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  • Global Business - Introduction

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    P Venkatesan
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    Global business involves trade across national borders that has occurred for centuries. Entering overseas markets through exporting represents market development in Ansoff's matrix, appealing because of saturated domestic markets, high costs of product development and risk of diversification. Factors pushing and pulling firms to enter foreign markets include domestic market saturation, economic difficulties, risk diversification, large foreign markets and extending product lifecycles. Constraints to entering overseas markets comprise of resources, time, market uncertainty, costs, cultural differences, regulations and political risks. Firms can engage in international business through exporting, overseas production, alliances, mergers and acquisitions, franchising and licensing.

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    Global business involves trade across national borders that has occurred for centuries. Entering overseas markets through exporting represents market development in Ansoff's matrix, appealing because of saturated domestic markets, high costs of product development and risk of diversification. Factors pushing and pulling firms to enter foreign markets include domestic market saturation, economic difficulties, risk diversification, large foreign markets and extending product lifecycles. Constraints to entering overseas markets comprise of resources, time, market uncertainty, costs, cultural differences, regulations and political risks. Firms can engage in international business through exporting, overseas production, alliances, mergers and acquisitions, franchising and licensing.

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    332 views3 pages

    Global Business - Introduction

    Uploaded by

    P Venkatesan
    Global business involves trade across national borders that has occurred for centuries. Entering overseas markets through exporting represents market development in Ansoff's matrix, appealing because of saturated domestic markets, high costs of product development and risk of diversification. Factors pushing and pulling firms to enter foreign markets include domestic market saturation, economic difficulties, risk diversification, large foreign markets and extending product lifecycles. Constraints to entering overseas markets comprise of resources, time, market uncertainty, costs, cultural differences, regulations and political risks. Firms can engage in international business through exporting, overseas production, alliances, mergers and acquisitions, franchising and licensing.

    Copyright:

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    Global business - introduction

    Introduction to international business International business is not new businesses and nations have conducted trade across national boundaries for centuries. Lured by the prospects of large markets and/or sources of raw materials, businesses have traded with other parts of the world. But as we will see later global business and global industry is different. Overseas trade and Ansoffs matrix

    Thinking about international business in the conte t of !nsoff"s matri #


    $ntry into overseas markets represents market development. $ isting products are sold in new markets. It is appealing because# % market penetration is difficult in saturated markets. % product development is costly. % diversification is risky

    &hy enter overseas markets' The reasons for entering overseas markets can be categorised into (push) and (pull) factors#

    Push factors

    *aturation in domestic markets $conomic difficulty in domestic markets +ear the end of the product life cycle at home $ cess capacity ,isk diversification

    Pull factors

    The attraction of overseas markets Increase sales $n-oy greater economies of scale $ tend the product life cycle $ ploit a competitive advantage .ersonal ambition

    Factors in the choice of which overseas market(s) to enter


    *i/e of the market 0population, income1 $conomic factors 0state of the economy1 2ultural linguistic factors 0e.g. preference for countries with similar cultural background1 .olitical stability 0there is usually a preference for stable areas1 Technological factors 0these affect demand and the ease of trading1

    !onstraints and difficulties in enterin" overseas markets


    ,esources Time 3arket uncertainty 3arketing costs 2ultural differences Linguistic differences Trade barriers ,egulations and administrative procedures. .olitical uncertainties $ change rates 0transactions costs 4 risks1 .roblems of financing &orking capital problems 2ost of insurance 5istribution networks

    $ porting is only one method of doing business internationally

    &e normally think of overseas trade in terms of e porting and importing goods and services This involves transporting goods and selling them across national boundaries. 5irect e porting implies that the domestic firm is actively involved in selling the goods abroad Indirect e porting means that the marketing of goods is delegated to e port agents and the 67 manufacturer concentrates on production But e porting involving the movement of goods is only one method of engaging in international business

    Other methods of market entr#


    8verseas product an/or assembly 0producing goods abroad1 International alliances and -oint ventures 0working with foreign companies1 International 34! 0mergers and ac9uisitions across frontiers1 International franchising and licensing allowing foreign based firms to produce, market and distribute goods in specified areas abroad1

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