Delivery in day(s): 5
MGMT6015 International Business Strategy Assignment Help
The present study is been conducted with the intention to evaluate the international business condition and identify the requirements to enter the new market. It would be developing a business model to enter the new international market focusing on the key modern economic theories and events with respect to the international business. The report would be developing a market entry strategy for an international business along with the evaluation of the HRM issues which would arise in the same context. Furthermore, it would evaluate the financial risk of the international business strategies and the alternatives to be used in context of the international business.
Key modern theories and events in the recent global history related to the international business
Nowadays, International business had become a key trend where every emerging business tends to enter international market with the intention to gain exposure and create a global presence. International business is mainly termed as the business transactions which takes place across the nations. In past few decades, it has been identified that because of the liberalisation in the investment practices and the flexibility in the legislations by government, the international business had acquired a sustainable growth and proved to be beneficial for the businesses at large (Cavusgil.et.al, 2013). In addition to this, the international business mainly consist of all the commercial transaction whether private or public, logistic, sales, transportation, investment, etc. which takes place among two or more countries beyond their political boundaries.
With respect to the international business practices, there are wide ranges of modern theories which could be utilised by the businesses. Absolute advantage theory, opportunity cost theory, the comparative advantage theory, mercantilism, new trade theory, international product life cycle, etc. are some of the most common theory which had contributed in the growth of the international business. According to the comparative advantage theory, each and every nation acquires enough capabilities of developing products and services in some of the specific areas. This theory is mainly concerned with the most important factors of the production like land and capital, labour and resources in the nation (Feenstra, 2015). The abundances of these aspects could be used for carrying out the international business practices like exporting to the other nation having a need of the products and services intensely.
In addition to this, there are immense numbers of business models which could be used by the organisation to enter the international market and establish the business operations such as franchising business model, e-commerce business model, freemium model, subscription model, joint ventures, exporting, licensing, etc. In context to the current proposal of developing a new business model to enter new international market, the business would be explored with the franchise business model. A company named “Summer paradise” had recently planned to expand its business in UK which would make use of the franchise model. The company would grant the rights to make use of the name and trademarks to the other party across the nation which would help in establishing new business operations and expand the brand to the higher extent (Badrinarayanan.et.al, 2016). The company would offer the franchising facilities in the public so that to have adequate number of application of interested parties and would accomplish the franchising deal with the best profitable option. The company mainly offers variety of fresh fruit juices, smoothies and ice-creams. It mainly focuses on the customer satisfaction and thus ensures the best quality and variety in the products and services. However, with the help of franchising business model the company “Summer paradise” would ensure that the services remain the same at the new outlet.
Rational of the proposed business model
In the present technological world, it has been seen that there are immense number of opportunities to expand the business practices and gain higher profitability. Entering into the international market had been not easier earlier but now several modification had been emerged which made much flexible to enter into the market at global levels and establish its presence at international levels. The franchising business model being proposed for “Summer paradise” had been selected to enter the international market with the intention to provide an international popularity and expand its market share along with the brand value and image in the industry (Dunning, 2013). With the help of this model, the business would be able to establish its root easily and without any extra effort as it is a renowned brand and seeking to expand its roots across its nation. International presence helps an organisation to cover wide range of area all over the world and attain a position of a multinational company among the common public. It has been seen that people are more inclined towards the renowned brands and finds them more trustworthy.
As the company offers range of fruit juices, smoothies and ice-cream which require attracting the customers and thus are tend to collect more trust and loyalty out of the population. Thus, the management took a decision of entering into a new international market and make use of the franchising business model specifically. Moreover, the franchising model facilitates the franchisor to establish its business in lower time along with an ongoing support (Robson.et.al, 2015). It also leads to the higher possibilities of success as compared to the sole proprietors. It has been found that the business model would incur less investment and the resources over the new establishment and would contribute in the wider expansion of the business activities in the global terms.
Market entry strategy for an international business which focuses on the leadership, marketing and HRM issues
With the purpose to enter any of the market, it is very much important to ensure the use of an effective market entry strategy so that to develop a clear way for establishing the business activities in new market. There are various market entry strategies such as licensing, joint ventures, exporting, direct investment, wholly owned subsidiaries, etc. which helps any of the business to enter into the new market are globally. However, in order to emerge with the business operation in the international market, the company “Summer paradise” could make use of the licensing which is an effective strategy and would help the company establish its brand in the market easily (Ang.et.al, 2015). Licensing is been considered to be a less risky market entry strategy where the licensor grants a license to an organisation in foreign market to produce the product and utilise the brand name and would receive a royalty payment against the business revenues. It has been identified that this way of entering into the market at global level would incur less investment with higher probabilities of success. Licensing provides with the access to the markets which could not be approached because of the high rate of duty, excessive cost of transportation and the import quotas or other additional limitations. It has been found that many of the organisations prefers the market entry with the help of licensing over the direct foreign investment as it brings technological advancements in the nation without any of the shortcoming of the direct investments.
As per Meyer & Peng (2016), expanding the business over international levels includes three major components and issues which could either contribute in the success or in the failure in the business. Leadership, marketing and human resources management are the three major aspects which must be focused by the authorities while executing the strategy and ensure the effectiveness of the business as well. In addition to this, leadership is an important aspect which helps an organisation to ensure the management of its business activities in an effective manner. A proficient leadership tactics leads the business towards the enhancement in the existing procedures and leads the entire team in a proper way. However, in case of the international business there are various issues which could be faced by the businesses. The licensing market strategy had thus helped the business to emerge in the market successfully but require to have an effective leadership, marketing and the human resource management so that to conduct the business activities smoothly (Jackson & Sørensen, 2016). It is very much important for “Summer paradise” to acquire professional leaders so that to ensure that the licensing strategy has been implemented properly and had made no biasness or illegal practices in the business. It had been generally found that the major leadership issue being identified in the international business is the ethical practices along with the leadership styles.
Ethical consideration plays an important role in leadership as the leader is the one who carries out the whole population within an organisation and ensures the effectiveness of the business growth. Licensing involves proper agreements and written formalities which help in restricting the leaders to the specific procedures and ensure the ethical activities in the business. This also contributes in the reduction of the leadership issues as the leaders is much concerned with the legal activities and do not indulge in any such acts which could hamper the business. Marketing in this context is a bit complex task as it includes various activities to promote the brand and spread adequate amount of awareness among the people (Gilpin, 2016). Marketing activities are important to bring the business emerging in a new international market into limelight so that to pull sufficient numbers of customers towards it. The major issues arising from the international market is the identification of the actual target market, identification of the reliable sources of marketing, distance and time, etc. The business usually faces these issues while expanding its roots at the global levels.
However, licensing strategy acquires a valid connection with the foreign market and thus allows the business to carry out all the activities of spreading the awareness about the products and services. It provides with the authentication to the brand and creates an image belonging to the same market which convinces the customers to serve them with the best services. Along with this, the organisation comes across the human resource management issues while entering the new market at global levels (Von Glahn & Taulbee, 2015). The differences in cultural backgrounds, acquiring the desired skilled and knowledgeable workforce in the international market, cultural diversities, language barrier, etc. are some of the HRM issues being faced in the international business. Human resources are the most important aspects in any of the business and thus require managing and acquiring effectively. Hiring the desired level of employees is a critical task in an international country for a new brand as people are reluctant to connect to lesser known brands concerning the authenticity and loyalty of the company.
Though, licensing strengthens the company by availing legal and authorised permission of carrying out the business activities with the particular name of the brand and establishes as an officially authorized brand in the market (Kuratko, 2016). Hiring the local candidates in the business would help the management of “Summer paradise” to communicate with the common people and convey the desired information about the products and services and deliver the best customer satisfaction and incur high profitability out of it. The management had to also look after the employee diversity as has to make them adapt the business culture and the procedures efficiently. The employees thus must be provided with the training and development sessions so that to make them learn about the procedures being followed in the organisation of the base country and make them implement in the international market. Schuler.et.al, (2015) stated that international business expansion includes wide ranges of activities which has to be focused so that to ensure the effective emergence of the business in the new market. With the purpose to enter into the new international market, every business requires having an efficient workforce so that to make them put their best efforts towards the achievement of the desired objectives of the new business and lead towards the success.
Financial risk of the international business model
With the emergence of a new international market, a business comes across various risks as well. Out of all the most effective risk is the financial risk which could hamper the international business model to the great extent. It has been found that carrying out a trade practices at global levels includes greater amounts of risks as compared to the trades domestically. It is mostly occurred due to the differences in the currency, currency crisis, laws, taxation and customs, regulations, interest risk, etc. In addition to this, the basic financial risk being related to the international business is the fluctuation in foreign exchange which hampers the finances of the new business. As per Ebert & Griffin (2015), financial risk is been considered as one of the major concerns of each and every business all over the world. The term financial risk however indicates the risk which includes the financial losses to the organisation. It usually takes place because of the unsteadiness and losses in terms of the financial market resulted by the fluctuation in the currencies, stock prices, interest rates, etc. This risk is been included in one of the high-priority risk types of the business.
With respect to the “Summer Paradise”, it is very important for the management to look after the investments along with the financial activities so that to ensure the effective allocation of the financial resources in the market and reduce the level of risk over the business (Koryak.et.al, 2015). The organization offering beverages and ice-cream to the people must implement better financial plan which could ensure the effective allotment of finances and manage the issues effectively. It has been identified that the financial risk is also bifurcated further which could be faced by the business such as market risk, credit risk, liquidity risk, legal risk, operational risk, etc.
It is very much important for the organization to establish a financial risk management so that to reduce the effect of the risk and secure the business of getting any of the severe impacts. Financial risk is the most effective risk and affects the business at large scale. It is been recommended that the organization must acquire highly professional financing advisers so that to have proper financial management and records in the business (Mechelli.et.al, 2016). As the outlet of “Summer paradise” is newly established in UK, it would require effective market research and the country analysis so that to record the risk of finances over the trade practices and then initiate with the investment or any of the financial activities. With the help of the professionals, the authorities would be able to implement better practices of financial management and reduce the risk over the same. Fluctuation in the currency is found to be the most common risk over the business and affects at large.
Thus, the company Summer paradise acquires an option to select the payment and pricing currency then it must consider its national currency for carrying out the business. In this way, the company could reduce the exchange rates risks over the business. It has also been found that by making use of different modes of financing, the organization could overcome with the issues and carry out its business operations more effectively. Along with this, the company must also get the business resources and some components insured so that to cover them from the risk and reduce the levels of losses out of it (Singhal, 2015). However, the entire loss is not been recovered by this act but it reduces the impacts and the levels of the losses by reimbursing the insured amount against the losses.
Colombo.et.al, (2016) stated that there are various alternatives which could be used by the organization for financing such as Bootstrapping, venture capital financing, seed financing, bank loans, etc. The most effective strategy which could be implemented by Summer Paradise is the venture capital financing which a private investment is made at the initial stage of a business. The venture capital financing strategy is also referred as the risk capital as it comprises of the risk of losing the funds if the venture fails or do not succeed as per the desires and consumes long terms to return the investment effectively. The major benefit of using this strategy is that it provides with the capabilities to expand the business which do not gets possible through the bank loans or any other way. It facilitates with the expertise advices and the industrial connection which would help Summer Paradise to establish its roots in the market (Da Gbadji.et.al, 2015). The venture capital financing strategy also provides with the support with additional resources in the area of legal, taxation or personal matters. This ensures the faster growth and greater success which is thus the key factors of success of any business. Moreover, by keeping these aspects in considerations the Summer paradise company would be able to expand its business at global levels
The above report concludes that International business is comprised of the business transaction which takes place across the nations. It has been identified that there are immense number of business models which could be used by the organisation to enter the international market and establish the business operations such as franchising business model, e-commerce business model, freemium model, subscription model, joint ventures, exporting, licensing, etc. The report reveals that entering in the foreign market had become much easier due to the flexibility in the regulations at the global levels markets and allows the organisation to establish its presence at international levels. It has been also seen that people are more inclined towards the renowned brands and finds them more trustworthy which tends the businesses to have a legal presence in the market. The report recognised that the franchising model would facilitate the franchisor to establish its business in lower time along with an ongoing support. In addition to this, it has been also revealed that licensing, joint ventures, exporting, direct investment, wholly owned subsidiaries, etc. are the market entry strategies which helps any of the business to enter into the new market globally. Furthermore, it has been identified that an effective financial risk management would help the business to overcome with the issues and stand stiff against the consequences and reach towards the success in international market.
Books and journals:
Ang, S. H., Benischke, M. H., & Doh, J. P. (2015). The interactions of institutions on foreign market entry mode. Strategic Management Journal,36(10), 1536-1553.
Badrinarayanan, V., Suh, T., & Kim, K. M. (2016). Brand resonance in franchising relationships: A franchisee-based perspective. Journal of Business Research, 69(10), 3943-3950.
Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2013). A framework for international business. Pearson.
Colombo, M. G., Cumming, D., Mohammadi, A., Rossi-Lamastra, C., & Wadhwa, A. (2016). Open business models and venture capital finance.Industrial and Corporate Change, 25(2), 353-370.
Da Gbadji, L. A. G., Gailly, B., & Schwienbacher, A. (2015). International analysis of venture capital programs of large corporations and financial institutions. Entrepreneurship Theory and Practice, 39(5), 1213-1245.
Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge.
Ebert, R. J., & Griffin, R. W. (2015). Business essentials. Upper Saddle River, NJ: Pearson.
Feenstra, R. C. (2015). Advanced international trade: theory and evidence. Princeton university press.
Gilpin, R. (2016). The political economy of international relations. Princeton University Press.
Jackson, R., & Sørensen, G. (2016). Introduction to international relations: theories and approaches. Oxford University Press.
Koryak, O., Mole, K. F., Lockett, A., Hayton, J. C., Ucbasaran, D., & Hodgkinson, G. P. (2015). Entrepreneurial leadership, capabilities and firm growth. International Small Business Journal, 33(1), 89-105.
Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Mechelli, A., Cimini, R., & Mazzocchetti, F. (2016). The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study. Revista de Contabilidad.
Meyer, K., & Peng, M. (2016). International business. Cengage Learning.
Robson, M., Watson, K., Kadile, V., & Clegg, L. J. (2015). Best in Class International Franchising.
Schuler, R. S., Khilji, S. E., & Ruël, H. (2015). 6. Role of human resource management in international mergers and acquisitions and international joint ventures in emerging markets. Handbook of Human Resource Management in Emerging Markets, 122.
Singhal, R. K. (2015). Venture Capital Financing. SIES Journal of Management, 11(1).
Von Glahn, G., & Taulbee, J. L. (2015). Law among nations: an introduction to public international law. Routledge.