global Opportunities (marketing)
...r make them their customs, such as fast foods, blue jeans, sports, and American interests. Specialized products will bring in more revenue and more attraction to their own company. III. Making the Most of Experience – With volumes of demand increasing they found out that the price of making the product would decrease also, this came from the experience curve efficiencies; per-unit savings gained from the repeated production of the same good. This comes from learning effects, which are insights gained from experience that lead to improved work performance, and economies of scale, efficiencies that result from expansion of production. B. Gaining Access to Resources –Not only do entrepreneurs go to outside countries to gain raw materials but they also will go outside their country to receive skilled labor. The demand will force they to look outside. C. Cutting Costs – Producing a product outside of the demand country could have some ups and downs. An up is that it would cost less to build in a factory in another country, but yet the factor of transporting it and shipping it back to the demand country by the customers could become costly. Regional Free Trade Areas have made it easier for other countries to trade amongst other country without the high taxes. D. Capitalizing on Special Features of the Location – Big companies may locate overseas to cut their cost, but what about their smaller suppliers. Often in their multi-year contract they will throw a catch in there saying that if they move they will have to also and be a part of them. 3. Strategy Options for Global Firms A. Exporting – Selling products in the home country to customers in another country. Small firms were about 96% of the American exporters. Trade Missions are trips organized to help small business owners make direct contact with potential buyers abroad. B. Importing – Selling goods produced in another country to buyers in the home country. If a product seems to be a potential fast growing product a buyer might try and pick it up and sell it in their country allowing the product to expand and for them to receive some profit. C. Foreign Licensing – Allows a company in another country to purchase the right to manufacture and sell a firm’s product in an international market. The licensee (the company buying the licensing rights ) must by the license from the licensor ( the company selling the licensing rights). However they must pay royalties; fees paid by the licensee to the licensor for each unit produced under a licensing contract. This also helps protect against counterfeit activity; the unauthorized use of intellectual property. D. International Franchising – is kind of like licensing but a little different. It’s the selling of a standard package of products, systems, and management services to a company in another country. E. International Strategic Alliances – A combination of the efforts and/or assets of companies in different countries for the sake of pooling resources and sharing the risks of an enterprise. F. Establishing an International Presence – Most small US businesses open up in Canada, but some are starting in English speaking UK and Ireland. Some companies do a cross-border acquisition; purchasing a company located in one country for another country. Or even starting a Greenfield venture; a wholly owned subsidiary formed “from scratch” in another country. 4. Challenges to Global Businesses A. Political Risk – The potential risk for political forces in a country to negatively affect the performance of businesses operating within its borders. Often government has an effect on this, if they decide to change laws companies could be forced to expose export markets, reveal trade secrets, and even demand work be completed in-country. Most of the western hemisphere is least likely at risk for a threat from the government, where the eastern hemisphere is very likely to be threaten and taken over by the government. Not all is the same; it varies depending on the government style. B. Economic Risk – The probability that a government will mismanage its economy and thereby changed the business environment in ways that hinder the performance of firms operating there. The two big concerns for inflation (reduces the value of country’s currency) and fluctuation. C. Managerial Limitations I. Product Planning – Customers taste, skills of the employees, and government regulations II. Marketing – Research for marketing, include who, reasonable sales projection, price range of product, how to deal with counterfeit products III. Finance – Cash flow from international operations, mange currency fluctuations, government policies, laws on profits from foreign market, host country allow you to take profits out of the country, will barter or other forms of countertrade be necessary IV. Management – Management options work for home work settings, placing people with correct jobs, pay for local employees, labor unions in foreign locations, over coming barriers, develop a trusting relationship with foreign employees, ethical standards in host nations, dealing with foreign rivals offering bribes to obtain preferential treatment V. Accounting – Integrating systems across global operations, constantly changing currencies, harmonizing accounting rules between countries, accounting system capture the information necessary for international trading VI. Legal Issues – IRS reporting requirements, paying appropriate taxes in home and host environment, local government regulations, will trade restrictions (including tariffs and non-tariff barriers) delay the expo...