INTERNATIONAL BUSINESS 1
Small enterprises and large firms can extend their businesses beyondtheir border to reap the benefits accrued through global trade.However, this process requires proper planning as well as theconsideration of the cultural factors that can interfere with thesmooth running of the business in the international market. Anenterprise may invest offshore to get a larger exposure. According toFeenstra, (2015), a bureau exercisinginternational business gets a greater acceptance globally and thusattracting potential investors. In addition, international tradecreates a more significant market for commodities. Consequently, thecompany gains access to markets hence high demand for their goods.Therefore, the company deploys business niches available with theguaranteed supply of materials without the threat of immediatecompetition.
Besides, economic conditions vary across the globe. Turkey may havesuitable economy conditions such as lower tax rates as compared tothe company’s native country. Therefore, the Bureau may opt to makean offshore investment to the Turkey. Other beneficial economicfactors that may attract foreign investment include reducedenvironmental regulations as well as reduced workforce costs.Nevertheless, a bureau that exercises offshore investment is prone toenjoy business rejuvenation. In other words, one can acquire thematerials which are not available in his/her home country. In therear, the foreign country creates new outlets for goods and services.
The modes of entry into the international market are equity as wellas non-equity techniques (Daszkiewicz & Wach,2014). As for the XYZ Company, both methods are appropriate.The firm will make use of non-equity modes when exporting small scalegoods to international market. Furthermore, when a firm is dealingwith small volume of commodities, direct export is the most suitablemeans of transaction since the goods requires minimal protection.Direct export involves use of sales representatives and importingdistributors who act as agents in marketing the products. The salesrepresentatives typically stand in the place of the suppliers in theforeign countries to receive commissions from goods export to thatparticular country while the distributing importers acquire the goodsin their personal right and market them in their country.
However, when the volumes of commodities to be exported aresignificant, it is appropriate to employ the indirect exportationmethods. This method entails exporting goods through domesticintermediaries where the exporter loses their control over the goodsin the market. Types of indirect exports include: export-tradingcompanies, export management companies, export merchants and thenonconforming purchasing agents. Other entry methods includelicensing, franchising and Turnkey projects (Columbia SouthernUniversity, 2015).
The primary elements in managing risks include: looking for rootcause of the risks, determination of the hazard and calculation ofthe chances of occurrence as well as the results of the gamble.Similarly, the secondary constituents such as the expansion of themaster plan to alleviate the hazard, assessment and the supervisionof the outcomes and finally the conveyance of information as well asthe consultancies with the personnel involved are typically availablein global market. Through free trade agreements and acquisition ofresources from the office of export encouragement services enablesthe venture to acquire resources necessary for its growth.
In conclusion, several drawbacks face any business entering into theglobal market. For the venture to be a success, the company shouldestablish strategies to address these predicaments. Furthermore, theeconomy of the country in question could act as a barrier to entryinto the business. The obstacle and can be mitigated by thoroughprior adequate research. Besides, language barrier is also a hurdlewhen entering international business. To solve the problem, one needsto acquire a translator. Transportation obstructions are also commonin international trade. Proper prior transport arrangements, as wellas consultancy, counter transportation challenges help in counteringtransport challenges (Borchert etal., 2014). Lastly, venturesshould strive to earn a position in the global trade by understandingavailable drawbacks and opportunities in international market.
Borchert, I., Gootiiz, B., &Mattoo, A. (2014).Policy barriers to international trade in services: evidence from anew database. The World Bank EconomicReview, 28(1),162-188.
Columbia Southern University – MBA 6601 InternationalBusinessbook: Daniels, JD Radebaugh, LH& Sullivan, D.P. (2015)International business Environments and operations (15th ed), UpperSaddle River, NJ Pearson Education – Google Search. (2016).Google.com.Retrieved 8 July 2016, fromhttps://www.google.com/search?q=Columbia+Southern+University+-+MBA+6601+International+Businessbook%3A+Daniels%2C+JD+Radebaugh%2C+LH+%26+Sullivan%2C+D.P.+%282015%29+International+business+Environments+and+operations+%2815th+ed%29%2C+Upper+Saddle+River%2C+NJ+Pearson+Education&ie=utf-8&oe=utf-8&client=firefox-b-ab
Daszkiewicz, N., &Wach, K. (2014). motives forgoing international and entry modes of family firms in Poland.Journal of Intercultural Management,6(2),5-18.
Feenstra, R. C. (2015). Advancedinternational trade: theory and evidence.Princeton university press.