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The marketing department of a multinational company wishes to expand its product sales into a new overseas market.a) What factors do they need to take into account?

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Introduction

Module: International Business Word Count: 1998 Student ID: 0363187/1 Table of Contents Introduction - MNCs .....................................................................3 The Macro Environment...................................................................3 Political Factors.............................................................................3 Economic Factors..........................................................................4 Sociocultural Factors......................................................................4 Technological Factors.....................................................................4 Legal Factors..............................................................................5 Environment Issues......................................................................5 The Internal Environment...............................................................5 Market Research..........................................................................5 Porter's Five Forces......................................................................6 Conclusion................................................................................6 Product - Air Travel....................................................................7 Market - Guatemala......................................................................7 Political Factors.........................................................................7 Economic Factors.....................................................................8 Sociocultural Factors.................................................................8 Technological Factors...............................................................8 Market Research......................................................................8 Porter's Five Forces..................................................................8 Conclusion.............................................................................8 The marketing department of a multinational company wishes to expand its product sales into a new overseas market. a) What factors do they need to take into account? Introduction - Multinational Company Economists are not in agreement as to how multinational or transnational corporations should be defined. Multinational corporations have many dimensions and can be viewed from several perspectives (ownership, management, strategy and structural). According to Franklin Root (1994), an MNC is a parent company that: 1. engages in foreign production through its affiliates located in several countries, 2. exercises direct control over the policies of its affiliates, 3. implements business strategies in production, marketing, finance and staffing that transcend national boundaries (geocentric). In other words, MNCs exhibit no loyalty to the country in which they are incorporated. Simply put, a multinational (sometime called a transnational) is a company that has headquarters in one country, but has operation in other countries (Wall et al 2001). ...read more.

Middle

Porter's Five Forces analysis Porter argued that 'the essence of strategy formulation is coping with competition' and that in addition to undertaking a PESTLE analysis, it is also necessary to undertake a structural analysis of the industry to gauge the strengths and weaknesses of the opposition and also determine the competitive structure of a given market (sited Wall et al 2001). The key areas in the five forces analysis are the threat of potential entrants, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. Conclusion These are the main factors that a multinational company should consider when entering a new overseas market. b) Evaluate the relative importance of these factors, using a specific products and a specific overseas market by way of illustration. Product - Air Travel BWIA West Indies Airways is the Caribbean's oldest and best-known airline. It serves the Caribbean from both sides of the Atlantic and passenger carryings are 1.3 million a year. Founded in 1940, its safety record is unsurpassed in the history of air travel. Based in Trinidad and Tobago, it has major hubs in Barbados and Antigua and has provided the Caribbean with international air service from North America and the UK and Europe. ...read more.

Conclusion

Through market research, BWIA would determine the number of airlines (twenty-six) operating into Guatemala. However, none of these airlines offer direct flights to or from the Caribbean to Guatemala. Thus there is little direct competition to BWIA's entry. Notwithstanding, a direct service eliminates the need for indirect connections through Miami, USA or Caracas, Venezuela which reduces the passenger load from the Caribbean for airlines operating in these two countries. This impact on the airlines operating these routes and further analysis of Porter's five forces will assist BWIA in determining it competition. Porter's Five Forces BWIA's analysis of Porter's five forces should determine the intensity of competition and hence the profitability and attractiveness of an industry. In shaping its corporate strategy, the team can modify these competitive forces in a way that improves the position of the organisation. Porter's model supports analysis of the driving forces in an industry. Based on the information derived from the five forces analysis, the BWIA management can decide how to influence or to exploit particular characteristics of their industry and plan for possible resistance to the development of this new market. Conclusion The relative importance of these factors will vary from country to country and among multinationals. The key component to the successful launch of a new product into a new market is the consideration of these combined factors in informing the strategic decision. ...read more.

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