Home > Finance essays > Investment in foreign markets

Essay: Investment in foreign markets

Essay details and download:

  • Subject area(s): Finance essays
  • Reading time: 4 minutes
  • Price: Free download
  • Published: 27 October 2015*
  • File format: Text
  • Words: 923 (approx)
  • Number of pages: 4 (approx)

Text preview of this essay:

This page of the essay has 923 words. Download the full version above.

Companies choose to invest in foreign markets for different reasons, often the same reasons for expanding operations within their home country.
Some of these reasons could be:
– Looking for new buyers for the goods and services that they offer.
– Saturated sales in their home market, so they are looking for a new customers abroad.
– They think that investments overseas could bring higher returns than additional investments at the home country.
– Cheaper producing of products in a foreign subsidiary- for the purpose of selling it either at home or in foreign markets.
– Investing in other companies abroad to help build strategic assets, such as distribution networks or new technology.
– Fluctuations in exchange rates could change the profit calculations of a firm. This could be a reason for a company to shift the location of its resources.
Before going overseas a company has to pay attention to several factors. One of the factors is that companies need to have a good distribution so that they don’t have to focus on it constantly. The second factor is that a company needs to determine whether they can afford to move people from their current responsibilities, as well as whether they have necessary skills for overseas sales and marketing. It is important that there is someone who is going to be accountable for the export sales part of the business. Some countries simply do not have enough of the skilled labor companies that they may need. A company will be competing with established companies that know where to find talent and how to recruit local candidates. Places to find local candidates could be: local educational institutions such as engineering programs and business schools.
The third factor is to adapt to local culture. Some countries such as France and Japan expect companies to adapt to the local culture. That may mean customizing your product or service to meet local customers’ tastes. At the very least, you will need to put your marketing message in the local language and make sure the meaning translates correctly. Closing a deal abroad can be a different experience than you’re used to in your own country. Some cultures struggle to say that they are not interested in a product or service, which means you can have long and costly sales process that will never lead to a sale. This kind of behavior is especially prevalent in China and the Middle East. This could be avoided by looking for customers who have bought similar items or services in the past. When you visit your desired destination before you set up your company it will give you a better understanding of the place, people and problems of a country. This gives you the opportunity to chat with the locals and business experts to ensure that you are making the right decision.
Understanding competitors abroad could help to consider if and how to expand. Spending time abroad and speaking with potential customers can help to avoid mistakes that will bring many extra costs. For many companies, it is a must to find a local partner when expanding overseas. Partners could help to facilitate sales and help to understand the culture. To form a partnership takes a lot of time but your efforts will be helping you to find a partner that is committed to your business.
The fourth factor is to stay informed about the foreign financial affairs. You could read the Financial Times or watch world news channels and read online to make sure you gain understanding of the market. For some companies with a strong website, it may not be necessary to establish a physical presence abroad. You may be able to offer overseas shipping and expand payment options without the hassle of extensive tax regulations. It is easier to sell online through an e-commerce partner with international capabilities and much less costly than building a local presence. In some markets you would need to develop websites in another language that accept the local currency. This will cost you money, but eventually you will benefit from it.
The fifth factor is that there are many different regulations surrounding exports so, it is important to understand what is required for your particular industry before attempting to expand abroad. The rules and regulations differ for businesses from country to country. It is wise to seek expert advice on any regulations that might affect your company.
The sixth important factor is to create a marketing strategy for your targeted country. It is important to do international market research. This must be carried out within your planned destination to ensure you gain a solid knowledge of your target audience. Doing this will bring costs along but it could save a lot of money in damages. You must consider slogans and their meanings, especially if translating in to another language. You could damage your brand if you use words that have a bad translation in another country.
That last but not least important factor is that growing companies are a source of employment, talent and energy for a community. They can come up with new ideas and economic development. To fully realize these goals, it’s crucial that you establish a reliable and mutually beneficial network. Networking is about making connections and building enduring, mutually beneficial relationships. Personal relationships enable you and your organization to stand out, rise above the noise and remain top of mind. To succeed you must continually connect with new people, cultivate emerging relationships and leverage your network. This can contribute to your success.

...(download the rest of the essay above)

About this essay:

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, Investment in foreign markets. Available from:<https://www.essaysauce.com/finance-essays/essay-investment-in-foreign-markets/> [Accessed 20-02-24].

These Finance essays have been submitted to us by students in order to help you with your studies.

* This essay may have been previously published on Essay.uk.com at an earlier date.