Question

please write an essay of complete and well composed paragraphs (200 word minimum for the entire essay) where you describe a local company and its choice to expand into other markets.

Answer 1

It is natural that usually humans become very ambitious in whatever test they choose, especially in case of business. Local companies, which are operating in domestic country try to expand their business by entering into new markets in different ways like by introducing new product, or by producing the differentiated products. Before entering into the new markets, the local companies face several problems. If they resolve those problems, they can succeed well in achieving their goal. That’s how many multinational companies (MNCs) like Amazon, PepsiCo and other MNCs have come up.

Now let me explain the risks involved in entering a new market. The major risks are: Systematic risk, which in the inherent risk of the entire market segment. Foreign exchange risk, which would arise, during the financial transactions of a company, because of base currency of the company being different from the one they use at different countries. Cultural risk, where the firm faces different tastes and preferences, traditions, habits and customs from the domestic market. Liquidity risk, where the commodity cannot be converted into money quickly. Environmental risk, which arises due to some natural calamities or manmade disasters.

Before entering into the new market, the business enterprises must consider the following things for achieving their goal.

Mode of entry: This is very important, because the company is entering into a totally new market. Going all alone is not so good, because of different risks in the destination market. So, the best alternative is to start a joint venture that is to tie up with good and successful domestic company, which is very familiar with the local conditions and target market. There are other ways as well.

Needs of the consumer: After entering into the market, it is very important to produce the goods and services according to the needs and the preferences of the consumer in the new market. The company entering into the new market must do thorough research regarding the needs, the tastes and preferences of the consumer. Based on this research, the company can produce goods and services. According to the needs of the consumer, the company must customize the products, so that the goods and services would be in sync with the traditions, customs in a destination country. These are the two main and crucial things to be considered before entering into a new market.

Other things include, the company can enter the market by introducing the new product, which amuses the consumers. The company has many options like, it can enter through franchising and licensing. It can enter through partnering as I mentioned above or it can enter by buying a domestic company. These are the different ways the company can step into new markets. For running successful business in new markets, the basic principles are same as local markets, like complying with the regulations in the market, managing the risks to minimize the losses etc. Out of all these the crucial thing is attracting the domestic consumers towards your products, because consumer is the king in the market. Rest other things will fall in line automatically. This is how the local company can expand its business in global level.