the globalised market just like the trend in expansion of markets. The global market has been a major target for entrepreneurs however more innovation is required to maintain the local market. The idea used in the global market is also applicable in the local market (Keillor 2011). Though the product innovation is crucial in entrepreneurship, the process innovation plays a central role. It is important in adapting to various business environments such as fixing of costs. Process innovation can be used by the businesses which are planning to have decentralized management. Basically each market will be managed according to the requirements and the policies guarding the market. 2. International Trade Barriers Doing business in the international market faces challenges such as quotas, tariffs and non tariffs. Non traffic barriers are usually imposed by governments basically to restrict the quality imports. Such barriers restrict availability of products thus complicating the prices in the market. The result is high prices. A traffic barrier such as taxes, custom duties decreases the volumes of imports thus increasing the prices of products, thus the local market is favored. The quota system sometimes may be applied by the government in a bid to shield the local market from collapse. The general trade agreement in the global market has been documented in the General agreement on tariffs and trade (GATT) (Plummer 2005). The agreement bound the important products to the internal standards of the country of destination. The basis of the agreement is to avoid discrimination of the foreign market when they meet the local standards. The standard allows competitions and regulations to fair. The most important aspect to be considered by a business with an international connection is the political and legal forces in the market. Some countries have unstable governments thus there are frequent regime changes and policy changes. There are many challenges resulting from the political unrest, there is a likely nationalization of firms, destruction of property, interruption of business operation and strikes by the workforce. A case example is the strikes which broke in Venezuela. The firms in the country were forced to shut up for months before starting operations. Companies were facing stiff challenges as the workers went on strikes also. Some important information on the status of each country can be found from the CIA (Central Intelligence Agency) or from the Overseas Private Investment Corporation. Legal considerations Firms operating the global market are obligated to respect the rules of the country they are in. they have to obey both the local and international business laws. Different countries have rules governing the social welfare of employees they include the rules governing wages, insurances and the working hours. The standards of services and products also vary from country to country. Sometimes some laws may be strict in one country while in another, there are not considered important (Plummer 2005). There are examples of regulations which government businesses operating in a certain country. A typical example is prioritization of the contents made from the local raw materials and the local labor in the production. Basically the reason for the restriction is to create employment for the citizen in the host country. Such imposture may spur development of a complicated market. Basically the raw material in the country must be assessed well to avoid losses due to low quality materials. The labor market should also not be compromising. The liability and safety of products in different countries may be in the hands of the manufacturer therefore the deaths resulting from the sale of product may result in deaths. Therefore entrepreneurs are obligated to ensure the rules are followed. Taxation is also an issue that the international entrepreneurs have to consider. In some countries, the goods and products made from the local may have some tax relief (Schaffer 2008). The international laws in international trade may affect the business operations in different countries. The international trade laws may discourage the sale of production the international market at low price that might totally paralyze the local market. In such instances, the governments are obligated to protect the local markets from facing unfair competitions. This might lead to imposition of non tariff barriers as well as quotas. Economic environment Governments have control over the internal trade within different countries; they either encourage international trade through incentives or discourage through the application of the quota system. Basically there are several economic factors that may discourage or encourage entrepreneurs from investing in the international markets. The exchange rates in the interest market play an important role in the cost of operation (Schaffer 2008). The hard currency is easily workable therefore the trade can be easily conducted and the soft currencies are difficult to convert thus may affects the growth investors in a country. Economic systems in different countries varies, basically the individual performance of company is the most crucial in the analysis rather than the general market. The countries that allow the free markets have business grow than the economy that is planned centrally. This is supported by the stability of the economy. Inflation rate in countries discourages investment since there is more risk in losing money due to fluctuation in converting the currency. Generally the countries to invest should a reasonable development that would not frustrate conducting a business. Trade Area and Culture analysis Culture is a behavioral action that separates human beings from each other. This based on the way the human being respond to the social and interactions in various capacities including conducting business. Basically designate the way the human beings behave in relation to each other. Culture can be classified into various elements such as the religion, education, social structure, political philosophy and the economic philosophy. The social structure can be understood in terms of the classes that form the society and its importance in conducting business (Schaffer 2008). Effects of culture Culture affects the business market is dimensions of business such as in the behavior of the consumers, the decision in buying the goods, the demand of the goods in the local market and the perception of a brand in the market. It also affects the management of the business through the decisions that have to be made. Negations for trade in different cultures varies for instance there are cultures that do allow certain adverts or products to be sold in their markets (Griffin 2005). Though having a clear knowledge in the native culture is important, the foreign markets also require a deep understanding on their culture. Therefore the culture can be a barrier towards achieving the business objectives. It can be overcome by ensuring the issue culture is handled with a sensitive approach. Therefore the behavior of the management is largely influenced by the cultural affiliation of the market. Some countries still have different cultures in it. Examples are countries such as China, the US, India. Thus the market is not approached as a single unit rather each of the cultures inside the country is handled uniquely. Some markets such as the UK and, Germany and France have a universal culture thus the culture of the country is the culture of the people (Burrow 2011). Culture is basically considered sensitive in the international business. Body language is interpreted to mean something in different cultures thus the managers may have difficulty in approaching a market. Attitudes and perception of cultures have much control over the decision made. Symbols influence businesses such as the perception in triangles are negative signs in Korea (Burrow 2011). To overcome the effects of culture in the business, managerial skills have to be applied. Cultures have to be incorporated into business by learning the customers’ needs, guide the consumer behavior and manage the supply of goods and services. The culture must be negotiated with the business so that the relationship is maintained. Though sensitivity in culture is important, the impact of culture in business must not mean all business ideas be inline with the culture. Sometimes, some goods can sell in the market without incorporating the culture. In this case, the culture plays a minimal role. Therefore it is the duty of the manager to master the market. A typical example of international entrepreneurial company is Tour travel agency (TTA). The company conducts its business in Los Angeles but aims to reach the global market in its operations. 3. Tour travel agency (TTA) a. Objectives To develop a strategic connection with the global market in international air travel To increase the use of internet in business to up to 75 % To have a projection of sales of over $1 million yearly. b. Organizational plan Ownership Tour travel agency (TTA) is sole proprietorship business owned by David Smith and operates in Los Angeles. TTA is putting up mechanism that would ensure the company is registered as a limited liability company. Location of the company The offices of the company will be based in Los Angeles. Size of the housing will 900 sq ft. the company has a future plan of expanding its offices. The City has over fifty other travel agencies operating the area. They are targeting over 2 million customers travelling across the United States and internationally. Summary of the management of Tour travel agency (TTA) The general manager of the company will be David Smith. The company is small in thus the employees would participate actively in various managerial capacities. Each employee has the mandate of ensuring some duties are multitasked. For to qualify to the TTA company, they must have an experience of four years in the travel industry, must be certified to operate as counselor. c. Organizational structure TTA will start its operations with a full time position with four employees. The manager will be David Smith; he is aged 40 years and a graduate from Oxford University. He has the industry experience of 15 years working in various capacities in travel agencies (Griffin 2005). His latest activity was that he worked as a manager in trans-airlines travel agency in Los Angeles. During his tenure, the company increased it profits and sales. Other members of the team includes the accountant, communication manager and a travel agent 4. Product/Services The major market being targeted by TTA is for those taking flights either for business or for leisure. The services offered include consultation for the clients both in the individual and the group category. The services provided may include reservations, arrangement of tours, arranging for vehicles in the place of destination consulting on the custom packages being offered among others. Description of the services Basically the services offered by the TTA are to assist its customers travel in home and the overseas destination without facing challenges on how to acquire accommodation, obtain passports, and offer access to privileges to know about high quality services. The company values competitive rates in its service as well the quality. Basically the customers’ satisfaction is the main objective of the business venture TTA has its operations in soft and hard adventure (Johnson 2009). The purpose for operating on is to ensure that the competition in the market does not kill the business. The athletic activities are basically bound to the hard adventure however the soft adventure is less cumbersome. From the economic indicators, the demand on the travel agency has been n the increase thus prompting the TTA to venture into the business. There are various sporting activities going therefore the TTA has offered itself to create cutting edge offers of quality services across the globe. Competitiveness The travel agency market is basically competitive and technology has been an important tool changing fortunes in the industry. The industry uses the computerized reservation system in dealing with its customers, thus a customer from any part of the globe can use the services of TTA (Johnson 2009). Using the new technology has been a trend in the industry thus being a good position in adopting new technologies is crucial in competitive the market. Since the travel industry has expanded, more specialized activities are carried by the travel agencies. TTA will have the opportunity to reach out to the vast market and make impact by providing services that might have not been provided by other companies. In order to provide better services, the company will seek relationship with other companies offering the same service they raise their market share. This would imply that more coordination in the international market would result in expansion. The TTA will continue with its relationship with the travel coordination with the major airlines across the globe in a bid to attract more customers Market entry strategy TTA the target customers are the middle class who can spend some of their time travelling. Basically most of these groups would either be interested in the sporting and leisure events. Basically the targeted areas are California, New York, Nevada and Illinois; these areas witnesses high number of air travelers. Men of youthful ages of between 18 and 34 are estimated to travel more that the woman. However Indicators shows that the women are on the increase, they are estimated at 49% in the adventure market. Basically the TTA customers would be the young couples and their children. Marketing Strategy Plan The location of Los Angeles is in the Northwest of the Pacific; basically it is a strategic position as since it is actively involved in the international activities. The airports in the city ever a busy thus the demand for travel agents is high. The primary market for the TTA will be the individual buyers however cooperate customers will also be considered. Market trends The major trend in the market has been the removal of business barriers by the governments. This has benefited the industry as more competition has been witnessed and the drop in the prices of the air tickets and taxation on the business. Over 50 % of the citizens in the United States have been travelled at some point (Johnson 2009). The statistics for the last five years that the number who travelled in the period stated were 98 million people. They participate in both the hard and soft adventures. The major leisure activities during the leisure time are camping, skiing, hiking among others. The customers in this category have a household include which approximately $70000 and beyond. Market growth The cost of travelling has reduced thus more people are willing to spend on travel. The domestic economic growth has increased thus the people have more money to spend on leisure. The service industry in the country has increased drastically and gained one of a larger share in the national economy. Basically the air travel can be either based on leisure or on the business. Both categories have almost an equal trend in the market. The domestic travel in the united states constitute an approximate of 70 % of the total air travel thus investing on such business ventures would be of great importance in the growth of the company. Competition and patterns of purchase The plan by each customer depends on the amount of money they are willing to spend. Basically they make substitutes for their products though from the same service providers. Test of each of the travelers differs and needs some guidance on how to accomplish their activities. Basically the competitions in the market are basically the same thus any of the competitors can pose trends depending on the services they provide. The lifestyle of the customers and the income earned by a household are basically the determinant on the trends in the markets (Johnson 2009). The main competitors in the market have been in the market for a longer time therefore trust has been built between them and the customers. They provide highly professional services to their customers integrated their market base. Strategy and implementation The objective of TTA is to provide unique service to its customers. In order to boost chances of becoming a leading agency, TTA has strategized to embark on development of sports as a major promotion strategy. This would be done in the media and specifically that has specialized on sports. It also plans to sponsor a sporting event to advertise its name to the potential customers. 5. The Financials TTA expect a slow growth in its first year of operation. This would be contributed by a variety of reasons; the fact that company is new to the market does not attract substantive customers. As they try to build trust, the company also faces a stiffer challenge because of low travel due to the season up and low in the market. The international market fluctuation has a major impact in the travel business therefore the financial considerations should the effect of internal market. 6. Recommendations i. The company should embark on decentralization of its businesses to increase efficiency ii. The company should the cultural practices of the natives does not affect the operation of the business by incorporating local culture into business. iii. The legal requirements of each of the countries targeted countries should be studied well before starting to invest. 7. Conclusion The international business ventures have a challenge that needs to be dealt with before participating business. Understanding business environment in the country of destiny is the most important step that ought to be done in order to be successful. Basically coping with cultural practices from different communities can be difficult however a proper study of the market would ensure correct prediction of the markets is made. References Burrow, J. L., & Bosiljevac, J, 2011, Marketing. New York: Cengage Learning. Cherunilam, F, 2007, International Business: Text and Cases. New Delhi : PHI Learning Pvt. Ltd. Griffin, R. W., & Pustay, M. W, 2005, International business: a managerial perspective. London : Pearson Prentice Hall. Johnson, D., & Turner, C, 2009, International Business: Themes and Issues in the Modern Global Economy. London: Taylor & Francis. Keillor, B, 2011, International Business in the 21st Century. New York: ABC-CLIO. Macrory, P. F., Appleton, A. E., & Plummer, M. G, 2005, The World Trade Organization: Legal, Economic and Political Analysis. New York: Springer. Schaffer, R., Agusti, F., & Earle, 2008, International Business Law and Its Environment. New York: Cengage Learning. Read More