This document will discuss corporate expansion into France. Specifically discussed will be the following: political and economic issues, proposed expansion to France, and successful expansion. This paper will conclude with a summary.
Political and economic issues There are several economic issues that you must deal with when engaging in international operations. If you are importing materials or products, you must take extra precautions to insure timely delivery. Geography and economic conditions in the country you are dealing with are factors. Mountains and oceans create international barriers that you must work into your business plan. Economic instability may be an issue if your transactions involve businesses in third world nations (Daniels,
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The country has been struggling to overcome the economic crisis, although GDP growth recovered (1.2%) in 2015, driven by public and household consumption. In 2016, growth is expected to increase slightly to 1.4%, which still falls below its pre-crisis levels.
The year 2015 saw signs of a tepid recovery supported by consumption. The tax credit for competitiveness and employment (CICE) and lower energy costs have allowed companies to recover their margins, and the weak euro has encouraged exports. Nevertheless, the country faces a structural budget deficit and rising public debt. The 2016 budget included a reduction in public spending of EUR 16 billion, with the aim of saving EUR 50 billion between 2015 and 2017. The financial crisis has led to unprecedented rates of unemployment and economic uncertainty. In 2015, the unemployment rate was 10.2%. In 2016, it should decrease very gradually (10%).France offers an entrepreneurial economy for expanding companies: its steely economy and business ethic is testament to its position as a global force (Parussini, 2014). Well, we 're major economic trading partners, for starters. Licensing, incorporating or registering a business in France is all valuable options. With a highly-trained, educated and skilled workforce, France is never short on labor and talent. Labor costs are also among the lowest in the EU.
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These include interest rate, inflation, standard of living, wages, exchange rate, unemployment rate and the overall economic growth of the country. These economic factors differs in each of the operating countries, which is why before a company venture any country it has to comprehensively analyzed the economy of the country considering the upper mentioned factors. Economic growth of a country gives a company a glimpse of high purchasing-power; this is what most marketers use in penetrating the market.
Coca-Cola
1st largest French company and 5th in the banking industry worldwide, 1st bank in the Euro Zone
France engages in quite a few secondary economic activities such as manufacturing, machinery and transport equipment production, aircraft production, and pharmaceutical items. This part of the economy makes up about 26% of France’s gross domestic product and 25% of its labor force (“CIA 2001”, 1). Manufacturing plays the largest role out of all of the secondary economic activities with a contribution of 16% to the gross domestic product. Behind it are the construction and energy generation companies which account for 4% and 3% of the gross domestic product (“Economic Structure”, 1).
Many business owners and entrepreneurs are doubtful about the global opportunities available to their business. In other words, business owners don’t give consideration to the world markets, instead they tend think locally in terms of gaining customers. This doubt however is unfounded. The international trade commission reported that 70% of the world’s purchasing power and 95% of the world’s consumers are located outside of the United States, which means that there is a massive market that is currently untapped by 99% of business in America. In addition to doubt, there is the uncertainty about exporting to other countries, this uncertainty may stem from lack of knowledge about foreign trade and the international laws. A business owner may be uncertain about how, when, where, and to whom it is legal to ship their products. Although, this uncertainty is understandable it is not required for businesses that are conducting business legally within the United States, business owners should remain mindful of this so that they can push their uncertainties aside. The last factor that deters businesses from international trade is Fear. Fear that there will be unforeseen and uncontrollable issues with transporting goods such as: theft, loss, damages, diversions, and/or regulatory penalties that may be imposed on the business. Although, there is a
Globalization can not only affect a company opening an office in another country but it can affect a small local business as well. As the internet brings the world closer together it becomes far more likely that a business that opened with no intention of selling internationally will have customers form different parts of the world asking for their product. For instance a steel company located in Pennsylvania may suddenly find orders coming in from South American factories. How the steel plant chooses to handle this new international customer could mean ...
In the 1990’s Carrefour took over French hypermarket chains ‘Euro Marché’ and ‘Montlaur’. This portrayed the strong influential impact Carrefour had in France, as the Group also introduced new services such as specialised traditional products and travel services. Subsequently this reinforced the presence and status of the business, as the chain was increasing and expanding rapidly.
A country's economic environment plays a significant role in the success of businesses operating within that country. Countries with struggling or shrinking economies were not included in the top ten ranking. Economic indicators and trends selected for this analysis:
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.
When it comes to doing business internationally the decision making is more complex. There are many interactions between each country that need to be addressed. In order for a business to be successful in the international market they need to examine and analyze all the facets of their company. They need
Toyota, as a multinational enterprise (MNE), because of its large size, reputation, and financial strength, has access to financial resources which may not be available for French local firms like Renault or Peugeot-Citroen. These financial resources can be originated from Toyota?fs internally-generated cash, or from capital markets. As a reputable and financially strong company, it may be easier for Toyota to have access to such resources than French local companies do.
Why would a company go international? There are many reasons why companies would go international, but generally a company goes international so they can seek opportunities in domestic markets, or they seek solutions to problems that cannot be solved through domestic operations. There are many profitable possibilities by going internationally and these include greater profit potential, offers new locations to sell products, it may provide better access to needed raw materials, it may access to financial resources from many nations, and lastly it may allow labour-intensive activities to locate in countries with lower labour costs. For a small business to become an international business they must use five guidelines the first is global sourcing, exporting and importing, licensing and franchising, joint ventures, and wholly owned subsidiaries. The first two are market entry strategies and the remaining are direct investment strategies.
After the World Wars, France began allowing foreigners to come and take jobs because they had major job shortages (Gofen 62). Some ma...
Brunt Hotels Group as a giant Entrepreneur recognizes an opportunity in France and decided to take the bull by the horn – acquire a small hotel chain. This investment added to the 60 hotels owned in the United Kingdom. Their decision after the acquisition of the hotel chain in France was to use half of the revenue to retain and rebrand the Brunt Hotels Group and the other half would be sold to maintain and support the strategic objectives of growth. The small hotel chain has lots of facilities to attract customers; they are clean and at competitive price. They are also situated at Downtown where easy access to mass transit bus is available. Brunt Hotels Group has a five-year plan which is to own 150 hotels and a 10-year plan; to own 300 hotels. To this, they decided to recruit home country managers to oversee the business activities of the small hotel chain just acquired in France. However, the Hotel...
The economic condition of the country is stable and growing. Unemployment rate is at 5.8% to its lowest level since 2008, and there is relative mild consumer price-inflation.
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.