Q1) One main reason for ABB to enter international market is to create a brand n
ID: 388258 • Letter: Q
Question
Q1) One main reason for ABB to enter international market is to create a brand name in the international market.Another reason is that due to economic depression,there has been financial fluctuations in many regions .So ABB should find out the glabal opportunities and invest accordingly.Again ,ABB has a lot of experience and reputation in local markets and so it should explore international markets.Profit being the objective of all companies,ABB should make use of its brand value and good reputation and enter international markets to make profits.
Q4) There are number of risks that ABB should take care before investing in emerging economies-
a)Foreign exchange rate riskwhich means converting local currency into domestic currency which in turn has its impact on return from investment that companies make.
b)Emerging markets are subject to changes and so it becomes difficult to use available information and make inferences about investment and return.
c)Even though there are strict laws to control trade in emerging economies, the laws have not proved to be very effective. Rather they have been advantageous for those people who are privileged tohave more information and as a result prices are manipulated .
d) Less liquidity of emerging markets as compared to developed economies lead to higher price uncertainty which makes investment risky.
e)The banking system are not developed and thus will stop ABB from proper financing which is very much needed for business.
f) In emerging economies, the management and government have more power than shareholders.Moreover poor audit system increases the chance of corporate bankruptcy
So how should ABB proceed? There appear to be alligators everywhere!
What would a bare bones plan look like with minimal risk?
Explanation / Answer
To proceed amicably with a surety of success and minimal risk ABB should from a hardcore strategy and follow it step by step and move further. The first step towards the plan of globalisation is analyzing the internal resources and strengths and how and where they can be useful for this expansion. ABB should make a deep analysis of how prepared it is internally for the expansion. What are the finances that the company can invest in the international markets? The company will have to remember that their business is running domestically also. Hence allocation of the finance of the in-house business and international investment will have to be evaluated. Another decision that the company will have to make is that who will be the leaders to manage this expansion and are they efficient enough to form marketing strategies for this expansion. Other than the leaders, the team that will follow which includes the sales, marketing and HR has to be available. Another study to be done is of the product that is going to be introduced to the market. What are its competitors? How will it stand unique? How will the new customers accept it? Is the product actually efficient enough to make its market?
Once the internal analysis is done then the company will have to analyse the markets it wants to invest in. Making a thorough research of the potential markets where its products can give maximum returns with minimum risks have to be found out. The competition prevailing in the market, the customer behaviour, the laws and regulations, the trade policies, the economy, the exchange rate etc are few areas where the company will have to conduct detail surveys for this expansion. Only after comparing the locations it has initially thought of and making a distillation of the few potentials ones the final selection of the location or locations will be done. This may also include visiting the final few personally to make a deeper study of the markets.
Once the internal resources have been chalked out and the external markets have been selected then the marketing strategy will be formed to follow and take the expansion further. A market entry strategy will define the objectives for achieving the goals of the expansion. These objectives will make it easy for the business to move ahead on every step and for the company to present before the investors and lenders a clear picture of how we are projecting the company growth. A budget will be formed that will segregate all the finances that will be required to make the global investment. The market that will be targeted will be mentioned and the opportunities and risks of the market will be detailed. What will be the competition that will be faced in the market and what is the competitive advantage we will be aiming for. What will be the trade policies of the place to enter the market? The marketing strategy and distribution channels will be well defined. The pricing policies based on factors like exchange rate, manufacturing and exporting cost will be formed. The goal of the expansion and the time period that can be allocated to achieve that goal will be determined.
With all these questions answered ABB will be prepared for an expansion in a new country with minimal risk and high expectancy of profits and growth.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.