Why companies expand internationally and establish global operations

¶ … Motivations for Firms to Expand Overseas

The 5 major reasons that companies expand internationally (or globalize) are the following:

They seek

(1) cheaper or more plentiful supplies,-

Sometimes the resources in one's own country (either labor or material or both) can be too expensive for the company. Seeking cheaper resources, they may decide to relocate to another country where such is the case. For instance, many companies choose to relocate to parts of E. Europe or to Asia where they may find a pool of cheap labor. They may also find more plentiful supplies for their product than can be found within their own country (for instance, someone producing paper may want to move to a country where trees are in larger supply)

(2) new markets

The market in one's own country may be too glutted to introduce the product there or for the business to succeed. Another country, however, may have a ready market for this product or service. Accordingly, it would be attractive for the company to relocate there.

This was the case with BMW when they moved their business to other countries after having first launched it in Bavaria / Germany.

(3) lower labor costs-

Labor can be more expensive in the U.S.A. than for instance in Asia. Many electronic companies or those dealing with textiles move to a poorer country where labor is cheaper.

(4) access to finance capital,-

Some countries, such as India, provide incentives for companies to move there knowing that it is advantageous for their economy. For fledgling companies, such deals can be attractive, and many a burgeoning company has decided to relocate for this reason alone.

(5) avoidance of tariffs on imported goods or import quotas

Tariffs can be hefty especially nowadays in the U.S.A. And particularly on certain products. Tariffs can take a huge chunk out of one's business. Avoiding them may be a good deal for certain countries. (McGraw Hill. Connect. Global Management: Managing Across Border http://highered.mcgraw-hill.com/sites/0077330439/student_view0/chapter4/)

Essay 2: How language affects business

Communication affects the way that one understands the other. This is particularly important in a business setting and particularly so in an international business setting where different culture and ways of communication may easily cause misinterpretation, miscommunication, and consequent humiliation and scandal.

Language can be seen in both a verbal and a non-verbal manner, and in the latter case it is expressed via mannerism and gestures. Gestures that in one country may be innocuous may be interpreted in another as totally demeaning and humiliating. Examples may be Arabia where close physical contact is more comfortable than in a Western country. The English use modesty and understatement. An American, not knowing that may easily find him shunned and humiliated in England where he engages in self-promoting talk (considered de rigor for USA). Italians and Spaniards, on the other hand, are apt to express themselves with emotional flowery language. For a businessman to succeed in these countries, it may be worth his while to be aware of that and to accordingly adapt. Germans, on the other hand, are logical. Knowing these differences and attempting to fit in will help a person better succeed in his business communication in these countries, gain his ends, and negotiate better in his business dealings with people of these particular countries.

This extends to gestures too, since gestures can be inadvertently humiliating to a particular country as is for instance our customary method of beckoning someone to come over; in Asian this is considered rude and is accomplished in a different way. (Cultural Differences And International Business Communication http://www.streetdirectory.com/travel_guide/29362/corporate_matters/cultural_differences_and_international_business_communication.html)

Essay 3: 4 reasons that would persuade firms to adopt elements of other marketing programs for individual markets.

Generalizing their marketing programs for all markets would be called standardization. The reverse of that is adaptation. That may be done for the following four reasons:

1. To attract oneself to a specific market. As e.g. BMW adapts its social media services (boards, email, guestbook, feedback) to particular target market as well as its customer service offering. It for instance offers services that are particularly targeted to its German market on that website (e.g. Business to Business, public, military, and diplomatic etc.). Occasionally, BMW has its own particular website (e.g. BMW Diplomatic Sales Website). On others (as e.g. Taiwan and USA) service is more standardized.

2. BMW also occasionally offers differentiates service as with the. Winter driving training in Sweden in Arjeplog to avoid insulting a certain market, for instance, BMW has changed its American slogan that sounds competitive to a different one in Taiwan.

3. Adaption is also critical if a country wants to maximize its resources and limit its time spent in marketing the product. The company wants to sell the product to a specific market. It wants to make that product attractive to that market. It would therefore have to adapt it in order to spend less in marketing and gain more in return.

4. Adaptation also allows the company to better promote itself and to build its reputation and brand. BMW for instance has integrated both: standardization and adaptation. Standardization enables it to gain consistency and a well-known brand, but adaptation allows its brand to be liked in the various countries and to gain acceptance and popularity there. This enhances the brand and gives BMW a great deal of viral and word-of-mouth marketing.

(Kotler P & Armstrong G "Principles of Marketing." Prentic Hall. 1999)

Essay 4: Four characteristics typical of successful economic blocs.

Economist Jeffrey J. Schott of the Peterson Institute for International Economics notes that successful economic blocs usually share four common traits: These are

1. similar levels of per capita GNP,

This refers to the total value of all goods and services produced in one year by the labor and property of the residents of a particular country. Successful blocs usually have more or less consistent levels in these and the numbers seem to proximate. Unsuccessful economic blocs, on the other hand, seem to fluctuate and have unstable economies more often than not.

2. geographic proximity,

Many of these successful economic blocs have geographic proximity to one another. They are collaboratively involved in trade with one another and have mutual agreements. The EU is one instance, where the European nations, geographically close to one another, engage in collaborative trade.

3. similar or compatible trading regimes,

They have similar trading rules and policies as for instance the policies instituted by the EU are binding on America and all of its countries that it engages in trade with. These countries too follow a capitalist routine of business structure. Countries that diverged form this -- as for instance certain communist countries or certain regions in the Middle East indeed showed less economic success.

4. political commitment to regional organization-

The successful countries generally showed political harmony and commitment to their country. When this was lacking, the country inevitably collapsed in economic morass. We see this with many countries on the African continent where political instability veers into economic duress. (Schott, Jeffrey J. (1991). "Trading blocs and the world trading system." World Economy 14 (1): 1 -- 17.)

Essay 5: How convergence of consumer lifestyle and preferences has had an effect on international cultures.

Given today's atmosphere of globalization and therefore sharp competition, different countries are all the more attuned to consumer lifestyle and preferences and they adapt themselves to meet them. This changes cultures.

Change can be seen in at least three ways:

1. Trust is a critical factor and cultures bend themselves over to win it from consumers. This causes cultures to become acquainted with other cultures (since consumers come from a variety of cultures). The result is that cultures that may be ordinarily suspicious of Western cultures may find themselves having to make overtures to them or adopt some of their speech and mannerism. The reverse applies with Western cultures too who, in order to attract clients, become more tolerant and make themselves acquainted with the principals of the other country.

Essay 6: Industry market potential and company sales potential

This is the difference between marketing and sales. Marketing is persuading the other to buy. An industry may have good persuasion appeal and may have great potential for its success of product or service.

Sales on the other hand refers to the product or service actually being sold -- business complete and accomplished. Company sales potential refers to the likelihood that the company can actually sell its product or services.

The marketing too is often done via social media, sometimes at a disconnect form the individual. However, for sales to be made, that needs to be done one-on-one. The industry therefore may have an attractive product and may be able to market that well. No sales however can be made until the one-to-one is affected and accomplished. This is when the process is complete.

An estimate of industry market potential is helpful to managers for it will help them decide whether or not to invest in a certain market. If they see potential in this market (such as in an Apple e-product), they may well decide to invest in it, for they may expect better sales than from a product that has less marketing potential.

The factors that are necessary to determine the industry market potential include the brand and reputation of the product as well as the current need or desire for it and the provenance of that specific market as well as the economic health of the time and the price of that particular product. Past success of that or similar products is also significant. (About.com Marketing vs. Sales: What is the Difference? http://marketing.about.com/cs/advertising/a/mrktingvssales.htm)

Essay 7: Why a one offering one world strategy is difficult.

The one offering one world strategy is otherwise called standardization. It is difficult for the following reasons:

1. One wants to attract countries to buy one's product and one wants to do this with least expense involved. The more attractive one's product is to specific culture, the less arduous it would be to sell it and the less labor and expense involved. One reaches one's target market faster. The way to do this is through adaptation to specific culture

2. Countries have different cultures and preferences. An American slogan or way of advertising for instance may not be as attractive in Taiwan as it would be in America. There are other countries too that enjoy a slower pace of life and therefore certain businesses for instance adopting that mode may be more welcome there than in a 'fast' country such as in America. Different countries have different habits, tendencies, and preferences. Aspects that are comfortable in one may be uncomfortable in another. A successful business will therefore have to adapt to the mannerisms of the country rather than standardizing its offerings.

3. Furthermore, consumers in some countries are far more sensitive to aspects such as price and availability of product than are consumers in another country.

4. Countries may find a certain marketing image contradictory to its morals or values and be threatened by it. They may also find it politically threatening. Companies have to be sensitive to these messages and therefore have to adapt their marketing to cultures.

5. Finally, although not least, consumers in different countries may use products in different ways depending on country lifestyle. For instance, Americans may desire certain gadgets in their cars that the relaxed Europeans may well desire others. For vehicle manufactures to succeed in these various countries they would have to adapt their product to culture. (MSI To Standardize or Not to Standardize: Marketing Mix Effectiveness in Europe http://www.msi.org/publications/publication.cfm?pub=405)