Microeconomics Service Master Pro-is a Company that concerns itself with the provision of a wide variety of services to both firms and residences. The company's flagship brands include but are not limited to TruGreen, AmeriSpec as well as Terminix.

International operations

Currently, Service Master has operations in 14 countries through its vast network of more than 4000 locations. Through its convenient franchise arrangements, the company has continued to expand throughout the world within a relatively short period of time. Though the company's headquarters remain in the U.S.A., ServiceMaster is present (through franchise and company-owned locations) in countries including but not limited to Malaysia, Lebanon, Saudi Arabia, Japan, Spain etc.

The possibilities for further expansion in regard to ServiceMaster seem endless. This assertion is essentially based on the Company's strategy for expansion where it seeks to develop through the issuance of master licenses. This arrangement allows the license owners to not only develop but also to undertake ServiceMaster sublicensing within a specified territory.

Challenges Faced by U.S. Based Firms when setting up in Other Countries

High set-up costs

U.S firms setting up in other countries could face high set-up costs. Typically, these costs are largely made up of sunk costs. By definition, sunk costs include all those costs which are essentially impossible to recover in the event that a firm leaves a given country. Examples in this case include fixed costs, costs of advertising and marketing etc.

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Hence in that regard, limit and predatory pricing are some of the challenges U.S. firms may face when setting-up in another country. In predatory pricing, incumbent firms may deliberately slash prices to ensure rivals do not make a profit.
Customer loyalty

This is another veritable challenge U.S. firms could face when seeking to set-up in other countries. In most cases, we have incumbent firms having products that are relatively well established and hence have a significant customer base. In such a case, competing directly with such strong brands could end up being an uphill task for U.S. Firms.

The Role the Host Government Plays in the Market Economy

According to Rittenberg and Tregarthen (2009), the production possibilities model avails a wide range of choices in regard to the appropriate combinations of goods and services. It can be noted that the question of which combinations are most appropriate in a market economy can largely be answered by having a look at the individual buyers and sellers interaction. However, there is a significant role the government plays in this scenario. For instance, there are measures the government of the day could undertake to either discourage or encourage the consumption of some goods and services. These measures include but are not limited to increase or decrease in taxation rates for specific goods etc. Hence for U.S. firms setting-up operations in other countries, this…