Comprising a significant section of the global economy, including approximately 4.8 billion people Emerging markets I are seen in recent times as being an particularly important growth source for multinational corporations (Akbar and Samii, 2005). Emerging market expansions are attractive strategies for multinational corporations due to the lure of potential capital gain and further expansion, however there are several risks associated with the entry into these emerging markets in which there are several implications for multinational corporations. Environmental market characteristics are important factors of firms looking to internationalise, as they pose many significant threats and opportunities on business activity (O'Cass and Julian, 2003). Legal, political, cultural and economic factors are key elements of risk in which impose implications on firms conducting multinational business. These external environment factors may significantly disrupt the strategic direction of the business (Witold and Zelner, 2010), highlighting the importance of international business firms to analyse the influences and potential implications of these market factors.
An important factor in which, there are many implications for international business firms is that of cultural differences between nations. Culture may been seen as an all encompassing system of value, normalities and beliefs that are shared among a group, organisation or institution that forms a basis for living or work (Linge, 2011). Cultural differences pose many implications for international firms doing business within foreign nations, ranging from language barriers to differences in education (Taylor, 2014). The cultural dimensions as proposed by Hofstede highlight the significa...
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Nguyen, J. (2011, September 8). The 3 Biggest Risks Faced By International Investors. Investopedia.com. Retrieved February 25, 2014 from http://www.investopedia.com/articles/basics/11/biggest-risks-investors-face.htm
The importance of culture in International business today cannot be underestimated and it is imperative that attention is paid at strategic, organizational and the individual levels. The “Blue Ridge Spain” case elucidates these at all three levels. My analysis of this case is from the perspective of the Spanish corporation, Terralumen S.A. National culture is the shared implicit beliefs and tacit values that truly differentiate one cultural group from another. I will be using Geert Hofstede’s frame work to deconstruct this case into its separate dimensions.
Hill, C., Wee, C. and Udayasankar, K. 2012.International Business:An Asian Perspective. 8th ed. Singapore: McGraw-Hill.
13. Fan Zhang and Dennis Xie, Chinese Copyright Protection Has Storied History, Strong Future, http://www.sourcetrix.com/docs/Whitepaper-China_Intellectual_Property.pdf
Investing or venturing into the international market involves critical analysis of the internal and external environment in which the company operates. Usually, a company will decide to venture internationally due to a saturated market or fierce competition in the current country of operation. The demand for a company’s products may have diminished as a result of an economic crisis thus the company will target a foreign market to sustain its sales. In other words, the firms expand internationally to seek new customers for its products. For example, the current Euro zone crisis led to low demand in Europe and many companies extended their businesses to emerging markets where demand was high. A company may also venture in the international market to enhance the cost-effectiveness of its operations especially for manufacturing companies that will benefit from low costs of production in developing world. Global expansion is a long term project as it involves demanding logistics to be successful. Thorough research must be undertaken to ensure that the expansion will create value for share...
Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).
Other types of exchange rate risks are translation risk and so-called hidden risk. The translation risk relates to cases where large multinational companies have subsidiaries in other countries. On the financial statement of the whole group, the company may have to translate the assets and liabilities from foreign accounts into the group statement. The translation will involve foreign exchange exposure. The term hidden risk evolves around the fact that all companies are subject to exchange rate risks, even if they don’t do business with companies using other currencies. A company that is buying supplies from a local manufacturer might be affected of fluctuating foreign exchange rates if the local manufacturer is doing business with overseas companies. If a manufacturer goes out of business, or experience heavy losses, it will affect all the companies it does business with. The co...
Multinational corporations (MNCs) are huge companies that operate in several parts of the world. MNCs are truly to be global in nature as these conduct tasks with no single national emphasis. These corporations have the ability to stimulate the flow of investment, technology and profits in the countries in which their subsidiaries reside. Multinational corporations are mobile in nature, as they tend to establish companies in countries where conditions are most favorable to their business operations. These corporations provide huge employment opportunities. MNCs mostly try to establish themselves in the developed countries as these corporations are always in a search of better employees and better deals from the host government. Whereas government of developing countries don’t have any other option to improve its foreign direct investment thus developing countries welcome Multinational corporations with best possible deals that country can provide so that the problems like unemployment, growth in all the sectors of the market, stabilization of economy, etc. can be fixed.
Expansion across seas can be very advantageous and lucrative for many companies; however, there are many risks associated with doing business overseas, and companies that intend to expand internationally should be careful and strategic when doing so. Not only do companies run the risk of experiencing a product fail due to differences in cultures, they also face severe political and economic risks as well.
With the growing trend of outsourcing manufacturing processes to emerging economies, brands are facing an increasing growth of counterfeit goods. These goods attempt to imitate luxury brands, which in the long run erode the value and the reputation of the brands (Staake et al. 2009). Consequently, counterfeits are becoming a growing concern for status, prestige and luxury brands.
Twarowska, K., Sklodowska, M. , Kakool, M. Management, Knowledge, and Learning (International Conference 2013). June 19-21, 2013. International business strategy, Reasons and forms of expansion into foreign markets. Available from http://www.toknowpress.net/ISBN/978-961-6914-02-4/papers/ML13-349.pdf
Saturation of domestic markets and the need by firms to diversify their markets have provided firms with the need to go international (MA sum, & Fernandez, 2008). Internationalization can be defined as the act by companies to explore international markets, although there has not been a clear definition of internationalization (Andersen 1997, p.28). Internationalization is a huge decision by firms and the wrong strategy can lead to ultimate fall of the organization. Internationalization allows firms and companies to own or control businesses and activities in several countries; a process that affects the whole organization making it more international (Dunning, 1993) and by going international, companies can gain competitive
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Nowadays, business is set in a global environment. Companies not only regard their locations or primary market bases, but also consider the rest of the world. In this context, more and more companies start to run multinational business in various parts of the world. In this essay, companies which run multinational business are to be characterized as multinational companies'. By following the globalization campaign, multinational companies' supply chains can be enriched, high costs work force can be transformed and potential markets can be expanded. Consequentially, competitive advantages of companies can be strengthened in a global market. Otherwise, some problems are met in the changed environments in foreign countries at the same time. The changed environments can be divided into four main aspects, namely, cultural environment, legal environment, economic environment and political system problems. All the changed environments make problems to multinational companies. In particular, problems which are caused by changed culture environment are the most serious aspect of running a multinational business. This essay will discuss these problems and give some suggestions to solve them.