Global expansion - Essay Example

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1. What are some of the issues the host foreign country could face as a result of the expansion? Issues faced by Host Country in Global Expansion Due to diversified norms, values and beliefs, when a company plans to expand globally, it is encountered by numerous issues…
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Download file to see previous pages Political and social climate of foreign countries. Local taxes and regulatory systems. Currency risk and Foreign exchange management. Transfer pricing and supply chain management. Local workforce. Diversified cultures of international markets Cultural differences substantially impact the way companies do businesses. It is important to be aware of the disparities that will be at your disposal in the target market. When expanding into international market, the accustomed norms, values and behavior of the local citizens mustn’t be ignored. A bottle of American whisky can be an offense in middle-east countries. Political and social climate of foreign countries A stable political and social system can be beneficial for the company which intends to expand whereas; unrest and destabilized political system can create new issues for it. Local taxes and regulatory systems It is crucial to determine whether the tax regime for international businesses is friendly or competitive. Corporate tax rate with low headline is always appealing for the companies. Currency risk and foreign exchange management Companies must determine whether the local currency is stable or volatile. It should also stumble if currency hedging can be obtained at a reasonable cost. Transfer pricing and supply chain management Development of effective supply chain helps to generate the company’s cash flow more quickly. Brief information should also be gathered regarding the transfer pricing policies of the foreign countries. Local workforce Effective communication of the local workforce has the ability to make or break the progress of business. It is the foundation of success for every business. Right people at the right location that is, financers, staff, suppliers, regulators, quality of customers can provide a competitive edge to the business. 2. Explain what cultural barriers and diversity issues are commonly encountered by international/multinational (MNC) and global organizations.  Cultural Barriers and Diversity Issues MNCs usually promote consumerist culture by producing standard commodities for diversified cultures. Yet, culture often become barrier and creates distances. The following are the primary reason of diversified cultures all over the world. Communication and Language Barrier- Different languages are spoken in different countries which become a hindrance for MNCs. It is an essential means of communicating with customers, retailers, suppliers etc. therefore, language often becomes a barrier in diversified cultures. Religion- Religious backgrounds usually have substantial impact on the individuals. People do not psychologically and emotionally accept something which is not aligned with their religious values. This often becomes hindrance for MNCs while tapping into diversified nations and cultures. Accustomed/diversified Culture- Socio-cultural differences, norms, beliefs, values, attitudes, perceptions congregate to form a certain cultural background of a country. These aspects vary from country to country and therefore construct a diversified nature of the world. 3. Why has diversity become such an important topic in the international arena? Importance of Cultural Diversity Cultural diversity plays a vital role for a company. The criteria diversifies customer groups on the basis of gender, race, ethnicity, age, educational background, beliefs, lifestyles, language, ...Download file to see next pagesRead More
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