Question

Imagine what considerations you would have to take if you were to expand a local business to an international market. Select a business or make one up to complete this exercise.

For example, if you wished to expand Big Sky Brewing Company to a foreign country what would you do? It would probably be best to have the beer contract manufactured in a local factory rather than shipping "water" thousands of miles. This is alcohol, so what age restrictions do you face? How would you get your beer into pubs? Into retail stores?

Another example, if you were Ford Motor Company and wished to sell cars in England, New Zealand, Japan what would you have to do? First, you would have to place the driving wheel from the left side of the car to the right as they drive on the left side of the road. Should you export from the U.S. or manufacture locally? Will you use your own Ford dealerships or sell through a local auto maker's dealership?

Answer 1

Taking the example of car manufacturing company considerations to take to expand a local business to an international market are

Legal entity - This involve deciding the form of business to use to operate the business. It could be a private company, public company, partnership, Joint venture or proprietorship. It depends on type of control and funding required. This also depends on the laws in the international market related to foreign investment.

Taxation - Tax system varies from country to country. Taxes can be direct or indirect. Effect of tax on the business needs to be checked. Further import duty on the product to br imported needs to be verified. Sale price of the car needs to be determined taking into consideration rate of taxes, both direct (income tax ) and indirect ( like Gst, Excise duty)

License and certification - Various license are certificate may be required by the new country for manufacturing of our product( car) . This needs to be taken care of. For eg. In Asin countries driving wheel needs to be on right side instead of left

Sale model - Sale model to be used for selling of product i.e. by dealers or own outlets, needs to be decided.

Human resources - To operate in the new country, local talent will be needed. For hiring emoloyees, certain local laws need to be complied like Social security, Withholding tax.

Market research - Market research needs to be done to know about the type of consumer. Research needs to be done Product

Demand also.

Foeign Currency knowledge - Since all dealings will be in local forex, understanding of currency fluctuations needs to be made. This has to be made for fixing sale price and repatriation.

Manufacturing - Whether car should be manufactured locally or Parts should.be decided.

Entry into market - This involve decision regarding whether to acquire an existing company or build your capacity. Acquisition may provide ready market available for product, but at the same time it may be costly.