Question

In: Operations Management

A head office of a beer company is based in Mauritius and wants to expand abroad....

A head office of a beer company is based in Mauritius and wants to expand abroad. What are the factors that you should take into consideration before a new branch is opened abroad.

Assignment of Word count is 3500 - 4500

Solutions

Expert Solution

Head office of a company is in Mauritius. Company wants to expands its business in foreign markets there are a lot of factors to be considered to expand its business in abroad. There are different rules in foreign countries that the company has to follow.A company cannot expand its business abroad just like own country. Company has to follow all the instructions, rules and regulations of own government and foreign governments. Here are some factors which a beer company should come in mind while expanding its business abroad:-

1. Define goals and business plan :- An international business plan is important in order to define company's present status and internal goals. These goals are also necessary to major companies result in foreign markets.

2. Determine how much company can invest in international market :-. The company is going to expand it's business in foreign market so it is necessary to determine that how much company can invest in foreign market. Company will be able to expand its business in foreign markets only if it has enough capital available for investment.

3. Plan for lead time :-. It takes time and patience to build a great market in foreign countries. So the company should have patient and plan for the long haul.

4.Language:-

Language needst be paid very close attention to when doing expansion in foreign. There have been some embarrassing mistakes in international advertising that most likely did not help companies sell their product.

5.Regional Values :-. Sometimes there are so many regional differences where the company is going to expand its business. The company should try to know all the regional factors. And when it is a beer company then the company should try to come to know that where it can sell its product.

6.Consumer Behaviour:-. The company should try to consider the psychological and societal factor that influence buying decision of consumers in foreign countries. In some of regions drinking bear is not allowed by the society. So the company should try to come to now that where it can sell beer in the country.

7.Age Groups:- Beer is a product which is mostly used by adult peoples. So while expanding its business in foreign countries the company should try to know that in foreign market there should be people who can buy buy beer.

8.Laws:-. There are different laws in different countries that greatly affect ability of doing business.so the company should be aware of laws in foreign countries related to business entity. For example, in Thailand there are specific laws for foreign companies that foreign companies can only own 49% of a business.

9.Licensing:-. There is a chance that it you can do business in foreign countries only after taking licence or permit from their government. Government do these things as a way of making sure that a larger percentage of income from sales stays in home countries. And it is a beer company then the company has to take licence from government to sell its product in country. Like the company has to take licence from Government of India if he wants to make and sale beer in India.

10. Taxes:- Taxes are the another ways that government implies on foreign business partners on selling their products in country . Taxes can do impact on ability of business to make profit in foreign countries. When the tax rates are high company's product price will automatically go high so the company should come to know that how much taxes are there in foreign countries on a business like beer.

11. Tariffs :- Tariffs are used to balance trade between countries and to protect National companies from losing business to foreign competitors. High tariffs can push a country citizen towards buying domestic products instead of buying foreign products. So if the tariffs are high then a beer company cannot stand in foreign market.

12. Currency risks :- There are always risks when doing business in a foreign country that you are marketing your product or services. If you have your money tied up in a foreign currency and economy of that country falls down your company could stand to lose millions.

13. Investment restrictions :- Many countries have strict requirements on who can own business and do other business related investments in their countries. So the beer company should research it already in foreign countries.

14. Stability :- the beer company should research on that countries income level where it is going to expand its business. The company can stand in foreign markets only if their potential consumers have high income level.

15. Environment :- The beer company should try to come to know the environmental factors where it is going to stand its business.

16. Labour :- Labour is a an important factor that should be considered while expanding business in foreign markets if the company can get labour easily then company can produce its product easily.

17. Finding target market :- The beer companies should try to find out where its product will be in greatest demand. Market research is a powerful tool for identifying the fastest growing market for beer.

So, we can say there are a lot of factors to be considered while expanding business in foreign markets. And when we have a product like beer then there can be a lot of restrictions in foreign markets to sell beer to the consumers. Company should try to follow all the rules and regulation of the countries where it is going to expand its business and also the company should focus on the target customers.


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