Unit I Essay
Using at least your textbook and a minimum of two additional sources, answer the following questions. Your paper should
be at least one page in length, excluding title and reference pages. Follow APA style guidelines.
• You are the CEO of XYZ manufacturing company. You have decided that you would like to market your product toTurkey. Consider the following points in your paper; you can make assumptions, but support your work with factsand scholarly references:
o Discuss the reasons why your company would want to expand overseas.
o Discuss what your mode of international business would be and how moving abroad will expand sales.
o How will you minimize risks and acquire resources?
o What are the factors you may face expanding into a foreign market? How might you mitigate those barriers?
Information about accessing the Blackboard Grading Rubric for this assignment is provided below.
1. Discuss the reasons why your company would want to expand overseas.
• To expand Sales: enter into international business means that the company access more markets, more customers and thus more revenue.
• To acquire resources: there are some resources that the company can not obtain in the domestic market for their production processes. By buying these resources from abroad the company can solve this problem.
• To minimize risk: entering into international business the company can diversify its sources of revenue and profit. When the country falls into recession and the company suffers reduction of revenue and profits. The losses can be compensated by revenue and profit coming from serving the foreign markets. Therefore business risks can be minimized.
• To follow competitors: when a competitor has entered into a certain foreign market, the company also decides to enter this foreign market to follow its competitor to ensure its competitive position. .
2. Discuss what your mode of international business would be and how moving abroad will expand sales.
Modes of Entry into International Business consist of:
• Merchandise exports and imports
• Service exports and imports
• Use of assets [licensing agreements]
• Franchising
• [Foreign investment]
Foreign direct investment
Foreign Portfolio investment
You are to choose one most appropriate mode for your chosen company. In Vietnam’s context, choosing Export of the company’s goods may be a good mode.
Compared to the other modes of entry, exporting goods is less risky and can generate adequate income.
3. How will you minimize risks and acquire resources?
• To minimize risk
• Minimize risks by taking advantage of business cycle differences amongst countries:
Ourcompany can set up its business in those foreign countries which seem to have opposite business cycles with that of the domestic market. When the domestic economy falls into recession, the company may suffer losses. These losses can be compensated by positive profits from foreign operations of its foreign branches. Thus risk can be minimized.
• Minimize risks by diversifying across countries.
Entering into different foreign markets by exporting various kinds of goods can help our company improve the product innovation and prolong the existing product life cycles. The introduction of new products in various foreign market can minimize the risk of its possible failure.
• Diversify suppliers across countries:
Purchasing material inputs from only one supplier always faces the risk of input shortage or input price increases, especially when the supplier has market power. By importing materials from different foreign suppliers across countries, our company can minimize the risks of input price increases and the problem of shortage.
• Counter competitors’ advantages:
Importing materials from abroad can help our company access low price inputs to its increase our price competitiveness over the competitors. In addition, accessing those materials that are not available in the domestic market may also become the competitive advantage of out company over the competitors.
• To acquire resources:
Our company inters into foreign markets to acquire those resources that are not available in the domestic markets or available with limited restriction in our countries. These resources may be foreign products, product components, foreign financial capital, technology and information.
4. What are the factors you may face expanding into a foreign market? How might you mitigate those barriers?
Factors that our company may face expanding into a foreign market:
Physical and Societal Factors: Political Policies and Legal Practices
Cultural factors
Behavioral factors
Economic Forces
Geographical Influences
Competitive Factors
To mitigate those barriers our company would:
• Choose the foreign market in the country with the political system that is not hostile to that of our country (political factor)
• Deeply study and understand the legal system of the foreign countries as well as cultural differences between the two countries. Have appropriate training our staffs.
• Analyze deliberately the economic and geographical conditions before choosing a foreign market to have appropriate proactive plans.
• Analyze the foreign competitors, their core competencies, competitive advantages and have strategic marketing plans to win in the foreign market.