International Business Expansion - Example

International Business Expansion International Business Expansion Introduction Global spreading accompanied by geographic spanand market knowledge hastens instigate of brands worldwide. It is the timing of international business expansion in all sectors of economic perspectives. Articles published identify empirical tests of internal and external drivers of the global trademark initiate. It identifies facilitators and inhibitors of brand launch in the global markets that accelerate the expansion in the global market. Global brands consider an evolutionary process determined by environmental and firm level factors. Brands positions in the firm’s global brand architectures are included (Rugman & Collinson, 2009). Frameworks created incorporate aspects of environmental emergencies and experimental learning and finally mimetic behaviors. Global brand architecture introduces important strategic considerations of brand’s position and stage internationalization. All the above considerations allow for an extended market structure that gives an opportunity to all products in the market to have sell values. It is vital to consider environmental and experimental factors to determine the market expansions of business products. On the other hand, macro and micro factors entail the determination of market expansion and international business extension in general. Environment divides into internal and external when determining the expansions of the commerce field (Blythe, 2006). Internal environment includes factors that operate within the firm (corporate culture, attitudes, history, firm capabilities, and staff behavior) while the external environment comprise elements that operate outside firm (government, competition and customers). Micro and Macro Environmental Factors Micro environmental factors entail organizations, customer market, competitors and suppliers. The timing of an organization incorporates all these factors before expansion. Suppliers operate on the need of demand. Timing of suppliers becomes necessary when the demand is high and the business portfolio booms. On the other hand, macro includes technology, demographic, cultural, and political factors. Political timing is necessary when the political leaders have a good social relationship with business people. Macro environment entails factors that are common to all firms in the industry. It either includes all the general customer relations that other firms in the business field share as advantages or disadvantages ’to the firms’ progress. The macro environment, therefore, includes all the factors that are either developmental or destructive in the firm’s general expansion to other markets. Moreover, the timing affects all the firms in the industry in terms of shortages, recession, or peak in the business activities of the firms. Timing in macro environment shares all the factors with other firms and this has a losing effect to the firms since they all face either superior times or ghastly times in terms of business expansion. It is vital for firms to take an analysis of the macro environment considering all the other firms in as a timing aspect before proceeding of firms’ expansion in the business field. In many cases, the same factors influence firms in other industries. Economic climate, government policy, and culture in the operational countries are the common factors that affect all the other firms in an attempt to expand their business dimensions. Despite these factors affecting firms in the macro environment, the industries are affected differently according to the countries policies and economic position. Sometimes overlap occurs between macro and microenvironment. For instance, large firm operating small country regard government of the country as part of microenvironment since it is simple for the firm to take control of the government processes. In contrast, firms large enough to control industry take part of the macro environment by minor firms in the equivalent industry (Collinson & Melivin, 2012). PESTEL Analysis PESTEL model in timing of business and expansion consists of political, economic, social, technological, environmental, and legal factors. The government policies on the type of goods and services to deal with affect the timing and expansion of a business. Expansion of a business becomes possible when the policies are favorable. It encourages entrepreneurs’ to expand and operate enterprises when the policies are constructive. Moreover, the legal environment of firms need significant. It promotes operation of micro and macro factors easily. The positive outcome is developments of business and their expansions depending on the timing of operations. The timing needs well-established legal procedures for expansions of businesses. Therefore, PESTEL model affects expansion of a business when all it is factors are favorable with appropriate timing of political policies. Geographical Timing of Business Expansion Governments of developing countries consider foreign direct investment (FDI) as a major contributor to national economic development and determine the appropriate time for business geographic expansion. Minimum level of development attracts FDI. Differences transpire when the country has a bulky domestic bazaar size or the natural resources are exploitable. It allows investors to determine the right time for developments. In micro factors, competitors are given the largest weight to determine the timing expansion of business. It is because of the attractive nature that competitors give to the market portfolio, which makes competitors vital before any geographical expansion of a business. Large domestic market attracts investors in different countries since the market provides flat form for them to trade and make huge profits. It expands the business boundaries and allows many people to access different services that add economic value to the country’s economy. Moreover, development of competition in the countries intensifies since many business people will try to come up with different ideas and strategies to boost their respective business. It automatically allows for expansion of business in different countries depending on the advantages that the host country provides. Besides, exploitable natural resources within a country attract investors (United Nations, 2004). Investors tend to use their own resources especially monetary to exploit the resources and later operate businesses that yield good profits to them and the host country. The expansion of businesses automatically expands the markets and more companies invest in the host country because of the available resources in the country. The timing of the exploited resources attracts more investors since business entrepreneurs’ have the rage of developing and expanding their business. Therefore, international business expansion takes place and more opportunities’ created within the host country. It is vital for countries to keep safe and develop large domestic product that attracts investors who expand their business boundaries to invest in the countries. Additionally, natural resources of the country need protection and proper utilizations to attract investors and exploitation of the resources. It ensures expandable patterns of the business field with many investors taking the responsibility of exploiting the resources and building large multinational companies in the host country and these expand business boundaries. Moreover, many people secure employment in the process of the expansion and reduce poverty levels. The domestic market builds and attracts more investors increasing the economic status of a country. More upstream and sophisticated services transnational countries (TNC’s) look for partners that offer the best facilities based on the least costs. Porter’s analytical model determines national competition advantages using factors like factor circumstances, firm strategy, structure and rivalry, demand conditions and finally related and supporting industries. All these factors help to determine the level of national competition and foreign direct investment. The government controls the factors through policies and this helps in explaining national competitive advantages including foreign direct investment patterns. Moreover, foreign investors look for countries that have governments that promote or do not prevent FDI and offer stable political climate. It enables investors to participate in their investments programs without interference or any sense of disturbance from external forces. Moreover, investors are assured of security with their various investments in the region with minimal or no interference from political leaders. Additionally, investors look for countries with reasonable laws and regulations whose implementation and enforcement are not discriminatory. Investors find freedom and easier to invest in such countries since all the rules and regulations are manageable. They are able to participate in major decision making processes of business portfolios easily, and hence establishing great expansions of businesses in the region. Countries with bilateral investment treaties with home countries and members of international dispute settlement programs are privileged. They attract more investors into their respective countries for quality business expansion around the world. Investors tend to be safe with countries whose international relationships are not in jeopardy. Countries with bilateral investment attract more financiers into their countries to establish huge investments’ into the countries (United Nations, 2004). It has a positive development on business expansion across the world depending on the timing of the business expansion and the treaties that the host country has with other countries. Therefore, it is important for countries to have effective bilateral investment treaties and free from international disputes to attract investors into the country and allow for good investments that promote business expansions and general boast of the country’s economic status. It is possible for countries to attain the above conditions by creating conducive political climate that attracts investors into the country to enlarge business from their original locations. Market Attractiveness, Timing, and Entry Mode Multinational Enterprise (MNEs) managers factor in a host of uncertainties when making entry mode decisions. Some of the factors are learnable by firm actions while others remain unanimous despite the actions of the MNEs. Demand uncertainty depicts differences that MNEs consider in making entry mode decisions. Subsequently it is reduced by firms’ actions such as market research, dealing with local channel members and incremental product introductions. Additionally, political uncertainty is an example of ambiguity not learnable through MNEs procedures. Therefore, before any expansion of a business multinational enterprise take into account possible factors required before the development of the business venture. It prevents any possible chances of the business collapsing in the future and all the potential challenges of the business taken into considerations, before any further developments of the business to other areas with the aim of expansion of the business (Muller& Chuong, 2010). Demand is the major factor MNEs consider in the market before any commence of developments of the business. It allows business entrepreneurs’ to come up with solutions of challenges they may encounter in the future with proper guidelines on how to escape from the dangers in case of it is occurrence. Sales professionals determine the changing dimensions’ of the market and the new products. It prevents the possibility of venturing and expanding into a business that has potentials of collapsing. New products that competitors do not have and yet needed in the market are determined. Expansion of business to different global areas becomes easier since all the areas of collapse are exploited and possible solutions attracted and implemented. The expansion of the business becomes manageable with the hope of making profits after the exploitation of marketplace. Local channels members are researched with any possibility of their developments to prevent future challenges that originate from the local channels (Muller& Chuong, 2010). Incremental product introductions avert possibility of competitors taking up the market and bringing competition that pulls some entrepreneurs’ out of the business. Consequently, before the expansion of any business proper research has to take place that entails all the above factors. It allows for proper and development of business will later success despite the geographical vicinity. Studies have investigated various forms of improbability arising in the limited environments of host countries and possessions on entry strategies of MNEs. Predominant theoretical standpoint examining the duty of hesitation on entry modes is the transaction cost perception (Brouthers & Hennart, 2007; Canabal & White, 2008). The principal focus is to diminish internal and external vagueness coming from benefit specificity and free- riding prospectively. In determining the expansion of business, transaction cost needs minimal attention since it prevents the creation of profitable business within the geographical area. Internal and external destructions need to be considered in depth to thwart any possibility of smooth prospective in the business and a new geographical location. Geographical timing Detailed research done on global description management and little studies looking evidently at the surfacing of customer and resolution- based structure, establishes an efficient geographical timing. Moreover, multinational enterprises (MNE’s) and geographic timing has some problems of complexity, for instance challenges of operational with multi-dimensional template structures and the approaches that diminish complication (peny, 2013). Studies have looked at the use of promotion-like strategies in the firms as a system of simplifying bureaucracy and need to rupture up and simplify MNEs that have emerged immensely and complicated. MNE structures have complicated system operations that need simplicity in order for it to work effectively and allow for geographic expansion. It eases government operations and establishment of systems that can handle many simple systems. The major structural dimensions’ in the 1970s and 1980s of MNE strategy and structure was business units, functions, and countries. Today, a number of other dimensions’ appear to be equally important. The first one is global account structure for customers who expect supplies in a consistence and coordinated methods diagonally in numerous countries and business lines. Second is industry sector, frequently viewed in proficient services firms. It helps in servicing a set of customers in an alert and conversant way. Third is the solutions based structure, which the customer-faces component pulls jointly (Peny, 2013). Offerings of assorted commerce units and third parties supply vast value to clientele. Therefore, for business expansion proper consideration of MNE, need to apply in the business strategy in order to develop complex and well-established system of business coordination (Constantinos, 2004). Culture and International Business Culture causes difficulties in international business. Business problems focus on culture as differences of the enlightening environment. Difficulties’ in international business causes observable differences. Cultural characteristics often portray a daily business life explained in stereotypical methods. In identifying culture as factors of connecting inhabitants of countries and traditional business literature, often misleads. Nations culturally harmonize business life containing frames of several subcultures. It becomes difficult to single out culture as a main cause of problems in international business (Becker, 2013). Traditional culture treats cultures as a factor of jeopardizing promise of a company to work unchecked across the world and use culture as a concept on national ground. Global strategy and structure are vital as the heart of the global organization in corporate culture. Global strategies and structures execute order that ensures global competitiveness and fertility. Global corporate culture comprises the mission, values, beliefs, vision, and expectations (Rahim, 2012). Conceptual and perceptual attitudes of the members affect the business activities of people and general expansion of the whole business environment. Most domestic firms find greatest weakness and difficulty in changing corporate cultural values. These are the systems, which are used in globalised markets. It becomes clear to researchers that European and Japanese corporate cultures and management practices in much greater efforts over longer periods to developing global corporate cultures and human resources than U.S companies operate. For instance, the corporate cultural value systems of the Japanese vary from those of U.S. It is an indication that during many supervisorial, companies triumph declines because of global competitors clutching market shares. Cultural differences cause changes in the operations of business and expansion. Many entrepreneurs’ find it difficult to operate businesses and expand their activities where cultural differences dominate. It develops corporate cultures that tend to create differences in business environments. It is therefore, vital for companies and businesspersons to consider the differences in the culture and come up with reasonable strategies of enabling a well-established environment to expand businesses in different environments despite of the cultural differences (Becker, 2013). Emerging market economies Emerging market economies (EMEs) benefit from improvements in financial soundness of both non-banks and banks financial institutions. Banking systems in EMEs strengthens overall capital adequacy ratios because of economic recovery and reforms (Kohli, 2008). Capacity of improving and making macro-economic and financial policy adjustments in response to various shocks impact changes on the financial system and improves many EMEs. It builds up macro-prudential inspection that issues stability reports to balance monetary policy-related reports (Chinowsky&Songer, 2011). EMEs are important for businesspersons as it allows individuals to have background information of the financial systems before investing in a business and expanding it is boundaries. The financial platform enables entrepreneurs’ to make decisions on important business expansions and expand boundaries within the business portfolio. International Joint Ventures International joint venture is the realization of power and it is a reduction. International joint venture with functional sanctions quickly disorganizes as a platform of hostility. Theory of international joint venture recognizes empirical fact and protects all interests against abuse of power (Aimin & Yadong, 2001). The underlying thesis of expositions is law and economics together with regulation of power. In generating proper business developments, international joint venture becomes effective since one is able to protect the business and even expand it is boundaries to greater geographical boundaries (Wolf, 2000). It enables for expansion of business with proper guidelines and rules that facilitate the expansion to other greater geographical boundaries. Conclusion In expanding business, many factors are put in place. The factors vary from internal to external to provide an appropriate environment for the establishment of a business in a geographic area. Macro and micro environmental factors mainly affect the existence of a business in a geographic jurisdiction. Therefore, it is important for investors to consider geographic factors before establishing a business enterprise. Government policies and the demands of multinational enterprises determine the appropriate time for business expansion. Political leaders influence the type and time for investors to come up with business establishments all over the globe. References Alan M. Rugman(2009): The Oxford Handbook Of International Business: Illustrated, Reprint; Oxford Handbooks Online, 857 Pages Collinson.,S & Melvin.,J(2012): From Complexity To Simplicity: Unleash Your Organizations Potential: Palgrave Macmillan, 304 Pages Ronald.,C,.Wolf(2000)Effective International Joint Venture Management: Practical Legal Insights For Successful Organization And Implementation: M.E.Sharpe, Aimin.,Y.,Yadong.,L(2001):International Joint Ventures: Theory And Practice:Illustrated: M.E. Sharpe,323 Pages Harinder.,S.,Kohli(2008):Growth And Development In Emerging Market Economies: International Private Capital Flow, Financial Markets And Globalization: Sage Publications Ltd,369 Pages Paul S. Chinowsky, School Of Civil And Environmental Engineering Paul S Chinowsky, Anthony D. 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