As an international manager for your company, you have been tasked with determin

Question

As an international manager for your company, you have been tasked with determining whether or not to expand your company’s products abroad. Please discuss some of the advantages and disadvantages. Please cover why it might be advantageous and or risky to expand internationally. Also, please discuss the possible mode of entry for a product or service for your company abroad. Provide options that your company might consider when expanding abroad and take into account the different types of investment and level of risk. As part of your evaluation you might want to provide an example to illustrate your point. Your boss will take into account your detailed knowledge of this matter and make decisions bases on your informed opinion of the matter.

Explanation / Answer

Some of the key advantages of expanding business

1: new customers: The company can gain new customers from new regions which will automatically enhance the reach and thereby total revenue of the product.

2:Economies of scale: This pronciple work on maximising the volume of sales. Thus per unit cost will comed down through generating more sales revenue out of it.

3: Brand enhancement: New customers by moving to new countries or region will increase the product reach and alos wident the opportunity . This will enhance the brand as well as product reach

4: Utilise the change in economic dynamics: If one country sales is not doing well, ithe company can explore the sales through other companies, Thus expansion of business will definetely give some upper edge at the time of recession.

Disadvanatages:

Possible mode of market entry

1: Direct sales: This si done via direct selling method from the company by settingup an office and resources

2;Franchising: To license out the business to thrid party on the agreement of meeting service qualities and other standards. In this business reveneu will come by franchisee fees and profit sharing

3: Joint ventures: Joint venturing means having allied business with any established or potential firms which has already presence in those market. This helps in reducing the capital investment

4: Partnering: Partnering helps in utilisng the resource and capabilities of other companies. This will minise the risk as well in going to foreign market.

5: Buying a company: This helps in direct take out of alreay established company. Thus resources, facilities of that comnpany and other market tieups can also be carried over along with the business.

Among the option the best would bne franchising and Joint venture. Both will reduce risk on entry to the market. Again based on the region model can be customised accoridng to the companys startegies. Emerging markets like South East Asian countries there are lot of scope for Joint ventures and in developed nations franchisee is the best option..

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