Expansion into Foreign Markets - Essay Example

The paper "Expansion into Foreign Markets" is a wonderful example of an essay on business. With the changing corporate nature of businesses worldwide and the termination of visible boundaries through the introduction of online commerce and multinational ventures, it is important to expand and adapt to various markets, consumers and trade conditions for optimum operations and rewards. To turn itself into a global enterprise, the company can choose one out of three options; it can choose to be a Global, Multi domestic or an international company.

Multi domestic Company

Being a multinational company sorts the problem of customizing the product to suit local needs. A multinational company also invests in various countries but does not generalize its product to the global market. It responds to local market preferences and uses different business strategies for different countries.

Global Company

A global company generally has investments in more than one country while establishing a base in one. The advantages of choosing to be a global company are to expand the boundaries for its product and attain maximum revenues with minimum expenditure (Carnoy and Manuel, 5). Its products are similar and so are the advertising campaigns used to promote them. This enables efficiency, economies of scale and a strong and universal brand establishment in all the countries under one company banner.  

International Company

An international company by definition does not invest in foreign assets or resources. Instead, it produces the product in one country and imports or exports it to the countries it chooses to sell in. A lot of consumer brands that are not on a very large scale choose to follow this approach because it lets them maintain the exclusivity of their products

Under the light of the aforementioned definitions, it is advisable for the company to utilize a multi-domestic/multinational approach. This approach will help the product reach wider consumers while achieving economies of scale.

Globalization Forces

            To achieve the status of being a multi-domestic company, the enterprise might have to face various forces of globalization influencing the organization. The initial hindrance could be the failure to adapt to the global market in terms of trade fluxes, international trade barriers, etc Competitors, economies of scale, and fluctuating consumer trends are also vital forces of globalization that could affect the success or failure of global operations.

Theory of Absolute Advantage & Theory of Comparative Advantage

Once these forces driving globalization have been tackled the company can seek to attain an absolute or comparative advantage over its national and international competitors. If the company succeeds in producing more of a product in allotted resources as compared to its competitors, it will have achieved an absolute advantage over them. The company can choose to obtain a comparative advantage by producing a product that has a lower cost of production and opportunity cost. The product can then be exchanged to achieve efficiency through comparative advantage.

Strategic Plans

The strategy to globally launch a product successfully should optimally start with a concise evaluation of the market intended for its launch. The evaluation should result in the development of a plan that covers the areas of marketing techniques, strategies, and products suitable to the market by teams, both in the home country and the intended country of expansion. Company objectives, and quality control, as well as a system of measuring the success of the strategies, should be realistic and closely linked to consumer response.

Environmental Sustainability

One aspect that should be carefully considered while contemplating global expansion is environmental sustainability. The company should be responsible for the consequences of its economic activity in the home country and internationally. Methods such as preaching healthy consumerism, following trade laws and labor regulations, environmentally savvy manufacturing techniques and technology can help in assuring the sustainability of a product and business both.

Mission, Vision, and Value Statements

While expanding into the foreign markets it is important for organizations to ensure that the development of mission, vision and value statements of the firm are on universal grounds and is applicable in any region without any objections of any sort. When reviewing the product in its early post-launch days it is very important to carefully scrutinize the brand identity and message that is delivered across various countries. To make a product more effective it is advisable to engage experts who are aware of the local lingo, trends, and traditions rather than overseas executives.