Globalization: Opportunities and Challenges for Businesses - Essay Sample

Introduction

Globalization is a term used in the description of how nations, people, and businesses interconnect internationally underscored by advancement in technology, transportation, and global finance, among others. The concept of globalization offers business opportunities to enterprises as well as challenges as businesses try to adapt to realize success. It, therefore, means businesses must deal with global trends to gain and maintain competitiveness in the market. An example is how businesses are trying to adapt to the novice Covid-19, which has threatened to disrupt globalization. XYZ Company is seeking to expand its global operations. The first step is the analysis of options for the production and selling of products in the different parts of the world. It is, therefore, important to examine several countries for this endeavour by comparing critical parameters such as barriers to entry, legal implications, international laws involved, and e-commerce considerations. The countries involved in the analysis include Russia, India, and China.

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Russia

An in-depth data analysis by Statista indicates that the clothing and apparel segment is forecasted to attain US$3,121m in 2020, amounting to an annual growth rate of 7.7%. It is important to comprehensively analyse Russia as a potential market from the perspective of the parameters highlighted in the question. The barriers to entry in the Russian market are high and are due to inconsistent enforcement of regulations, pervasive corruption, and lack of the rule of law (Ivanova, 2019). Concerning the laws affecting the move, there are current macro-economic fluctuations that negatively impact the growth and development of new ventures. The international laws would also affect investment in Russia as the flow of capital would be impeded by present laws and regulations. Computer literacy in Russia is considerably high; therefore, e-commerce would be appropriate to ensure a competitive edge.

India

Another potential country for international expansion for XYZ Company in India, which is considered to have relatively low barriers to entry in addition to the clear registration process. The law that implication on business moving into the Indian market is appropriate, which means it’s favourable for entry by new businesses. There are favourable policies that promote making products in India in addition to other relaxed regulations that attract foreign direct investment in the country. The clothing and apparel sector is sought to grow by 11.9% by the year 2014, which makes it a potentially successful investment. Therefore the law attracts foreign players to invest in the market. International law plays a critical role in whether a country attracts foreign investment. Such international laws include the Trans-Pacific Partnership (TTP) and are a member of the World Trade Organization, which promotes the business environment for foreign investors (Rrustemi, 2016). In Indian, there has been an exponential growth in the number of mobile and internet users that facilitates e-commerce business (Ara, 2015). The cost of communication has reduced, and 3G has been essential.

China

=China is a country that has witnessed significant growth in trade and investment and especially from foreign markets. The barriers to entry in China are fewer, and there is the presence of favourable trade policies. However, entry is greatly influenced by whether a business has incentives for investment with a potential partner (Ninerola et al., 2017). Businesses tend to face related legal issues, increased bureaucracy, language, and culture, among others. The law affecting investment in the country is favourable for new businesses. International law and treaties enable the easy flow of capital to support export trading. The increased computer literacy in China underscores the investment in e-commerce infrastructure for a business (Sekhar et al. 2019).

Possible Expansion into China

The Chinese market provides significant opportunities for XYZ Company. However, it is marked by various complications such as culture, language barrier, and bureaucracy, among others. The success of the XYZ Company is based on the selection of an appropriate global entry strategy. Joint venture in which XYZ Company partners with a domestic would be most appropriate since the domestic company will provide expertise into the new market. It can also help experience tax advantages in China. The company will then jointly utilize the five forces framework to understand the industry competition and hence its competitive dynamics. The company will focus on the production of quality clothing and apparel products at low costs hence the low prices compared to the competitors.

It is important to understand that the decision on the entry mode into a foreign country is dependent on the incentives a company has for investment. Despite the increased opportunities that the Chinese market offers, there are some barriers faced by foreign nations. The barriers include legal issues, cultural differences, language issues, trust, bureaucracy, and human resources. The recommended strategy that XYZ Company can employ in Chinese market investment is joint ventures. It has benefits such as increased access to distribution networks, improved capacity, risk and cost-sharing, availability of new knowledge, and expertise in addition to greater resources.

References

Sekhar, C., Karthikeyan, M., Divakaran, A., & Deyi, Z. (2019). Performance of e-Commerce business in India and China. International Journal Of Agricultural Sciences, 15(1), 195–211. https://doi.org/10.15740/has/ijas/15.1/195-211

Ara, A. (2015). Growth of E-Commerce in India. International Journal Of Core Engineering & Management (IJCEM), 2(4), 25–33. https://www.researchgate.net/publication/318280714_Growth_of_E-Commerce_in_India.

Rrustemi, V. (2016). Entry Marketing Strategy of SAAB Car Manufacturer into the Indian Market. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2832999

Niñerola, A., Sánchez-Rebull, M.-V., & Hernandez-Lara, A.-B. (2017). Entry modes and barriers to internationalisation in China: an overview of management consulting firms. Measuring Business Excellence, 21(1), 37–49. https://doi.org/10.1108/mbe-04-2016-0022

Ivanova, N. (2019). Entering the Russian Market: The Peculiarities for Foreign Companies. SHS Web of Conferences, 62, 09005. https://doi.org/10.1051/shsconf/20196209005