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.