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Impact of globalization in international business
The impact of globalization on international business
The impact of globalization on international business
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International Business Entry Modes Robbie Watson University of Lafayette International Business IBUS 540 Miguel A. Orta June 20, 2018 Abstract The rise in globalization over the last few decades has helped facilitate and encourage corporations to expand into international markets. This paper will review the five common international expansion entry modes, and the pros and cons of each method. Finally, my employer is in the technology industry and I will breakdown and recommend which entry mode would work best for international expansion. International Business Entry Modes Globalization has broken down many of the trade barriers and has allowed companies to expand internationally over last few decades. Emerging markets such as Brazil, …show more content…
for use in a foreign country for a fee. An example of licensing is with the NFL, by allowing its brand to be licensed to memorabilia, television broadcasts, sporting goods, toys and video games. Franchising is where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business processes to produce and market and market goods and services. Common examples of franchising are with fast food chains such as McDonalds, and Burger King. Pros Franchising provides fast entry into a country with low cost and low risk. The setting up of the operational facilities is the responsibility of the franchisee. Since the licensee and franchisee are in the foreign country, it is easier for it to respond to customer demands. Cons It is difficult to control the operation of the licensee or franchise. In recent news Burger King in Russia was running an advertisement that was found offensive to some cultures (Scott, 2018). Negative publicity is hard to control and manage with franchises. Finally, the firm may end up creating a competitor by agreeing to licensing and franchising deals in new foreign …show more content…
Regardless of which entry method is chosen, the inherit risk of international expansion must always be considered into long term corporate goal and strategies. References Ciesielski, J. T. (2016). How Autonomy Fooled Hewlett-Packard. Retrieved from http://fortune.com/2016/12/14/hewlett-packard-autonomy/ Knight, G. (2015, February 02). Born Global Firms: Evolution of a Contemporary Phenomenon. Entrepreneurship in International Marketing, 3-19. https://doi.org/10.1108/S1474-797920140000025001 Orta, M. (2018, June). Module 2 Overview on VoiceThread Lecture Notes [Video file]. Retrieved from https://moodle.louisiana.edu/pluginfile.php/1636549/mod_resource/content/1/061318%20MODULE%203-DEVELOPING%20A%20BUSINESS%20PLAN.pdf Scott, C. (2018). Burger King Russia apologies for World Cup ’impregnation’ ad. Retrieved from https://www.cnn.com/2018/06/20/football/burger-king-russia-apologize-for-world-cup-impregnation-advert-spt-intl/index.html Zekiri, J. (2016). Motivating Factors and the Modes of Entry in Other Markets. Ecoforum, 5. Retrieved from
Breaking into new markets helps the company grow and brings in new customers, which leads to higher profit margins.
Globalization among companies has been increasing due to the high potential profits and the lower costs of labor and resources. Venturing to other countries, which have lower costs of lower costs of living, can support their families on lower salaries. Companies that don’t have to spend as much on salaries and benefits are a great way for the company to save money and increase their profits. When looking to other countries to expand to, they will need to review their value chain to make sure they are able to keep their same values with their expansion.
For years, M&S’ marketing strategy was simple: produce high quality products under a famous brand name at affordable prices, and advertise the products in classical ways. However, in recent years this strategy collapsed and the company started to lose its competitiveness. M&S had to find solution to this problem to survive in both domestic and overseas marketing environment. It is known that franchising is one of the most important factors of future development of any company. Consequently it is essential for M&S to have a reliable franchisee as Fiba Holding to become successful in such a big marketing area as Turkey.
According to Wheelen & Hunger (2010), Panera management believed that its specialty bakery-café concept had significant growth potential, which it hoped to realize through a combination of owned, franchised, and joint venture-operated stores. Franchising was a key component of the company’s growth strategy. (p. 29-10).
al, 1990). Significantly, the initial selection of entry mode can have a huge impact on the survival and success of firm international operations (Hollensen, 2011; Root, 1994). The international operations in the target market basically depend on the firm’s choice of foreign entry modes (Hollensen et al., 2014). Many scholars on international market entry strategies examined that whilst making the decision regarding foreign market entry mode, there was a wide range of factors that influenced a firm’s entry mode decision. The entry mode decision can be influenced by different set of factors as the entry modes involve with different levels of control, ownership and resource commitment (Hollensen et al., 2014). The choice of entry modes between exporting, contractual agreement (licensing and franchising), joint venture and wholly owned enterprise are all strategic alternative (Lin, 2000). Therefore, managers need to analyze and determine the most suitable international strategy to enter a foreign country. After reviewing previous entry mode research, most of the research primarily focused on the experience of large multinational enterprises rather than SMEs that discussed about their entry mode strategy in foreign markets (Luo, 2001). Moreover, extant literatures on the entry modes have been
Although companies may focus their internationalisation on one of the three strategies, chances are that they will try to have a combination of two of them. Following are some challenges that commonly arise from the combination of
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
Exhibiting at a franchise expo is an effective means for businesses to showcase their brands and new products and services, stay up to date on competitors and collaborate with industry peers. However, the main objective of exhibiting at expos & trade shows is to acquire qualified leads that can be converted into franchise sales. Franchisors can significantly increase their chances of achieving this key objective by taking the right steps before, during and after the show.
Steve Kafka, an American of Czech origin and a franchisor for Chicago Style Pizza, has decided to expand his business into the Czech Republic. He knows it is a risky decision; when he became a franchisor, he had to overcome a lot of difficulties. Steve anticipates he will face some of these difficulties again at the new location in Prague, Czech Republic. Although he was born in the United States, he has family and friends in the Czech Republic, speaks Czech fluently, and has visited the country of his origin several times. He knows the people and the culture. In this paper, I will analyze the cross-cultural differences between the United States and Czech Republic, determine comparative advantages in this country, and recommend ways to minimize the risks of establishing a franchise overseas.
Another strength is Burger King’s franchise development having 90% of its restaurants franchised. The franchise concept allowed the company to grow with minimal capital expenditure and receive royalties and fees. Burger King went above and beyond and created a new model of its restaurant to attract mo...
... conclusion, to compete with the intense competition in today’s fast-food market, KFC China differentiates the company by being innovative. Three significant innovative strategies are localizing the menu, understanding the Chinese culture, and hiring local management. KFC demonstrates that one size fits all approach in the global market does not always work. Many typical Western approach to foreign expansion is to deliver the same products or services as their original establishment. For instance, Domino’s Pizza, an American restaurant chain, nearly failed in Australia due to the underestimation of the need to adapt their offerings to the local tastes. KFC China offers important lessons for global firms. It is essential to know that to what extend the company should keep the existing business model in emerging markets and to what extend it should be thrown away.
The current integrated and interdependent world economy is the outcome of the process of Globalization. Various definitions of Globalization are available. As per Block (2004), in his research paper, has defined globalization as “Intensification of world-wide social relationships which link distant localities in such a way that local happenings are shaped by distant events and, in turn, distant events are shaped by local happenings.” The IMF (2008) claims that globalization is a result of advancement in technologies and modernization of the people. It is the result of growing incorporation of economies in the world, predominantly through the movement of labor, technology, knowledge, services, merchandise and investments across international borders. Globalization also has a direct effect on the social, environmental and political aspects of the economy (ibid). Enhancement in technology is the key driving force of globalization. Advancement in technology especially the growth of internet and telecommunication infrastructure has facilitated an easy method of communication and conducting business globally and creating global markets. Moreover the interconnections of economies will increase both opportunities for the business and competition among them. Zhu (2009) argues that globalization has two different parts namely Globalization of markets and Globalization of productions.
A franchise sometimes involves signing two agreements, a purchase agreement and the franchise agreement itself. The purchase agreement is a short document simply stating that, subject to a suitable site being found, the franchisee will enter into the contract set out in the franchise agreement provided, of course, that the franchisee has read and approved the franchise agreement within a reasonable time. Having accepted this condition the franchisee pays the franchisor a deposit which forms part of the initial fee. The search for a suitable site as well as associated research into planning, permitting, viability of the site, etc. can begin. If no suitable site is found, the deposit is usually returned. However, if the franchisee rejects the site or changes his/her mind about the franchise, the deposit is usually forfeited.
A franchise is simply investing money in a location or store, and then having the store become your own business after learning how to manage the entire business. You earn the majority of the profits, and you also don't have to worry about operations. You'll be taught by the company on how it run the entire business, and this is the reason why this is a huge and very easy way to become rich. Franchises require quite a hefty investment depending on the business you plan to buy. However, if the business is in high demand, there is profits to be made. Take for exMple the Cold Stone Creamery business. Countless people purchase one of their many franchises. The money is very good, the opportunities are endless, and the fact that there is no more need for advertising is what makes this more worth the investment in the long
By choosing to expand into markets later than other fast food restaurants Burger King hopes to avoid the problems of developing infrastructure and establishing a market base. For instance, by following McDonalds into Brazil, Burger King avoided the need to develop the infrastructure and mark...