The different types of entry modes, to penetrate a foreign market, arise due to globalization. The latter has drastically changed the way business conduct at international level. Owing to advances in transportation, technology and communications, nowadays practically every business of any size can supply or distribute goods, services, or intellectual property. However, when companies deal with international markets, it is complicated as the companies must be prepared to surmount differences in currency issues, language problems, cultural norms, and legal and regulatory regimes. Only the largest companies have the capital and knowledge to overcome these complications on their own. Many other businesses simply do not have the means to efficiently and affordably deal with all those variables in foreign jurisdictions, without a partner in the host country. Foreign market entry mode has been defined as an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management, Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Make-or-Buy Decisions in International Business
International businesses invariably face decisions about whether they make all or just some of the components used in their final product and therefore buy in from other sources (outsourcing) those components they decide not to make. This make-or-buy decision is related to the degree to which a firm is vertically integrated: that is, the extent to which a firm is its own supplier and market. At one extreme a firm can make all of its own inputs and be its own supplier; at the other extreme, it can buy all its inputs and rely on external suppliers. Partial integration implies that some components are made and others bought. A major benefit of making inputs (backward or upstream integration) is the degree of control maintained over cost, quality and timeliness of delivery. Major drawbacks are the cost of investment and expertise needed to provide these inputs. A benefit of buying is Continue reading
Principal Functions of Investment Banks
Global investment banks typically have several business units, each looking after one of the functions of investment banks. For example, Corporate Finance, concerned with advising on the finances of corporations, including mergers, acquisitions and divestitures; Research, concerned with investigating, valuing, and making recommendations to clients – both individual investors and larger entities such as hedge funds and mutual funds regarding shares and corporate and government bonds; and Sales and Trading, concerned with buying and selling shares both on behalf of the bank’s clients and also for the bank itself. For Investment banks management of the bank’s own capital, or Proprietary Trading, is often one of the biggest sources of profit. For example, the banks may arbitrage stock on a large scale if they see a suitable profit opportunity or they may structure their books so that they profit from a fall in bond price or yields. In short the principal Continue reading
Globalization and International Marketing
The concepts of globalization and international marketing are two important concepts that must be addressed and discussed in relation to business operations of large multinational companies. Globalization is defined as the integration of the economy at a global level and involves two main features. The first main feature states that in globalization, most trade takes place among multinational corporations, while the second main feature emphasizes that the major activity in the global economy is the flow of money in the form of derivatives, foreign investments and many others. In simple terms, the concept of globalization simply means the opening and cross relating of different economies in the world, in line with the desire to have a wider and diverse market. With this, since the aim of globalization is to expand and diversify its market, the concept of international market then becomes relevant. International marketing refers to marketing across national borders, Continue reading
Import Process
Importing refers to the purchase of foreign products for use or sale in the home market. Importing involves searching foreign markets for acceptable products and sources of supply, providing for transfer of the product to the home market, arranging financing, negotiating the import documentation and customers procedure, and developing plans for use or for resale of the item of service. Thus, successful importing depends on more than good buying; it requires planning for acceptance of the product and delivery of the promised benefits. The importing firm has the responsibility to determine whether the foreign product or service will meet the needs to the home market. Essentially the import process comprise the following five stages: Determining market demand and purchases motivation. Locating and negotiating with sources of supply. Securing physical distribution. Preparing documentation and customs processing to facilitate movement among countries and organizations. Development a plan for resale or use. 1. Continue reading
Country of Origin Effect in International Marketing
The Country of Origin Effect is the influence that the manufacturer country has on the positive or negative consumer judgment. Studies have shown that when a customer becomes aware of the country of origin of a product his/her image about the product is influenced either positively or negatively according to his perceptions. Consumers tend to have a stereotype about product and countries that have been formed by experience, hearsay, myth. These stereotypes are generally broad and vague according to which they judge a specific country or a specific product to be the best: French Perfumes, Italian Leather, Chinese Silk and Japanese Technology are all examples of such stereotypes. Therefore the country, the type of product, and the image of the company all its brand play a crucial rule in deciding whether the country of origin will engender a positive or a negative reaction. Country Image: Precursors to Country of Origin Continue reading