Aacsb: Communication, Reflective Thinking, Ethical Reasoning

Assignment #1

AACSB: Communication, Reflective Thinking, Ethical Reasoning

1. Richard Bendix is the marketing manager at a firm that makes and sells high quality prefabricated houses. He believes that there is little difference between his home-country market and foreign markets, and that he can use the same methods for selling in Asia or Latin America as he does in his home country. Write a memo in which you explain to Richard the differences between domestic and international business. Explain the risks and other differences that Richard's firm will likely encounter if it expands abroad.

To: Mr. Richard Bendix, Palm Harbor Manufacturers, Marketing Manager

From: JP, Business Analyst

Date: June 2, 2013

Project Name: International Expansion

Subject: Selling Strategy abroad

Dear Mr. Bendix,

As a business analyst for Palm Harbor Manufacturers, I am writing to you to offer my feedback regarding your marketing strategy as the firms expands its business abroad. You stated in our recent monthly meeting that you believe there is little difference between the US market and foreign markets, and that you could use the same methods for selling in Asia or Latin America as you do here. I need to assure you that conducting and managing international business operations is more complex than undertaking domestic business.

I do not intend to inhibit your interest or drive for international success; however, it is important to understand the differences between domestic and international business.

First, no two cultures are the same, and understanding both the social and business culture in another country is the first key to success. Culture defines everything a society does, from its business practices, to its response to advertising and marketing, to negotiating sales. It is important to include research on the culture of the country where you intend to sell to prior to entering their market. Understanding these often sensitive areas will mean that you are better prepared when first entering the market.

Second, the level of competition you will experience in foreign markets is likely to be more dynamic and complex than you currently experience in domestic markets. A good strategic tool to use to determine if you are able to compete in a particular international market is an analysis that will help you assess your supplier power, buyer power, threat of competitor products and the threat of new entrants to the market. You can be certain that, in order to develop an edge over any rival firms, any strategic business manager is better off using this model to better understand the industry, which is influenced by the mentioned five forces.

Currency risk (also known as financial risk) refers to the risk of adverse fluctuations in exchange rates. Fluctuation is common for exchange rates-- the value of one currency in terms of another. Currency risk arises because international transactions are often conducted in more than one national currency.

Another difference you will encounter is regarding the political and legal systems, involving what is called country or political risks. Each government has its own policies relating to foreign firms and products. The key is to understand that once you are in a foreign market you must abide by the rules and laws of that country, not the ones in your own market. These laws and regulations can severely impact the potential long term success of your business and it is wise to consult with legal counsel, based in that country, to ensure you reduce the risk of these laws and regulations effect on your firm.

Countries determine their laws based on the needs of their citizens, not the concerns of foreign companies. By and large, international law is a gentlemen's agreement which is honored, but not always. For example, in areas such as intellectual property, although there are many agreements in place, protecting intellectual property can be time-consuming and costly.

Advertising your product and service will of course be an important component of your marketing strategy. It is important to be aware of the types of media available and the kind of media your target market uses to gain information about products and services they wish to buy. Not everyone is connected to the internet nor is every customer able to read and write. This does not mean those markets should be ignored. It does mean that how you advertise and market your products will require an examination of the most appropriate media for your target market.

For all the reasons I just presented to you, there are many differences between domestic and international business. Whether they are cultural, technical or legal they require an understanding and an appreciation of the differences.

I look forward to hearing from you and to agree on the ideal selling strategy before entering new markets.

Sincerely,

JP

Palm Harbour Manufacturers, Business Analyst

2. Suppose that after graduation you get a job with Cottonwood Corporation, a small firm that does business only in its domestic market. You have just completed coursework in international business, are aware of various business opportunities abroad, and believe that Cottonwood should internationalize. Write a memo to your boss in which you explain why your company should pursue international business. What are the benefits to Cottonwood of venturing abroad? Explain why firms internationalize.

To: Mr. John L. West, Cottonwood Corporation, CEO

From: J P, Business Analyst

Date: June 2, 2013

Subject: Venturing Abroad

Dear Mr. West,

I am writing to you to make you aware of various business opportunities that could be of great benefit to the firm. As you know, Cottonwood Corp has accomplished a lot in the 12 years since it was founded. The high quality of our projects has made echo in the local and national communities and the company has a record of leadership and success. For this reason, I believe that the team is ready to meet new challenges and it is now the