Assignment 1: Discussion Questions—International Business Decision Making
The various factors impacting international business may be brought together into a process for evaluating international business opportunities. Choosing the right mode of entry is the next step.
Research evaluation of business opportunities and modes of entry using your textbook, University online library resources, and the Internet. Respond to the following:
Write your response in 400 words or less. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.
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Assignment 1: Discussion Questions—International Business Decision Making
“Success is not final; failure is not fatal: it is the courage to continue that counts.” is a famous business quote by Winston Churchill. International business decision-making refers to evaluating and choosing between alternatives in the global marketplace. According to Sharma et al. (2020), international business decision-making is a complex process that involves numerous factors and considerations, including cultural differences, economic conditions, political stability, and the competitive landscape. To make informed and effective decisions, international businesses must comprehensively understand the global market and the many variables that impact it. Sharma et al. (2020) also stated that one of the key considerations in international business decision-making is cultural differences. Different countries have unique cultural norms, values, and beliefs that can greatly impact business. For example, in some cultures, building personal relationships is an essential aspect of doing business, while in others, the focus is on formal contracts and legal agreements. To be successful in a foreign market, international businesses need to understand the cultural norms of the target country and adapt their business practices accordingly.
Economic conditions also play a significant role in international business decision-making (Sharma et al., 2020). For example, a country experiencing a strong period of economic growth may be an attractive target for investment, while a country experiencing economic turmoil may be seen as too risky. Businesses must be aware of the economic conditions of the target country, as well as the overall state of the global economy, to make informed investment decisions. Sharma et al. (2020) also stated that Political stability is another key consideration in international business decision-making. In countries with a stable political climate, businesses can be more confident in their ability to operate without interference, while in countries with political instability, businesses may face challenges in areas such as regulation, protection of property rights, and protection of intellectual property. International businesses need to assess the target country’s political stability and the overall state of global politics to determine the risk and potential rewards of doing business in a particular country (Sharma et al., 2020). This paper discusses how a business can assess international business opportunities by giving examples, the single most effective way for a potential international business to enter an international market, and the apparent risks of the mode of entry recommended.
One way in which a business can assess international business opportunities is to conduct market research. According to Clause (2018), market research involves gathering information about the target market, including demographic data, consumer preferences, and purchasing habits. Companies can use various methods to gather this information, such as surveys, focus groups, and secondary research, such as data from government agencies, trade associations, and academic institutions. By understanding the target market, businesses can identify potential opportunities and develop a tailored strategy for entering and competing in the market (Clause, 2018). Thus, conducting market research is one of how a business can assess international business opportunities.
Another way a business can assess international business opportunities is by assessing the level of competition in the target market. Understanding the competitive landscape is essential for developing a successful business strategy in the target market (Kaleka et al., 2019). According to Kaleka et al. (2019) companies should assess the strengths and weaknesses of their competitors and determine how they can differentiate themselves and gain a competitive advantage. For example, a company may choose to focus on offering unique products or services, differentiating themselves in terms of price, quality, or customer service. Thus, assessing the level of competition in the target market is another essential factor to consider when assessing international business opportunities.
Another way a business can assess international business opportunities is by assessing cultural differences. Different countries have unique cultural norms, values, and beliefs that can greatly impact business. According to Shenka et al. (2020), in some cultures, building personal relationships is an essential aspect of doing business, while in others, the focus is on formal contracts and legal agreements. Companies must be aware of these cultural differences and adapt their business practices accordingly to be successful in a foreign market. Thus, assessing cultural differences is another way a business can assess international business opportunities.
Coca-Cola is an example of a company that has successfully assessed international business opportunities. According to Brondoni (2019), Coca-Cola has a presence in over 200 countries, and it has successfully evaluated the cultural, economic, and political factors in each market. For example, Coca-Cola has adapted its products in China to meet local tastes and preferences, such as offering a green tea-flavored drink. The company has also been successful in India by focusing on sustainability and reducing its carbon footprint, which aligns with the local cultural values and beliefs (Brondoni, 2019). These examples illustrate how a company can assess international business opportunities and develop a successful strategy for entering and competing in foreign markets. Thus, Coca-Cola is an example of a company that has successfully assessed international business opportunities.
The single most effective way for a potential international business to enter an international market is through a well-designed and well-executed market entry strategy. According to Watson et al. (2018), this strategy should be based on a thorough understanding of the target market. It should consider the cultural, economic, legal, and political factors unique to the target market. Watson et al. (2018) also stated that conducting market research is one of the most important steps in creating a successful market entry strategy. This research should include a comprehensive analysis of the target market, including consumer preferences and buying behaviors, as well as an understanding of the local competition and regulations. This information will help the business to understand the local market and to determine the most effective way to enter the market and establish a successful presence. Watson et al. (2018) also stated that once the market research is complete, the business should consider its strengths and weaknesses and goals and objectives to determine the best entry strategy. For example, suppose the business has a strong brand and a well-established reputation. In that case, it may consider establishing a direct presence in the target market through a subsidiary or joint venture. Thus, a well-designed and well-executed market entry strategy is the single most effective way for a potential international business to enter an international market.
Political risk is one of the biggest risks associated with a well-designed and well-executed market entry strategy. According to Koblin (2022), political instability, changes in government policies, and conflicts can significantly impact a company’s operations in a new market. For example, a change in government regulations could make it difficult for a company to operate in the new market, or a conflict could disrupt business operations (Koblin, 2022). Thus, Political risk is one of the biggest risks associated with a well-designed and well-executed market entry strategy.
Cultural differences can also pose a risk associated with a well-designed and well-executed market entry strategy. According to Wang et al. (2020), companies must be aware of cultural norms and customs to succeed in a new market. A lack of understanding of local cultural customs can result in misunderstandings, harming a company’s reputation and hindering its success in the new market. Different countries have different cultural norms, values, and beliefs, and failure to understand these differences can lead to miscommunication, misunderstandings, and even offense; This cultural risk can be particularly challenging when it comes to marketing and advertising, as cultural differences can impact the effectiveness of marketing messages and branding strategies (Wang et al., 2020). Thus, cultural differences can also pose a risk associated with a well-designed and well-executed market entry strategy.
In conclusion, international business decision-making is a complex process that requires a comprehensive understanding of the global market and the many variables that impact it. Businesses must conduct market research and assess the level of competition when assessing international business opportunities. Assessing international business opportunities involves evaluating a range of factors to determine the potential for success in a specific market. By carefully considering these factors, companies can position themselves for success in the global marketplace. The single most effective way for a potential international business to enter an international market is through a well-designed and well-executed market entry strategy. This strategy should be based on a thorough understanding of the target market and consider the cultural, economic, legal, and political factors unique to the target market. Also, a well-designed and well-executed market entry strategy is crucial for a company to succeed in a new market. However, even the best plans are not immune to risks such as political risks and cultural risks. Companies must be aware of these risks and develop strategies to mitigate them to ensure their success in a new market.
Holz-Clause, M. (2018). Conducting market research.
Kaleka, A., & Morgan, N. A. (2019). How marketing capabilities and current performance drive strategic intentions in international markets. Industrial Marketing Management, 78, 108-121. https://doi.org/10.1016/j.indmarman.2017.02.001
Kobrin, S. J. (2022). Managing political risk assessment: Strategic response to environmental change. Univ of California Press.
Sharma, P., Leung, T. Y., Kingshott, R. P., Davcik, N. S., & Cardinali, S. (2020). Managing uncertainty during a global pandemic: An international business perspective. Journal of business research, 116, 188-192. https://doi.org/10.1016/j.jbusres.2020.05.026
Shenkar, O., Tallman, S. B., Wang, H., & Wu, J. (2020). National culture and international business: A path forward. Journal of International Business Studies, 1-18.
Wang, S. L., Gu, Q., Von Glinow, M. A., & Hirsch, P. (2020). Cultural industries in international business research: Progress and prospect. Journal of International Business Studies, 51, 665-692.
Watson IV, G. F., Weaven, S., Perkins, H., Sardana, D., & Palmatier, R. W. (2018). International market entry strategies: Relational, digital, and hybrid approaches. Journal of International Marketing, 26(1), 30-60. https://doi.org/10.1509/jim.17.0034