When businesses go international, they have to face a number of issues and challenges from their external environment. The international business environment is much more complex and multifaceted than local environment. Business organizations have to deal with a number of environmental forces that directly or indirectly affect their business operations. These forces include political forces, economic forces, social, cultural, and demographical factors, technological forces, and competitive forces (Loudon, Stevens, & Wrenn, 2004). The international business expansion strategies also require the business organizations to analyze the local cultures, the kind of reception they anticipate from the local government, suppliers, distributors, and the community, control issues, and leadership, motivation, and communication issues and problems which their managers may face at the workplace (Hill & Jones, 2007).
This report acquaints the readers with an example of international business expansion strategy pursued by an American business organization into India as its new international market. The opening section of the report gives an introduction to the organization; its products, location, size and scale of operations, and other important profile elements. The next section proposes Australia as a potential target market; recommends an entry strategy for international expansion and gives rationale for this choice. The main body of the report consists of an analysis of the external environment which the company will have to face in the international market and different kinds of challenges which will be waiting for its managers in this market. These challenges include recruitment and selection, cultural diversity, leadership, motivational techniques, communication systems, control issues, and concerns of the host country and the local community. The report concludes by summarizing the key points from the discussion.
Fast Communications: The Company Profile
Fast Communications is a Latin American-based business corporation mainly engaged in providing home communication services to its clients all over the country. It was established in 1995. The main products and services offered by Fast Communications include fiber optic network of High Definition Television channels, high speed internet services through fiber optic network, advanced digital home telephone sets with multi-functionalities, and others. The products and services offered by Fast Communications are used by both home users as well as business clients. It high definition television channels provide full time entertainment to its home users like movies, music, TV shows, games, etc. The digital home phones and the Internet based on fiber network provide a fast and affordable communication system to home and business users.
Fast Communications is one of the fastest growing telecommunication service providers in the United States. It has a strong brand image and high level of customer acceptability in the eyes of household users as well as corporate clients. Fast Communication has a sound financial strength and strong business presence in the local market. It has a large customer base and supplier network all over the country. Fast Communications operates with more than 30,000 employees in both technical and non-technical positions. Keeping in view the potential opportunities in the international markets and advantages of internationalization for its business growth, Fast Communications has decided to expand its operations into some attractive market. The international expansion strategy will open new horizons of success and prosperity of Fast Communications in the Global market. It will not only help it in developing its brand image in the Global market, but will also make it stand among the multinational telecommunication service providers of the world.
Australia: the Rationale for Choice
Australia has been chosen as the most potential market for international expansion due to availability of vast investment opportunities and favorable environmental conditions for telecommunication services organizations. Australia is a land of opportunities for investors and multinational organizations. If Fast Communications invests in Australia, it will be able to grow its business in a very short period of time. Australia has a high per capita, one of the most stable currencies, a fast-paced service industry, and an advanced telecommunication infrastructure for households and industrial sector. Australia is one of the most developed countries of the world and has the most favorable economic, political, legal, social, and cultural environment. Fast Communication can find a large consumer segment in Australia which can become potential target customers for its telecommunication products and services. It can target households and business customers for its fiber optic-based television channels and internet services. The major cities which can be targeted in the initial phase are Canberra, Sydney, Perth, Brisbane, Adelaide, and Melbourne.
Entry Strategy: Joint Venture
Fast Communications has a strong brand image in the United States market. However, it will have to make efforts to develop the same strong brand image in the new international market. Therefore, direct penetration strategy into Australian markets through fully self-funded operations will be a risky investment for the company. There are various country penetration strategies which can be assessed by Fast Communications to choose the best way to enter this market. Keeping in view the different risks and challenges of international business expansion strategy, it is recommended that Fast Communications chooses joint venture to enter the Australian market in the safest and an effective fashion. The Joint venture will allow Fast Communications to enter this market without making huge investments and by sharing the potential threats with some existing well-established business (Hill & Jones, 2007). To make the joint venture, Fast Communications will first need to invite potential investors from the host country to make long-term business relationships and start operations on large scale in selective cities and towns. Once Fast Communications establishes its business presence in the most populated and developed cities of the country, it can purchase the shares from its business partners and become all in its strategic moves in the long run (Lambin, 2007).
The international business environment will bring a number of challenges for Fast Communications. These challenges will be imposed by different environmental forces which are the part of Australia's business environment. These forces include political, legal, and governmental forces, economic forces, social, cultural, and demographical forces, technological forces, and competitive forces (Luther, 2011). Each of these forces will have a direct impact on the company's business operations and its effective performance in the industry. These are now explained below in detail:
1. Political, Legal, and Governmental Forces:
Political, Legal, and Governmental forces are among the most important environmental forces that impact the businesses of new entrants in a country. These forces consist of laws, regulations, and regulatory frameworks which every business organization has to follow in order to operate and grow in the country in the legal way. Fast Communications will have to adhere to the local laws and regulations which are imposed by the Australian Government for business organizations in general; and telecommunication service providers in particular. Fast Communication will see a favorable governmental behavior in Australia as the Government of Australia has always been showing a positive response and support to the foreign investors that wish to setup their business in this country. At the same time, Fast Communications will have to keep itself fully aware and updated of the policies and procedures that are set by the Australian Government from time to time. These policies and procedures are mainly related industrial relations, business and marketing ethics, social welfare concerns, environmental protection measures, audit and compliance procedures, investor relations, international trade, taxation policies, and others.
2. Economic Forces:
The second most important force in the external business environment is economic force. This force consists of factors that deal with the earning and spending patterns of the general public, business organizations, and the Government in a country (Lord & Ranft, 2000). The economic conditions of Australia are quite favorable for foreign investors. Reason being, it is one of the fastest growing and well-developed countries of the world with high per capita, low unemployment, massive exports, advanced telecommunication and financial infrastructure, and strong outer world relations. However, Fast Communications will find the same high prices of technological products and other services in this country as they were in its parent country. To deal with the high prices and expensive running of business operations, Fast Communications will have to move in the industry in a very cost-efficient and tactful way. It will have to manage its business costs effectively and cut down unnecessary expenditures in order to ensure high profit margins and superior financial performance over the years (Hill & Jones, 2007).
3. Social, Cultural, and Demographical Forces:
These forces are related to the life styles and preferences of the general consumers with respect to their local culture, societal values, and demographics. Australians have a contemporary lifestyle where they are pretty close to the high-end technological products and fast-paced communication networks. The per capita income in Australia is also among the highest in the world. Keeping in view the life styles, preferences, and income level of Australians, Fast Communications can confidently offer its communication services like high definition television channels network, super-fast fiber optic internet, and advance digital home phones to a large consumer segment. It will find the most potential customers in…