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 Management
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
International Marketing Research – Definition, Categories and Process
International marketing managers make the same basic types of decisions as do those who operate in only one country. Of course, they make these decisions in a more complicated environment. As with marketing decisions, the basic function of marketing research and the research process does not differentiate between domestic and multinational research. However, the process is complicated almost exponentially as more and more countries are involved in the same decision. Marketing research practices and techniques have become truly global. For example, the world’s largest research firm, Nielsen, is headquartered in the U.S. but derives almost two-thirds of its revenue from outside the U.S. It is standardizing much of the data it routinely collects in 27 different countries. The main factors which influence marketing research in different countries are; Cultural differences. Culture refers to widely shared norms or patterns of behavior of a large group of people. It is the values, attitudes, 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
Depositary Receipts – Definition, History and Types
A Depositary Receipt (DR) is a type of negotiable (transferable) financial security traded on a local stock exchange but represents a security, usually in the form of equity, issued by a foreign, publicly-listed company. The Depositary Receipt, which is a physical certificate, allows investors to hold shares in equity of other countries. One of the most common types of Depository Receipts is the American depository receipt (ADR), which has been offering companies, investors and traders global investment opportunities since the 1920s. Since then, Depository Receipts have spread to other parts of the globe in the form of global depository receipts (GDRs). The other most common type of Depository Receipts are European DRs and International DRs. ADRs are typically traded on a US national stock exchange, such as the New York Stock Exchange (NYSE) or the American Stock Exchange, while GDRs are commonly listed on European stock exchanges such as the Continue reading
Top Reasons for Mergers and Acquisitions in Global Scenario
Mergers and acquisitions are considered as one of the routes by which organisations can expand their presence into new markets across geographies or product segments. Essentially these forms of expansion are external in nature in that they all have an element of foreign presence attached to them. These methods of expansion of business have the advantages of reducing risks as there is a new local knowledge or expertise which is added onto the organisation. There are potential for the acquired organisation to bring in new knowledge and synergies to the total organisation which may be valuable in operating in the new market conditions. But along with the advantages to the organisation there are also associated disadvantages also of falling into debt due to the leveraged nature of the acquisition and higher risk of bankruptcy of the organisation. These factors are analysed below. Too much Debt and Risk of Bankruptcy Mergers Continue reading