International Business
----------------------
Reasons for a business to invest overseas:
* Cheaperą - raw materials
- labour
- marketing costs
- transport costs
- tax payable (from tax discounts)
* Government incentives (including tax discounts as mentioned)
* Greater market share (Australia has a limited market)
(Increased sales -> greater profit)
* If needs direct constant communication with overseas suppliers,etc
* To establish greater Economies of Scale (greater buying power =
cheaper costs per unit)
* Need to be setup overseas to penetrate market (or due to legalities)
* Legalities (eg. protection policies) and tariff's imposed
Reasons why the Australian Government promotes Australian Businesses
in Eastern Europe:
* Increase exports -> increased balance of payments
* Larger poluations -> increased world market share
* Increase production of consumer goods
* Attractive product -> International demand
* Sets grounds for companies to diversify over there once set-up
* Good for the economy and jobs
Overseas expansion forms:
* Domestic business *export*
* Merger (agreed takeover of setup company)
(not full control)
* Takeover (forcefull takeover/buyout of setup company)
(full control)
* Offshore product units (Wholly owned)
Either - Vertical Intergration
(eg. For wholesaler buying their/a supplier or retailer)
Or - Horizontal Intergration
(eg. For wholesaler buying another wholesaler in same
business)
Problems associated with setting up overseas markets:
* Language/Cultural barriers/differences eg. Ettiquette, customs
(eg. Commodore International in Japan)
* Fluctuating exchange rates
* Laws and regulations of country eg. Tariffs, crimes
* More difficult to manage (distance), most likely means delegating
power O/S, harder to control/manage
* Political/Economic insatability of some foreign countries,
place a greater risk in setting up O/S
* Bad feelings towards a 'foreign' company
* Methods of payment
Converted on 22 Jul 1996 with RexxDoesAmigaGuide2HTML by Michael Ranner.