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. This paper evaluates business opportunities and modes of entry.
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International Business Opportunities and Modes of Entry
When assessing international business opportunities, it is necessary to carry out a comprehensive evaluation of different factors to identify the feasibility and possible success of going into a new market. According to Han et al. (2024), assessing international business opportunities requires that a business performs excellent market research. The business needs to do a thorough analysis of the size of the market, demand for the products, and the growth potential. Identifying economic conditions competitors, cultural features and regulatory settings is fundamental for the successful assessment of international business opportunities. Another step when assessing the international opportunities of a business is implementing financial analysis. Looking into the financial viability of venturing into the global market needs evaluation of pricing, costs, and return on investment. Han et al. (2024) advise that businesses should investigate the risks associated with the use of a new currency and come up with risk alleviation approaches before going into the international market.
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Evaluating the legal and regulatory environment of the new market is crucial especially when considering factors like the existing policies of trade, local laws, and regulations. Here the business seeking opportunities in the international market should examine the laws surrounding intellectual property protection and strict conformity to the global standards of running the business. Kargina (2023) argues that SWOT analysis is an important step that every business eyeing international market opportunity must perform first. Research recommends that the business should conduct a comprehensive evaluation of the strengths, weaknesses, opportunities, and threats that might affect the business while operating in the international arena.
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In my opinion, the size of the company is an essential factor when assessing international business opportunities. Large and well-established companies will have more resources such as developed infrastructures, human resources, and capital, which can be beneficial to the company’s growth in the global market. Additionally, bigger companies have the advantage of wider brand recognition and influence in the market. These are important features to explore the dynamics of the global market. On the contrary, small companies can have the flexibility and adaptability that many big companies lack. Moreover, smaller companies can also adapt faster to the demands of the market, cultural variations, and regulatory needs in many countries (Eden & Nielsen, 2020).
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I opine that direct investment via joint ventures or subsidiaries would be the most effective entry strategy into the international market. With the direct investment strategy, common risks include regulatory and political risks. This is because changes in government and political policies can significantly affect the operations of the business. Economic instability can also be a risk associated with direct investment because economic downturns in the host nation can inhibit the smooth running of the venture.
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I think exporting would be a less effective strategy than direct investment because of limited logistical and distribution operations. Additionally, with exporting, the business will enjoy limited adaptability of goods and services to the local preferences in the host nation. Lastly, exporting is also less effective as the business will have to mainly depend on intermediaries. The disadvantage of overreliance on intermediaries may trigger logistical and communication problems.
In conclusion, even though direct investment is often accompanied by various risks, it offers more adaptability and control to the business compared to exporting, more so for organizations intending to operate in the global markets.
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