Discuss The Advantages And Opportunities Of Expansion Commerce Essay
Improving the competitive advantage is the art of business. Unless everyone in the marketplace are increasing. The positioning for growth means that we must beat the competition, this means we must understand our competitive advantage and play to our strengths. Some of the common advantages are as follows:
Most companies compete with each other in several ways, but no one competes on every point.
Unique product not available unless, the products are low priced, quickly delivered, customized for specific needs, pre-sale service, highly trained staff with technical expertise, product durability and dependability, hours of service and stable suppliers.
Discuss several methods for entering an international market (exporting, licensing, franchising, joint venture, or wholly owned subsidiary) and the risk of the one selected.
Which mode of the entry will you choose and why?
Market entry methods: After estimating the environment in the selected country, to enter into an overseas market there are six factors which are to be considered and these factors are:
I choose Joint venture: To distribute the risk of market entry into a foreign market, two organizations can come together to form a unified organization to run the company in the host nation. The two companies can share the knowledge and sophisticated technology to assist them in the development of company.
What are the risks of the mode you have chosen and how will you manage these risks?
The benefits and risks of joint venture are as follows:
Companies of any size can have joint ventures to strengthen their long-term relationships or to collaborate on short-term projects.
A successful joint venture offers access to new markets and distribution networks which helps in increased capacity sharing of risks.
Joint ventures are especially famous with businesses in the transport and travel industries that operate in different countries.
The risks of joint ventures are as follows:
Partnering with another business can be complicated. It takes time and effort to build the right relationship.
The objectives of the venture are not clearly communicated.
In the joint ventures there is an imbalance in levels of expertise, investment or assets brought into the business.
Identify the legal and economic issues of the target country.
Identify and describe the following 3 features of your target country’s legal
Does the country have a well developed, transparent and enforced body of contract law?
Any derivatives contract in India must have a minimum contract value size of Rs200, 000. This is enforced on all derivative contracts are traded on the stock exchanges. Stocks, bonds and such other securities of a body corporate, where the aggregate value of securities offered does not exceed Rs5,000,000.
Does the country’s legal system adequately protect private property rights (Including intellectual property)?
The influence of the British Judicial System, which India imbibed, continues in significant aspects. The official language for court proceedings in the High Court & the Supreme Court is English. Lawyers wear a cloak (over gown) and a band as part of their uniform and represent the case with their clients and address the Judge in the court as – "YOUR HONOR".
The procedural laws of the land like Civil Procedure Code, Criminal Procedure Code as well as most commercial and corporate laws are modeled on English laws. English case law is regularly referred to and relied upon in courts.
There is great emphasis on oral arguments. Almost all matters are heard extensively in open Court. Advocates are seldom restrained in oral arguments and complex hearings may well take days of arguments to conclude. Specialization is relatively a new phenomenon and most lawyers have a wide-ranging practice.
c. How tough are the country’s product safety and product liability laws and how severe are the penalties for infraction?
Besides the broad three tier structure there are various specialized tribunals the more prominent ones being the Company Law Board; Monopolies and Restrictive Trade Practices Commission; Consumer Protection Forum; Debts Recovery Tribunal; Tax Tribunal. These Tribunals function under the supervisory jurisdiction of the High Court where they may be situated, though many of them appeal directly to the High Court or the Supreme Court of India.
2. What kind of political economy does the country have (i.e. what kind of political system and what kind of economic system does it have)?
India is a republic consisting of 28 states and seven union territories with a parliamentary system of democracy. It has the world's twelfth largest economy at market exchange rates and the fourth largest in purchasing power. Economic reforms since 1991 have transformed it into one of the fastest growing economies however, it still suffers from high levels of poverty, illiteracy and malnutrition. A pluralistic, multilingual, and multiethnic society, India is also home to a diversity of wildlife in a variety of protected habitats.
3. Describe the country’s geography and its impact on business.
India, officially the Republic of India is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east, India has a coastline of 7,517 kilometers. It is bordered by Pakistan to the west, People's Republic of China, Nepal, and Bhutan to the north-east; and Bangladesh and Myanmar to the east. India is in the vicinity of Sri Lanka, the Maldives, and Indonesia in the Indian Ocean.
Describe the country’s education system. Does it produce adequately trained workers or will private industry have to pay to train them?
I believe that India is uniquely positioned to achieve a significant competitive advantage in the world economy by being among the first to implement a flat education system for its entire people before the end of the next decade. Research reveals that a significant number of Indian companies are endeavoring to increase their market share by building the size of their product and service portfolios. This is particularly true in the pharmaceutical sector. Ranbaxy, for example, acquired 18 generic drug patents from Spanish company EFARMES, Similarly Nicholas Piramal, an Indian healthcare company, entered into a US$350 million, five-year manufacturing agreement with Pfizer to gain 12 products.4 Acting on a similar imperative Sobha Renaissance information Technology acquired Billing Components to sell products in the telecoms market; previously it had provided only services. While these companies are still purchasing foreign expertise, some of the companies are already established and world known.
5. Does the country have a serious social class system with implications for business operations?
Though India has similar governmental structures, their social systems and cultures differ significantly. The governments of countries have dealt with conflicts involving social class differences and cultural diversity. To combat these conflicts, has reevaluated its bicameral system, established more social welfare programs, and attempted to create antidiscrimination policies.
To what degree does the target country’s culture accept uncertainty and how will that affect business operations?
Cultural factors are having tremendous impact on cross-national communication, and it is in the area of cross-cultural communications that most blunders in international marketing occur.
If your project is a foreign direct investment, please answer to what extent the following 14 negative factors exist which discourage FDI.
Political risk instability or arbitrary change in laws and policies.
Excessive red tape and delays.
Excessively high taxes.
Excessively high interest rate.
Bribery and corruption.
Xenophobia and racism among target country’s population.
Attitude of ministers towards visiting potential investors.
Limitations or prohibitions on repatriating profits or royalties.
Limitations on ownership.
Legal requirements for local participation.
Insufficient or unenforced protection of intellectual property I.P rights.
How does your target country compare with its neighbors regarding the perceived level of corruption according to transparency international latest corruption perceptions index?
India has already achieved a 9% GDP growth rate while China has surpassed 12% and both have reduced their poverty rate to more than 35%. They are becoming such political and economic powerhouses that the whole world is paying serious attention to them.
Is your business eligible for any target country government investment incentives?
Yes, but investment incentives are not eligible.
Product market dimensions how big is the product market in terms of unit size and sales volume?
In recent years India have seen an awakening of interest in what it has to offer to global businesses. With the increasing sources of available information it has often been difficult to the business decisions on any information whose veracity is questionable.
Regulatory controls on foreign direct investment have relaxed considerably in recent years. This means that foreign retailers and consumer goods can only participate in the retail market through indirect access strategies. The Indian government has indicated in 2005 that liberalization of direct investment in retailing is under active consideration. Price controls have been progressively liberalized since 1992.
Estimates of the size of the retail sector vary, with recent calculations putting the annual value of Indian retailing anywhere between US$200 billion and US$392 billion in 2003. At present the organized sector accounts for only 4to 6 percent of the total market although this is expected to rise by 30 to 40 percent by 2010.
What is the purchasing power in the target market both current and future?
According to Goldman Sachs, Indian economy is set to overtake that of Western Europe by 2030 and by 2050 it is set to overtake the US economy to become the second largest economy in the world. In terms of Purchasing Power Parity (PPP) India is already the third largest economy in the world.
What are the major differences relatives to the firms experience elsewhere in terms of customer profiles, price, national purchase patterns and product technology?
However financial constraints and product market exposures determine the response of multinational and local firms to sharp depreciations. U.S. multinational affiliates increase sales, assets, and investment significantly more than local firms during, and subsequent to, depreciations.
Differing product market exposures do not explain these differences in performance. Instead, a differential ability to circumvent financial constraints is a significant determinant of the observed differences in investment responses. Multinational affiliates also access parent equity when local firms are most constrained. These results indicate another role for foreign direct investment in emerging markets.
How will these differences affect the transferability of the firm’s capabilities to the new business environment and their effectiveness?
Drawing on the organizational learning literature, we seek to enhance our understanding of joint ventures by developing a theory to explain the influence of technology on shareholder value creation. We also explain the moderating effects of national culture and task relatedness. Using an event-study methodology to examine the shareholder value creation for the parents of US partners in joint ventures, we found support for our hypotheses. The results thus shed light on the complex interaction between type of knowledge, national cultural difference, and task relatedness.
What links and associations exist between potential customers and established national competitors currently supplying these customers?
The companies are firmly committed to act accordingly with Federal and state laws. This manual is a clear statement of the laws which acts to the program of the National Grain and Feed Association and is meant as a general rules and regulations only.
What are the major channels of distributions (discount structure ties to present producers from final customers, links between wholesale, links between wholesales and retailers, finance, role of government)?
A number of alternate 'channels' of distribution may be available:
Distributor, who sells to retailers.
Retailer, who sells to end customers,
Advertisement typically used for consumption goods
Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.
What links exist between established producers and their suppliers?
The heavy industries have come a long way since the days of craft production. The craft producer used highly skilled workers and simple but flexible tools to make exactly what the consumer asked for one item at a time. Goods produced by the craft method cost too much for people to afford.
Do industry concentration and collusive agreements exist?
This compares the perspectives of transaction costs and strategic behavior in explaining the motivation to joint venture. In addition, the theory of joint ventures is an instrument of organizational learning is proposed and developed in the organization. Existing studies of joint ventures are examined in light of these theories. Data on the sectarian distribution and stability of joint ventures are presented.
What are the major competitor characteristics (size, capacity utilization, strength and weakness, technology, supply sources, preferential market arrangements and relations with the government?
Competitor analysis in the marketing and strategic management is an estimation of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategies through which it identifies opportunities and threats.
Given that competitor analysis is an essential component of corporate strategy, it is stated that most firms do not have this type of analysis. As a result, traditional environmental scanning places many firms at risk of competitive blindspots due to a lack of robust competitor analysis.
What is competitor performance in terms of market share, sales growth, and profit margins?
An unapproved theory is that high performance of the companies has a defined mission which includes specific principles of their target markets and broad goals. Competitive advantage is found on customer satisfaction, which in turn is built on a market-led strategy, effective systems and committed and empowered staff.
What are the characteristics of major target market segments?
Market segmentation there are very few products which can be sold to all people or organizations. Therefore, marketers must segment potential customers into subsets, or target markets that can be effectively and efficiently reached.
Which segments are potential target upon entry?
The Indian film industry has experienced significant growth over many years, evolving into a fully-fledged economic sector marked by large-scale commercialization. Industry reforms and liberalization has attracted foreign investment and allowed foreign companies to enter the market quickly, bringing innovative technologies. India has the world’s largest film industry and the following information shows the scale and trends of the industry.
Why are some firms gaining and others losing in the target market?
Developments in the world market and in technological conditions in the world economy during the recent years, i.e. in the last decade, the new challenges to industrialization and the development of a competitive manufacturing sector in India. Three main categories of changes are most relevant: a) changes in market conditions, b) in technology hardware and software and c) in the organization of production.
Are foreign firms already operating there gaining or losing?
Indian textile industries are the leaders and textile workers are putting aside their long-standing differences and are trying to make job losses in the industry and in other manufacturing sectors.
What are the key factors behind success in this business environment the pressure points that can shift market share from one firm to another?
Increasing competition among Latin American firms fosters more proactive processes aimed at reviewing business strategy. The research objective is to measure the impact of key variables on successful implementation of business strategy. Relying on the knowledge and experience of Latin American entrepreneurs and managers, the questions addressed include: How important is the role of the CEO and management actors? Do firms prioritize actions prior to implementing strategy? Are control and follow-up tools valued? How is a successful strategy implementation ensured? Research findings are expected to provide useful knowledge for management decision processes relating to successful implementation of business strategy.
How are these different from those we have experienced in other countries?
Since the opening up of the Soviet bloc countries, help given to libraries from the West has mainly taken the form of donation of material. It has been difficult for Western colleagues to appreciate the full extent of the problems experienced by their counterparts in the former Soviet bloc. The most pressing problems concerned library management. Describes two seminars on library and information management set up by the Foreign Relations Bureau, Berlin, in former Soviet bloc countries. The seminars tackled the problem of management from different angles. Outlines the learning and benefits received by both Western and Eastern participants.
How do these success factors relate to our firm?
Companies’ lack of implementation of success factors in new product development. Drawing on theory in the competence perspective and an exploratory empirical study.
Will you have to pay to develop any needed infrastructure for your projects?
The Renewable Energy Infrastructure will provide you with the practical solutions you need to meet your obligations in a rapidly changing marketplace. Whether is understanding the new paradigm in renewable energy infrastructure, clarifying the approval process, demystifying the FIT program, strengthening stakeholder relations, securing funding, integrating the smart grid or overcoming regulatory barriers, we have it all covered to keep you informed.
Will you have to pay to develop your local supplier’s infrastructure to meet your specifications?
The more we use and deploy open standards, the greater our vendor independence. Open standards decrease the cost of changing vendors by decreasing the costly components of change, resulting in improved and increased vendor options.
How stable are the country’s macroeconomic indicators, i.e. unemployment rate, inflation rate, interest rate, annual GDP growth rate?
A stable and sustainable economy is an essential precondition for growth. It allows individuals, businesses and the Government to plan more effectively for the future, increases investment and helps to raise productivity. Generally, countries which maintain relatively stable macroeconomic variables such as inflation, unemployment, interest rates, exchange rates, the balance of payments and fiscal aggregates tend to display higher long-term growth rates.
What factors best motivate the workers in the target country’s?
The requirements of trained and experienced Professionals with the desired mindset are the need of the hour for any Organization to grow in this competitive environment. While there is no exploitation of Professionals in Indian Industry and people are available in plenty, but the most important and difficult to get is the right professional. This can be easily done by the no. of applications for every job listed on the famous jobsites.
If your mode of entry is exporting, please address all the potential barriers that the target government has imposed on imports.
No business can import or Export goods without obtaining a license of Importer/Exporter Code Number along with a BIN from the Regional Licensing Authority unless he has specific exemptions from obtaining the same. Registration with Regional Licensing Authority is a compulsory license for all Importers and Exporters. The Customs authority will not clear goods unless the Importer/ Exporter have obtained Import Export Code Number or BIN Number.
What kind of legal and marketing consideration will you have with respect to advertising in the target market?
A comprehensive path which guides to important target marketing or segmentation related articles and tutorials; including several case studies:
Commercial site devoted about target marketing.
Know Your Market.
Targeting Web Surfers.
Will you have to transfer your proprietary technology into the target market? If so what kind of technology transfer control system does the target country have?
Our response has been fully compliant with the IAF request for proposal. However, the extent of technology transfer would be depends on the permission we receive from the government.
Has the target country used its technology transfer control system in the past to delay entry by foreign firms?
Many transition and developing economies have reduced direct public involvement in the production and trade of seed and other agricultural inputs. This trend creates opportunities for farmers to realize improved access to inputs, including technology from international private research.
What regulations does the target country’s government have regarding the cross border transfer of IP?
A broad of business enterprises seeks advice and counsel from our legal advocates regarding organizational, operational and transactional matters. Among the firm’s clients are the entrepreneurial, partnerships, closely held companies and publicly owned companies ranging from local and regional businesses to large multinational corporate. We are uniquely positioned to advise our clients on collaborations and technology transfers.
If your project will be an FDI, what kind of legal restrictions does the target country’s government have on FDI?
The arrangement is the first of its kind between two major law firms and will set new guidelines for the delivery of legal services on transactions involving international businesses investing in India or Indian businesses investing or raising capital or finance internationally. The several methods of entering market are as follows:
Licensing and franchising:
Franchising is a term which can be applied to just about any area of economic endeavor. Franchising encompasses products and services from the manufacture, supply for manufacture, processing, distribution and sale of goods, to the rendering of services, the marketing of those services, their distribution and sale.
A license under intellectual property commonly has several component parts beyond the grant itself, including a term, territory, renewal provisions, and other limitations deemed vital to the licensor.
The term "export" is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to an "exporter" who is based in the country of export whereas the overseas based buyers referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in home country to other markets.
The term "import" is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus an import is any good or service brought in from one country to another country in a legitimate fashion, typically for use in trade. It is a good that is brought in from another country for sale. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country.
Balance Of Trade:
Balance of trade represents a difference in value for import and export for a country. A country has demand for an import when domestic quantity demanded exceeds domestic quantity supplied, or when the price of the good (or service) on the world market is less than the price on the domestic market. The balance of trade, usually denoted NX, is the difference between the value of the goods (and services) a country exports and the value of the goods the country imports:
NX = X − I, or equivalently I = X − NX
A trade deficit occurs when imports are large relative to exports. Imports are impacted principally by a country's income and its productive resources. For example, the US imports oil from Canada even though the US has oil and Canada uses oil. However, consumers in the US are willing to pay more for the marginal barrel of oil than Canadian consumers are, because there is more oil demanded in the US than there is oil produced.
Public companies are totally owned and controlled by the government and are open to the public. A company that has issued securities through an initial public offering and is traded on at least one stock exchange. Although a small percentage of shares may be initially "floated" to the public, the act of becoming a public company allows the market to determine the value of the entire company through daily trading.
Public companies have inherent advantages over private companies, including the ability to sell future equity stakes and increased access to the debt markets. With these advantages, however, come increased regulatory scrutiny and less control for majority owners and company founders. Once a company goes public, it has to answer to its shareholders. For example, certain corporate structure changes and amendments must be brought up for shareholder vote. Shareholders can also vote with their dollars by bidding up the company to a premium valuation or selling it to a level below its intrinsic value.
Public companies must meet stringent reporting requirements set out by the Securities and Exchange Board of India (SEBI), including the public disclosure of financial statements and annual reports discussing the state of the company. Each stock exchange also has specific financial and reporting guidelines that govern whether a stock is allowed to be listed for trading.
A company whose right of ownership is controlled wholly by the private owners. As a result, it does not need to meet the strict Securities and Exchange Commission filing requirements of public companies. Private companies may issue stock and have shareholders. However, their shares do not trade on public exchanges and are not issued through an initial public offering. In general, the shares of these businesses are less liquid and the values are difficult to determine.
Private companies must also meet stringent reporting requirements set out by the Securities and Exchange Board of India (SEBI) under the SEBI Act, including the private disclosure of financial statements and annual reports discussing the state of the company. Each stock exchange also has specific financial and reporting guidelines that govern whether a stock is allowed to be listed for trading.
From past few decades the economy and laws in India were drastically changed and became more efficient than before. The law and economics helps a nation develop into an economical super power and increases their sustainability and also increases the foreign direct investments in a country. This helps in having many business treaties with many countries of the world which creates a business atmosphere and leads to development of the economies.
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