Expanding Business Internationally: Victory State Bank Case - Term Paper Example

The country that I would recommend to my CEO for international expansion in China. This is mainly because China is a country that is developing very fast and thus if the country starts an international branch in China it will be sure to attract a large number of customers (Li, 2010).

The economy of China is indeed stable and well-performing with a Gross Domestic Product of approximately 7.33 trillion (The College of Staten Island's Modern China Studies Group, 2012). This is a very large and promising figure. Therefore, starting a new branch in the country will assure the company of positive returns. On the other hand, the GDP per capita is approximately $ 9, 100. This shows that the country is highly productive and thus, it is unlikely that the bank will make losses once it expands to China. China has a very large population of approximately 1.35 billion. Therefore, there is sufficient labor for all organizations in the country. Therefore, if the country expands to China, it will be sure not to have high labor costs or labor shortages. On the other hand, China has established itself in export and import trade (Li, 2010). Therefore, the country has a large number of economic activities that lead to the need for banking services. Importers and exporters of products in and out of China demand banking services and thus, Victory State bank will be very beneficial to them. In addition, the large number of economic activities in China requires finances. Therefore, the demand for loan services in the country is very high. When the organization expands to this country, it will have a large number of customers demanding loan services. The infrastructure of China is also well developed and efficient (The College of Staten Island's Modern China Studies Group, 2012). This is given by the study of China’s roads, machinery, and latest technology. Recent studies show that the country has invested over $ 1 billion to enhance its transport and communication infrastructure. With developed infrastructure, the business will also thrive since operations will be smooth and effective (Li, 2010). China is made up of a large number of industries that require banking services. In addition, recent studies show that the growth rate of these industries is approximately 14.5% (The College of Staten Island's Modern China Studies Group, 2012). This is a high figure, which assures the bank that as the industries continue to grow, the demand for banking services will increase, and thus the bank will grow.

On the geographic factors of the country, the country has a climate that favors business operations all through the year. Therefore, the business is sure not to be affected by disasters such as floods and earthquakes. The environment in China has also been well conserved and thus; the organization will have a favorable environment to perform its operations with no environmental issues (Li, 2010).

China is a politically stable country and thus, issues of political instability will not disrupt operations in the organization. Since China is a communist country, it is unlikely that it faces issues such as political unrest or clashes (The College of Staten Island's Modern China Studies Group, 2012). The regulatory requirements of establishing a business in China are also few and thus, the organization will only require a license and the minimum sum of money required in order to start a bank. The only other laws that the company will have to follow are the tax laws, and the labor and employment laws. Therefore, there are no political limitations in the country, which might hinder the company from establishing itself.

In summary, China is a very suitable country to expand an already established business. This is because; there are many benefits arising from the political and economic environments of the country. For instance, the findings show that the organization will benefit massively from the large population of China. This is because; the large population will provide cheap labor to the bank. In addition, the large population will also provide a large number of customers seeking banking services. Other benefits accruing from the expansion of the business to China include political stability due to the communist government, and economic stability due to the high growth rate (Li, 2010).

A challenge that the organization might face is the high rental services. This is because, with the high economy of the country, the leasing charges of buildings are very high. Therefore, establishing an area where the bank will be situated might pose a challenge for the business. The other major challenge that the bank will face is competition (The College of Staten Island's Modern China Studies Group, 2012). This is because China is a developed country and thus, there are many other banks and financial institutions offering banking services in the country. Therefore, the competition might be very stiff and unfavorable in the initial stages of performance.

Despite these few challenges, the organization will indeed reap a multitude of benefits if it establishes a new branch in China. This is because, from the findings, it is clear that the benefits are more than the challenges that the organization might face. In addition, China’s economy is very favorable for the banking industry and thus, the business will thrive quickly unlike in other countries where such a business would stagnate in its initial stages.