Question

Please respond with a typed 500 word response: Explain the decision process in expanding from domestic to international business.

Answer 1

We live in a world of globalized businesses and multinational corporations. Yet, not every business can expand to a foreign market just as easily. There needs to be a framework in place which aids the decision making the process for the organizations in order to make sure they use the best possible form of the decision-making process to see if they are making the right choice by planning to expand overseas or not. There are a number of variables at play here. First, however, we need to take a look at our own market and what it is that would drive us to even consider an expansion in the first place. We can say that for a company to make use of the best possible plan, this needs to be the first consideration. If our won domestic market has areas we can still improve upon, expansion should be put on hold, rather, we should revisit our model in order to make the best possible use of the market and create our general competency. If there is excess market competition, it is the main reason we should actually consider an expansion, exactly if there is nothing else we can do in the saturated market. We also need to conduct market studies of the potential markets in order to determine if the competency that is the main aspect of our business has a need in the other country or one where we can generate it. Then we conduct a market study based on sample sizes, cultural aspect, religious, ethnic as well as economic studies need to be conducted. If a market is found to be unstable, following a trend or changing in short terms, it should be avoided as well. We should conduct an assessment of the costs for the process and our own budgetary constraints in order to be able to consider the expansion. There are other options such as exporting, franchising and licensing which should be the main consideration if capital is the case which requires consideration. Once we reach this point, the rest of the studies just depend upon the brand favorability in the eyes of the consumers as well as the study of the competition in order to be considered either direct competition such as with greenfield investments or an action such as a merger, strategic alliance or even an acquisition in order to generate the best possible value from the process of et entering another market. The decision making framework depends upon the factor of need, market factors we can exploit, the competition as well as the gap in implementation or any other factor we can use or that our organization is competent to provide in order to consider an expansion.