Mid Term Assignment





MIDTERM ASSIGNMENT

1. Weigh the risks and benefits of entering the international market with those of entering or doing business in the domestic market.

International market enables a business to tap international customers. Entering the international market brings faster growth to an organization. Also, it brings access to cheaper inputs including labor and raw materials.

Risks of entering international markets include communication barrier people may not be able to understand language of our origin, higher cost is involved in terms of transportation and complying with international standards, non-compliance with the rules and regulations may lead to heavy fines being imposed on the company.

Entering or doing business in the domestic market is considered less risky than doing business internationally (Anderson, 1987). If we are domestically doing business we aware of the tastes, fashions, culture of our country which helps us to determine demand of our products are different times. Also, we can easily create good business relationships with similar businesses in our country. Compliance with the local laws and standards is easier as we are already aware of them.

2. In what ways is doing business in the developing nations of Eastern Europe both similar and different from doing business in the United States? Western Europe?

People in developing nations of Western, Eastern Europe and US have the same tastes and fashions also the culture that prevails in these nations is almost the same. The products that consumers choose in different age groups are more or less similar. Developing nations of Eastern Europe, US and Western Europe have around similar income or GDP per capita , so it means their spending and consumption levels are same.

Corruption levels in US are very low as compared to developing nations of Eastern and Western Europe. Also the government policy in US and Western European nations encourage investors in setting up businesses and provide tax holidays, but in Eastern Europe, the tax rates are very high and the government doesn't support investors and do not provide them subsidies and tax incentives.

3. Weigh the relative benefits and risks of a medium-sized American firm licensing technology to a developed nation? A developing nation?

If an American firm licenses technology to a developed nation there are chances of innovations to take place as more R&D will be conducted on the technology they receive and there is a possibility of launching a new modified and upgraded version of that technology. If technology is licensed to a developing nation it may enhance the productivity, efficiency and effectiveness of operations in that nation. Also, costs will fall in the long-run.

When an American firm of a medium size licenses technology to a developed nation it causes many drawbacks. Control over the technology weakens. In developing countries, there might be problems of protection to that licensed technology or there are chances of it being used by unauthorized third parties (Export.Gov, 2012).

4. Compare and contrast possible methods of managing currency risk.

Currency risk can be managed ...