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Saturday, November 26, 2016
Thursday, November 17, 2016
INTERNATIONAL BUSINESS MODELS
INTERNATIONAL
BUSINESS MODELS
Prospective international managers
must first realize there is no single way to enter a foreign market. Businesses
must choose the model appropriate to their level of resources, market
potential, and experience operating in the international sphere. The various
categories of international business models include export/import businesses,
independent agents, licensing and franchising agreements, direct investment in
established foreign companies, joint ventures, and multinational corporations
(MNC). The differences among these options are sometimes subtle in nature.
IMPORT/EXPORT
BUSINESSES.
For instance, an export firm is one
that sells its domestically made products to a very small number of countries.
In contrast, import firms import foreign-made goods into the country for
domestic use. Often, export and import firms are operated by a small group of
people who have close ties with the countries in which they do business. Some
such firms may begin as export or import specialists, but eventually expand their
operations to production of goods overseas. IBM and Coca-Cola Co. exemplify
companies that have used that approach.
INDEPENDENT
AGENTS, LICENSES, AND FRANCHISES.
Independent agents are
businesspeople who contract with foreign residents or businesses to represent
the exporting firm's product in another country. Closely related are firms with
licensing agreements, in which domestic firms grant foreign individuals or
companies the right to manufacture and/or market the ex-porter's product in
that country in return for royalties on sales. Another variation is a
franchising arrangement, in which the parent company grants a franchise upon
payment of a franchise fee by a local business operator, who then agrees to
follow a prescribed methodology and marketing plan using the company's name.
The local franchisee may have to pay royalties or annual franchise fees, but
otherwise remains independent of the franchisor. In each of these models,
assuming the partner in the target market is competent, the risks to the originating
company are usually low, as it is not setting up operations of its own in the
foreign country, but rather relying on independent businesses or individuals
that are already there.
JOINT
VENTURES.
Joint ventures help distribute the
risk of entering foreign markets and can provide hands-on experience for a
company just initiating its presence in a particular country. Joint ventures
can be formed with another domestic company to do business in another country,
e.g., two Japanese companies collaborate in a Chinese business venture, or
between one company from outside the target market and one from within, e.g., a
Mexican firm and a Vietnamese firm create a new venture to do business in
Vietnam. Having a local partner, as in the latter example, can be especially
beneficial to a company that is relatively unfamiliar with the market it is
trying to enter. This sort of arrangement can serve as a validation mechanism
to reduce the chance of making foolish mistakes by not knowing local customs,
preferences, laws, and so on.
BUYING
A STAKE IN A FOREIGN AFFILIATE.
Buying part or all of a foreign
company is a common form of foreign direct investment and carries with it the
advantages of having an experienced partner to help do business in the foreign
market. The foreign affiliate may be left to operate as a relatively
independent entity, functioning more like a partner, or it may be more tightly
integrated into the parent organization as a division or subsidiary.
MULTINATIONAL
CORPORATIONS.
Multinational firms are relatively
new in the business world, yet they are becoming increasingly important. There
is no specific definition of a MNC. Nor is it easy to differentiate an MNC from
a company that simply has offices or factories in multiple countries. Some experts
define an MNC as a company that derives at least 25 percent of its sales from
foreign sources. However, that is an arbitrary figure. Others define an MNC by
its size. There is general agreement that large, multibillion-dollar
enterprises, such as General Electric Company, Mitsubishi Corporation,
DaimlerChrysler AG, and so forth, constitute MNCs.
Experts predict that the numbers of
MNCs, joint ventures, and other international operations will rise as
businesses seek to take advantage of economies of scale and the growth of new
markets as a way of reducing costs and increasing profits. As the geo-graphic
boundaries over which individual companies operate become less defined, the
need for people who are able to manage international activities becomes more acute.
Thus, international managers are becoming more important in the business world,
and their success can directly affect a company seeking to compete in the
global market. As a result, business leaders are placing increased emphasis on
the development of managers with expertise in international management.
Foreign Market Entry Modes
- Exporting
- Licensing
- Joint Venture
- Direct Investment
Exporting
Exporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses.Exporting commonly requires coordination among four players:
- Exporter
- Importer
- Transport provider
- Government
Licensing
Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance.Because little investment on the part of the licensor is required, licensing has the potential to provide a very large ROI. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost.
Joint Venture
There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.Such alliances often are favorable when:
·
the
partners' strategic goals converge while their competitive goals diverge;
·
the
partners' size, market power, and resources are small compared to the industry
leaders; and
·
partners'
are able to learn from one another while limiting access to their own
proprietary skills.
The key issues to consider in
a joint venture are ownership, control, length of agreement, pricing,
technology transfer, local firm capabilities and resources, and government
intentions.Potential problems include:
- conflict over asymmetric new investments
- mistrust over proprietary knowledge
- performance ambiguity - how to split the pie
- lack of parent firm support
- cultural clashes
- if, how, and when to terminate the relationship
·
Strategic
imperative: the partners want to maximize the advantage gained for the joint
venture, but they also want to maximize their own competitive position.
·
The
joint venture attempts to develop shared resources, but each firm wants to
develop and protect its own proprietary resources.
·
The
joint venture is controlled through negotiations and coordination processes,
while each firm would like to have hierarchical control.
Foreign Direct Investment
Foreign direct investment (FDI) is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise.Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment.
The Case of EuroDisney
Different modes of entry may be more appropriate under different circumstances, and the mode of entry is an important factor in the success of the project. Walt Disney Co. faced the challenge of building a theme park in Europe. Disney's mode of entry in Japan had been licensing. However, the firm chose direct investment in its European theme park, owning 49% with the remaining 51% held publicly.Besides the mode of entry, another important element in Disney's decision was exactly where in Europe to locate. There are many factors in the site selection decision, and a company carefully must define and evaluate the criteria for choosing a location. The problems with the EuroDisney project illustrate that even if a company has been successful in the past, as Disney had been with its California, Florida, and Tokyo theme parks, future success is not guaranteed, especially when moving into a different country and culture. The appropriate adjustments for national differences always should be made.
Comparision of Market Entry Options
The following table provides a summary of the possible modes of foreign market entry:
Comparison of Foreign Market Entry
Modes
Mode
|
Conditions
Favoring this Mode
|
Advantages
|
Disadvantages
|
Exporting
|
Limited
sales potential in target country; little product adaptation required
Distribution channels close to plants High target country production costs Liberal import policies High political risk |
Minimizes
risk and investment.
Speed of entry Maximizes scale; uses existing facilities. |
Trade
barriers & tariffs add to costs.
Transport costs Limits access to local information Company viewed as an outsider |
Licensing
|
Import and
investment barriers
Legal protection possible in target
environment. Low sales potential in target country. Large cultural distance Licensee lacks ability to become a competitor. |
Minimizes
risk and investment.
Speed of entry Able to circumvent trade barriers High ROI |
Lack of
control over use of assets.
Licensee may become competitor. Knowledge spillovers License period is limited |
Joint
Ventures
|
Import
barriers
Large cultural distance Assets cannot be fairly priced High sales potential Some political risk Government restrictions on foreign ownership Local company can provide skills, resources, distribution network, brand name, etc. |
Overcomes
ownership restrictions and cultural distance
Combines resources of 2 companies. Potential for learning Viewed as insider Less investment required |
Difficult
to manage
Dilution of control Greater risk than exporting a & licensing Knowledge spillovers Partner may become a competitor. |
Direct
Investment
|
Import
barriers
Small cultural distance Assets cannot be fairly priced High sales potential Low political risk |
Greater
knowledge of local market
Can better apply specialized skills Minimizes knowledge spillover Can be viewed as an insider |
Higher
risk than other modes
Requires more resources and commitment May be difficult to manage the local resources. |
8. Global - Producing a product the same way for every
market that it is sold in. There are not any modifications made to the product
the exact product sold in China would not change if sold in Europe.
Multidomestic - It sees customers as being unique. A multidomestic company modifies a product to accommodate the wants/needs of the market. Ex. A Coke Cola Sold China has a different taste from those sold in the U.S.
In his book "concepts in Strategic Management and Business Policy" for Wheelen, I find that such differences are considered to be minor adjustments.
Products such as Insurance and Banking systems could be considered to be Multidomestic.
5. In computing,
internationalization and localization (also spelled internationalisation
and localisation, see spelling differences)
are means of adapting computer software to different languages and
regional differences. Internationalization is the process of designing a software
application so that it can be adapted to various languages and regions without
engineering changes. Localization is the process of adapting internationalized
software for a specific region or language by adding locale-specific
components and translating text.Multidomestic - It sees customers as being unique. A multidomestic company modifies a product to accommodate the wants/needs of the market. Ex. A Coke Cola Sold China has a different taste from those sold in the U.S.
In his book "concepts in Strategic Management and Business Policy" for Wheelen, I find that such differences are considered to be minor adjustments.
Products such as Insurance and Banking systems could be considered to be Multidomestic.
The terms are frequently abbreviated to the numeronyms i18n (where 18 stands for the number of letters between the first i and last n in internationalization, a usage coined at DEC in the 1970s or 80s[1]) and L10n respectively, due to the length of the words. The capital L in L10n helps to distinguish it from the lowercase i in i18n.
Some companies, like Microsoft, IBM and Sun Microsystems, use the term "globalization" for the combination of internationalization and localization.[2][3] Globalization can also be abbreviated to g11n.[4]
World Trade Organization (WTO)
The World Trade Organization (WTO) is the
only global international organization dealing with the rules of trade between
nations. At its heart are the WTO agreements, negotiated and signed by the bulk
of the world’s trading nations and ratified in their parliaments. The goal is
to help producers of goods and services, exporters, and importers conduct their
business.
The South Asia Free Trade Agreement (SAFTA)
The South Asia Free
Trade Agreement (SAFTA) was agreed to among the seven South Asia countries
that form the South Asian Association for Regional Cooperation (SAARC):
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka
SAFTA came into effect on 1 January 2006, with the aim of reducing tarrifs for intraregional trade among the seven SAARC members. Pakistan and India are to complete implementation by 2012, Sri Lanka by 2013 and Bangladesh, Bhutan, Maldives and Nepal by 2015.
SAFTA replaces the earlier South Asia Preferential Trade Agreement (SAPTA) and may eventually lead to a full-fledged South Asia Economic Union.
The road to implementation, however, is plagued by the overarching conflict between India and Pakistan.
SAFTA came into effect on 1 January 2006, with the aim of reducing tarrifs for intraregional trade among the seven SAARC members. Pakistan and India are to complete implementation by 2012, Sri Lanka by 2013 and Bangladesh, Bhutan, Maldives and Nepal by 2015.
SAFTA replaces the earlier South Asia Preferential Trade Agreement (SAPTA) and may eventually lead to a full-fledged South Asia Economic Union.
The road to implementation, however, is plagued by the overarching conflict between India and Pakistan.
Wednesday, November 16, 2016
India Government bans Dr. Zakir Naik's Islamic Research Foundation (IRF)
Recently the government of India, through a gazette notification, had put the IRF under prior permission category.
Many people react this with angry, they think it is unlawful forcing to Dr. Zakir Naik, there are lots of people come in under Muslim roof.
Sunday, November 13, 2016
Best Inspiring quotes ever
Don't blame your life for failed, it's because of you life. Think about that there are lots of famous and rich people in the world or surrounding you those was coming from poor family background, just cause there hard work and ingenious thinking, sometimes luck favor them but they believe on their work, they dare to take risk. If you don't do anything, success will not come in your hand.
One thing we should remind that if you think it's late, not that is wrong. Anything is possible at anytime, just live your dream, keep your hopes and spend some time on it by hard work. Success must come at anytime. If you don't get success, don't its could be showing path for others.
If anything didn't do at yesterday, don't think its over, do it today. Anything will be happen, at least you can understand yourself that i tried when you failed, if you get success that the moments are surprising charming time and rewards must be a bonus or you deserve it.
One more thing everything success comes from brave to take risk and hard work. Said, "Hard work has great power to success than talent".
Listen yourself what you will do or what resource you have or how much will work hardly. Just explore yourself and take risk. Today you are man and tomorrow you are a leader of others.
One thing we should remind that if you think it's late, not that is wrong. Anything is possible at anytime, just live your dream, keep your hopes and spend some time on it by hard work. Success must come at anytime. If you don't get success, don't its could be showing path for others.
If anything didn't do at yesterday, don't think its over, do it today. Anything will be happen, at least you can understand yourself that i tried when you failed, if you get success that the moments are surprising charming time and rewards must be a bonus or you deserve it.
One more thing everything success comes from brave to take risk and hard work. Said, "Hard work has great power to success than talent".
Listen yourself what you will do or what resource you have or how much will work hardly. Just explore yourself and take risk. Today you are man and tomorrow you are a leader of others.
Saturday, November 12, 2016
President D. Trump and very first time at office coversation with CIA
The first day of the legendary Trump Oval Office
Trump: ISIS should be destroyed immediately at this moment.
CIA: We can not do that, sir. We are Turkey, Saudi Arabia, Qatar, and many more, along with together ISIS is developed.
Trump: Democrats have developed them.
CIA: Sir, we (CIA) have developed them. ISIS is very need for us. Natural gas from the lobby if you do not, we lose funding.
Trump: If you stop funding Pakistan. Let them deal with India.
CIA: can not be too, sir.
Trump: Why?
CIA: India will separate from Pakistan by possession Baluchistan
Trump: I don't care.CIA: Then peace will come to Kashmir. They will stop buying weapons. India will become a super power. To keep us busy India in Kashmir that Pakistan must go funding.Trump: OK OK, then destroy the Taliban.CIA: Sir, that is also not possible. We have to keep Russia in check 1980s had created the Taliban. Now Taliban are busy Pakistan.
Trump: We should be destroyed Middle east head government whose created terrorist against us. Let's start with Saudi Arabia, what say?CIA: Sir, it is also impossible. We brought those to the government in power, because we need their oil. The government will be in power, otherwise countries will come Democracy. Democracy comes to ruin. Oil traders will go to all of them on their own. We lose the oil, sir.
Trump: So let's attack Iran.CIA: Not possible, sir.Trump: Why?CIA: We are continuing discussion.Trump: What discussion?CIA: We would like to bring steel drones before attack. If we attack them now, then Russia will help them and destroy our army; As did Syria. Moreover, needs to take checking Israel thats why Iran is very important for us.Trump: So let's attack Iraq Again.CIA: Sir, our friends (ISIS) has already occupied one-third of Iraq.
Trump: Why not full area of Iraq?
CIA: Because we need Shiya government of Iraq for keep checking ISIS.
Trump: OK OK, I'm off to get Muslim in America.CIA: Sir, you can not do it.Trump: Why?
CIA: Our local people will become more daring, because they will have no fear. We can not be allowed them to be so bold, to keep them fear.Trump: I want all illegal immigrants sent back to their home country.CIA: they had gone then who make your wall, sir? where you will get lower price of labor without them?
Trump: So let's them illegal whose carrying H1B Visa
CIA: Sir, not possible.
Trump: Why? Why? CIA: So that our whole activities of White House will outsource from India, Bangladesh with cheap rate.
Trump: Let me know why I become a president of United States.
CIA: Enjoy! sir; just enjoy the momentum of White House, keep eyes on us, we will hand with care.
Trump: ISIS should be destroyed immediately at this moment.
CIA: We can not do that, sir. We are Turkey, Saudi Arabia, Qatar, and many more, along with together ISIS is developed.
Trump: Democrats have developed them.
CIA: Sir, we (CIA) have developed them. ISIS is very need for us. Natural gas from the lobby if you do not, we lose funding.
Trump: If you stop funding Pakistan. Let them deal with India.
CIA: can not be too, sir.
Trump: Why?
CIA: India will separate from Pakistan by possession Baluchistan
Trump: I don't care.CIA: Then peace will come to Kashmir. They will stop buying weapons. India will become a super power. To keep us busy India in Kashmir that Pakistan must go funding.Trump: OK OK, then destroy the Taliban.CIA: Sir, that is also not possible. We have to keep Russia in check 1980s had created the Taliban. Now Taliban are busy Pakistan.
Trump: We should be destroyed Middle east head government whose created terrorist against us. Let's start with Saudi Arabia, what say?CIA: Sir, it is also impossible. We brought those to the government in power, because we need their oil. The government will be in power, otherwise countries will come Democracy. Democracy comes to ruin. Oil traders will go to all of them on their own. We lose the oil, sir.
Trump: So let's attack Iran.CIA: Not possible, sir.Trump: Why?CIA: We are continuing discussion.Trump: What discussion?CIA: We would like to bring steel drones before attack. If we attack them now, then Russia will help them and destroy our army; As did Syria. Moreover, needs to take checking Israel thats why Iran is very important for us.Trump: So let's attack Iraq Again.CIA: Sir, our friends (ISIS) has already occupied one-third of Iraq.
Trump: Why not full area of Iraq?
CIA: Because we need Shiya government of Iraq for keep checking ISIS.
Trump: OK OK, I'm off to get Muslim in America.CIA: Sir, you can not do it.Trump: Why?
CIA: Our local people will become more daring, because they will have no fear. We can not be allowed them to be so bold, to keep them fear.Trump: I want all illegal immigrants sent back to their home country.CIA: they had gone then who make your wall, sir? where you will get lower price of labor without them?
Trump: So let's them illegal whose carrying H1B Visa
CIA: Sir, not possible.
Trump: Why? Why? CIA: So that our whole activities of White House will outsource from India, Bangladesh with cheap rate.
Trump: Let me know why I become a president of United States.
CIA: Enjoy! sir; just enjoy the momentum of White House, keep eyes on us, we will hand with care.
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