Planning for expansion
What is the primary goal of domestic and global expansion?
To increase a business's market share, revenue, and profitability by entering new markets or extending its presence in existing markets.
Name two advantages of expanding domestically
Advantages include familiarity with the local market and regulatory environment, and the ability to leverage existing brand recognition.
What are the challenges businesses face when expanding globally?
Challenges include cultural differences, exchange rate fluctuations, political instability, and regulatory compliance in the foreign market.
How does globalisation impact business expansion?
Globalisation opens up new markets, increases competition, and creates opportunities for businesses to access global supply chains.
How can technological advancements aid in global expansion?
Technology can facilitate communication, streamline supply chain management, and enable digital marketing, making it easier to reach international customers.
What factors should a business consider before expanding internationally?
Businesses should evaluate market potential, competition, cultural differences, legal requirements, and economic stability of the target country.
What is a joint venture, and how can it aid global expansion?
A joint venture is a partnership between two businesses that share resources, risks, and rewards. It can help enter foreign markets with local expertise.
What impact does exchange rate volatility have on international expansion?
Exchange rate volatility can affect the cost of importing/exporting goods and alter profit margins in foreign transactions.
Why is cultural awareness important in global business expansion?
Cultural awareness helps businesses adapt their products, marketing strategies, and communication to fit local customs and preferences.
Define 'economies of scale' in the context of business expansion.
Economies of scale occur when a business reduces costs per unit due to increased production, achieved by expanding operations.
Why might a business choose to expand domestically before going global?
Domestic expansion allows a business to strengthen its operations and build a solid foundation before facing the complexities of international markets.
How can a business use franchising as an expansion strategy?
Franchising enables a business to grow by allowing others to operate under its brand in different locations, while receiving fees or royalties.
Identify two risks associated with international expansion.
Risks include political instability in the target country and the potential for intellectual property theft.
What is the difference between importing and exporting?
Business that export, manufacture their products in their home country and send them off to be sold in another country. Importing is bringing a good or service into a country.
What role does government policy play in domestic expansion?
Government policy can either facilitate or hinder expansion through regulations, tax incentives, or subsidies.
Explain how a business can use a SWOT analysis to plan for expansion.
A SWOT analysis helps identify strengths, weaknesses, opportunities, and threats, guiding strategic decisions for effective expansion.
Describe how mergers and acquisitions can drive business growth.
Mergers and acquisitions allow businesses to quickly gain access to new markets, customers, and technologies by combining with or buying other firms.
How does the legal environment affect international business expansion?
Different countries have varying legal requirements for business operations, intellectual property, and employment laws, impacting expansion plans.
How can expanding into emerging markets benefit a business?
Emerging markets often present high growth potential, lower competition, and opportunities for establishing a strong market presence.
Discuss how economies of scale can be achieved through global expansion.
By expanding globally, a business can increase its production volume, which lowers per-unit costs and enhances competitive advantage.
What is a market entry strategy? Provide two examples.
A market entry strategy is an approach a business takes to enter a new market. Examples include exporting and forming strategic alliances.
Explain the term 'licensing' in international business expansion.
Licensing is when a business permits a foreign company to produce and sell its products, often in exchange for a fee or royalty.
List two ways businesses can mitigate risks during global expansion.
Businesses can conduct thorough market research and form partnerships with local firms to reduce risks.
What is the difference between direct and indirect exporting?
Direct exporting involves selling products directly to the customer in another country, while indirect exporting uses intermediaries like agents or distributors.
What are the benefits of using a licensing strategy for global expansion?
Licensing allows businesses to expand with lower risk and investment, using local partners to navigate the regulatory environment.