Add to this description by stating that the participating entities can be in the form of companies, governmental agencies or a partnering configuration between the two. Further, B can be classified into four rudimentary types – “foreign trade, trade in services, portfolio investments and direct investments”. In this short say, the following section will encompass a discussion and delineation of the process of business expansion into a new country, and it will capture various dimensions starting from macro-environment analysis to the evolution of marketing plan.
The conclusion section will contain a summary of key points covered in the main section. 2. Discussion: The first step an organization has to undertake while considering an international expansion is to assess the Marco-environment (PESTLE Analysis) of the host country in terms of factors which pertain to key and relevant political, economic, socio-cultural, technological, legal and environmental elements (Jam et al, 2006).
Organizations which are planning to make an international foray into international markets need to assess and constantly monitor the political environment in the host country in relation to changes in political structure, government policies and stability of the regime as well as consistency in policy-making (Contain and Romaine, 201 3, p. 142). All of these actions are necessary in order to anticipate and plan for any adverse outcome which may arise due to political action.
Political risk has been defined as the probability of losing an investment in a given country due to actors like upheaval in political dispensation, sudden policy changes pertaining to taxation, trade tariff, trade regulation and restrictions imposed by the host country on repatriation of profits. For example, in case of India as a host country, the risk of expropriation of profits and property is not that high.
But, in terms of operating and transfer risk, there have been several instances wherein, the government has clearly interfered in the running of foreign company operations; and in matters related to taxation on profits, earned in India but repatriated back to the home country (.NET, 2014). Additionally, for any B endeavor, a combination of factors pertaining to economic conditions have to be looked at and analyzed from product marketing point of view; with each combination being unique to a particular exporter (Curry, 1999).
Some of the fundamental criteria to be used include the total size of the population, (broken down into meaningful units); per capita income as well as income distribution; level of infrastructure development; impact of economic development on social indicators and finally the macro level factors of GAP growth, level of regional cooperation ND integration and the projected growth rate for different parameters like inflation, interest rates and governments monetary spending (Contain and Romaine, 201 3, p. 47). Moreover, each country has a set of sociological and cultural attributes which play a key role in shaping how different organizations conduct their operations, design products and services, select the methods of distribution and eventually determining the overall management structure as well is the final fate Of an organization (Jam et al. , 2006, p. 202).
The next important step for an aspiring NC is to conduct a usurious analysis of industry dynamics which include factors like competitive pressures and intensity, customer and competitor analysis; and finally the organization can conduct an internal analysis of its “unique resources” and “strategic capabilities” in order to assess its core and distinct competencies, which in turn, can enable decision-making in terms of entry and competitive strategies to be adopted.
Porter’s Eve Forces model is the most popular tool used for assessing the competitive intensity in any industry and it also allows for an assessment of industry attractiveness in terms of profitability. SOOT analysis is another important tool which allows for juxtaposition of internal strengths against opportunities which are identified using the PESTLE analysis (Thompson, Strickland & Gamble, 2008). The next step of the expansion process involves a choice of strategic objectives and selection of entry strategies.
Strategic objectives relate to the measurable and quantifiable elements of market share, revenues and profitability. Some of the strategic options for entry can include exports, franchisee agreements, direct investment or strategic alliance formation with local players (Jam et al, 2006). . Conclusion: It can be inferred from the informative analysis presented above, that international business expansion is an imperative in the era of globalization and intense competition.