International Business Expansion Challenges and Solutions Essay

This essay delves into the multifaceted challenges faced by organizations venturing into emerging markets. It begins by defining emerging markets and highlighting the motivations behind international expansion, such as increased market share, revenue growth, and enhanced brand image. The essay then systematically examines various obstacles, including political instability, economic fluctuations, social and cultural differences, technological limitations, legal complexities, environmental concerns, competitive pressures, strategic missteps, resource constraints, and financial hurdles. Each challenge is explored with relevant examples, such as political instability in the Middle East and legal complexities in India. The essay concludes by proposing recommendations to mitigate these challenges, offering valuable insights for businesses seeking to thrive in the global landscape. The essay highlights the importance of adapting strategies to local contexts and the need for thorough research and planning.

ESSAY

Emerging market defines economic situation of country which is becoming more
effective and advanced towards growth as well as industrialization. It has better characteristic to
become development market. It helps the management of organisations to expand their business
operations in the international market (Khanna and Palepu, 2013). In addition to this, the
economic situation of China as well as India are considered as emerging market in the near
future time. The present report describes about different kinds of challenges which are faced by
the organization to get internationalized. Further, it also describes the reason because which
firms organizations want to expand at international level. In addition to this, it represents
different recommendations to overcome these kinds of issues.
Reasons to expand internationally
There are many reasons for organizations to expand their business at the global level.
Generally, expansion of organization in international market can help to increase its market share
and growth. In addition to this, it can aid the corporations to increase profit as well as revenues in
different nations. Further, management of enterprises also spread their business to improve the
brand image and goodwill of firm in minds of consumers in the global emerging market
(Czinkota and Ronkainen, 2013). Further, expansion of international business provides effective
opportunity to achieve better competitive advantages in comparison to its competitors. For
example, by increasing the scope of business in various countries, Microsoft is gaining higher
market share, growth and competitive advantages over others.
Challenges faced by organizations for global expansion
Generally, management of enterprises face many issues to expand their business
operations in different countries. Some of them are described as below:
Political Challenges
There are many political barriers which create complexities for corporations to expand
business in various nations. Different factors like taxes, tariffs, political stability as well as
corruption level affect the corporations badly in different emerging economies (Terpstra, Foley
and Sarathy, 2012). For example, political condition of Middle East countries and China are not
suitable for organisations because government of these nations do not provide independence to
expand their business as per the suitability of corporations. In addition to this, these reasons
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create complexities to expand business in these nations. Furthermore, it produces issues to
develop effective international marketing strategies in an appropriate manner.
Solution
Economical challenges
Economical is also an important aspect for corporations to enter in the international
market. There are many economic factors such as Gross domestic products (GDP), Gross
national product (GNP), inflation rate, currency rate and supply and demand of materials which
create a huge impact on the corporations to expand its business operations in the emerging
economies (Xu and Meyer, 2013). For example, economical condition of Nepal as well as
Pakistan is not appropriate which creates issues to manage their global business activities. So
these kinds of factors cause problems for the management of corporations to expand their
business due to lower sales and less profits in these areas.
Social challenges
Social challenges of different nations generate issues to handle its global operations
effectively. Income level, social status, lifestyle, education, needs as well as requirements of
consumers are the social aspects which affects the international activities of corporations in
emerging countries (Cavusgil and Knight, 2015.). For example, social factors of South African
countries are not appropriate due to lower education as well as income level of people which
create complexities for many organizations to do their business in these areas. In addition to this,
they produce complexities for enterprises to earn better profit and increase market share in these
nations. Along with this, premium product selling organisations faces issues to increases its sales
in many developing counties due to various social issues. On the other side, culture of Canada
and France are completely different which imposes challenges to know exact needs and
requirements of consumers in the emerging market (Thite, Wilkinson and Shah, 2012). This
factor produces problems to manage its operations in the other countries.
Technological challenges
Technological factors create challenges to expand its business in the emerging market. In
addition to this, operational efficiency as well as communication facilities like internet is
technological aspect which influences global activities and operations in the international market.
(Cuervo‐Cazurra, 2012). For example, on the other hand, China and UAE are not supportive due
to lots of restrictions on the promotional and advertisement activities. In addition to this,
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different social media applications are also banned which create issues for the management of
corporation to handle its international operations. Along with this, telecommunication facilities
in India are not appropriate which create barriers for global organisations to expand business
operations in different emerging markets.
Legal challenges
Legal factor is the major challenge for management of international organizations in
different emerging markets. There are many legal factors such as health, safety, employment
policies, promotional rights as well as market entry rules and regulations. There are main
regulatory factors which affects the global operations of firms (Verbeke, 2013). For example,
legal rules and regulations of India are stricter as compared to other emerging economies. Due to
these reasons, legal factors do not provide flexibility to the organizations for making better
global strategies because it increases the expenditure of corporations in international market. In
addition to this, Wal-Mart is a popular supermarket chain across the world that wants to expand
its business in India. Due to legal rules and regulations, corporation faced issues to enter in
Indian market (Haufler, 2013). This reason produced complexities for the management of Wal-
Mart to expand its business operations in the emerging Indian market.
Environmental challenges
Environment can also be considered as the major issue for international corporations to
expand their business in emerging markets. In addition to this, corporate social responsibility
(CSR), charity, organizing social events as well as welfare activities for environment are the
main environmental factors which produces impact on global strategies in different countries
(Collings, 2014). For example, environmental policies of USA and UK are very strict which
affects the business operations of corporations. This factor does not support business
corporations to manage as well as increase its scope of business operations. Furthermore, it also
increases the investment cost of these global corporations in emerging countries. Apart from that,
to manage its operations in India, enterprises have to spend 2% of profit on welfare activities of
society which increases their expenditure in the emerging markets like India (Ramamurti, 2012).
Competitive challenges
It is also major challenge for management of global organisations in different emerging
global market. Generally, organisation has to compete international and domestic corporations
which create cut throat rivalry in the global market. In addition to this, it affect the issues to
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increase its sales and profit in the present sector. Due to this reason, management of corporations
is unable to increase its market share and growth in the emerging market. For example, Gionee is
a Chinese corporation which manufacture Smart phones and its accessories. Generally, this
organisation is facing rivalry issues due to presence local and international electronics
organisations such as Micromax, Samsung, Sony as well as HTC in Indian market (Kiss, Danis
and Cavusgil, 2012). Furthermore, this causes create complexities for management of
corporation to establish their business operations in India.
Strategic challenges
Management of corporations faces many strategies issues to develop effective plan in
emerging market. In addition, this factor generates various complexities for management of
corporations to manage its global operations in a appropriate manner (Fletcher and Crawford,
2013). For example, Mcdonald's corporation faced strategic issues in earlier stage within Indian
market. Due to inappropriate strategic and marketing approaches, management of corporation
suffered with many issues regarding sales of products in the market. In addition to this, firm
faced loss of monetary funds in the present sector. In addition to this, it created challenges for
Mcdonald's firm to increase its market share and growth.
Lack of resource availability
It is also most important factor for management of enterprises to spread their business in
the emerging markets. Resources availability like raw material, transportation and workers in
optimal cost produces issues for corporations to manufacture their products as per requirements
of consumers and needs. In addition to this, it also increase investment expenditure in the
international market (Hitt, Ireland and Hoskisson, 2012). For example, many electronics
corporations like HP and Dell are facing these issues in global market which increase their
product cost. Due to this reason, sales of organisational products affect adversely in emerging
market which also produce problem to achieve better rival advantages as comparison of other
competitors in international market. Furthermore, it creates complexities to manage other
operations in systematic manner.
Financial challenges
Management of corporations also faces many financial issues to expand its business in
international market. This aspect create complexities to implement global strategies on time in
the emerging countries. In addition to this, it creates issues for management of corporations to
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get better competitive advantages as compare to other in the market (Hsu, Chen and Cheng,
2013). For example, electronics products manufacturing companies suffer with this kind of
issues because it consumers more monetary funds and efforts to emphasize on research and
development for making new products in the market very fast. These reason produces to manage
their internal and external business operations in a appropriate manner within emerging
international market.
Lack of appropriate human resources
Inappropriate human resources become challenges for global organisation to spread its
business in the emerging market. It creates complexities for management of corporation to make
better competitive strategies to increase their sales. In addition to this, it generates issues to
manage internal as well as external operations in a appropriate manner. Furthermore, it decreases
sale and profit of corporations in emerging market (Kiss, Danis and Cavusgil, 2012). For
example, Motorola corporation faced which created complexities to increase its sales in the
international emerging markets like India and China. In addition to this, it produced negative
impact brand image and goodwill of corporation in mind of consumers.
Selection of STP (Segmentation, targeting and positioning) strategies
Inappropriate implementation segmentation, targeting as well as positioning approaches
can be severe challenges for management of corporations in the emerging market. It can create
issues for organisations to manage its operations in a appropriate manner. Inappropriate selection
of segmentation can create issues to expand its business operations. It creates complexities to
bring new changes as per needs of consumers (Heshmati and Lovic, 2012). In addition to this,
ineffective targeting strategies can be created problems to target customers in the emerging
international market which reduces sales and profit of corporation. Along with this, inappropriate
selection of positioning strategies can generate challenges for management of corporation to
create better awareness regarding their products. Due to this reason, enterprises can reduces its
market share and growth in the emerging countries. Furthermore, it produce challenges for
management of corporations to create better brand image and goodwill front of consumers
(Khanna and Palepu, 2013). For example, Suzuki which is Japanese corporation which also faced
problems due to ineffective positioning and targeting strategies of its two wheeler products in
the Indian market. Furthermore, corporation got too much loss in the auto mobile sector.
Research related challenges
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It is also one of most important issue to understand needs of consumers as well as people
in international market. In addition to this, corporations faces problems to collect primary data
which create issues to develop products as per the desires of customers. This reason creates
issues for management of corporations to sell their product in the emerging international
countries (Czinkota and Ronkainen, 2013). For example, Nokia faced research related issues
which produced adverse impact on the sales of its mobile products in the different nations.
Generally, corporation was making different kind of smart phones instead of Android products
which affected its profit in international market like India and other countries.
Recommendations to overcome these issues
There are many suggestions for management of corporation which can aid the
corporation to overcome effect these challenges in appropriate manner. Some of them are stated
below in the points.
Organisation can use many ideas and strategies to overcome these effect which can
contribute effectively to manage business operations in the emerging international market
(Cavusgil. and Knight, 2015). For example, management of firm should understand taxes and
tariffs of different countries. This process can aid the corporation to make appropriate strategies
at the workplace. In addition to this, organisation can communicate government official to
reduce taxes and tariffs to operate emerging market. This strategy can aid the management of
corporation to overcome from its challenges effectively.
To reduce economical issues, management of corporation can use many strategies which
can aid to expand its business operations in a appropriate manner. For example, organisation
should take suggestions from economic experts which can aid to make appropriate strategies
which can to face economical challenges effectively (Thite, Wilkinson and Shah, 2012). In
addition to this, management of corporation can emphasize on supply and demand of their
products. This approach can provide effective flexibility to corporations for manufacturing their
commodities in suitable quantity within emerging markets.
To overcome effect of social reasons, management of corporations can use may practices
in international market. For example, firms should conduct market research to find out needs and
requirements of consumers (Cuervo‐Cazurra, 2012). For this, organisations can use primary and
secondary research method to execute market research. In addition to this, to collect better
statistics and facts, management of corporation can use questionnaires and interviews to know
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about needs and requirements of service users in the global emerging market. Furthermore,
enterprises can use secondary research methods like preference of latest journals, books as well
as online articles to analyse desires of consumers in the market. So these approaches can aid the
to know about various additional things like lifestyle, current trend which can help the
corporation to make products as per current market conditions. They can support the firms to
achieve effective market share and growth in the emerging market (Verbeke, 2013).
Furthermore, it can aid the corporation to make better strategies for increasing better profit and
revenues as comparison of its competitors.
To overcome challenges of technological aspects, Organisations can use many tools and
other techniques. For example, management of corporation should ERP (Enterprises resources
planning) to manage global marketing operations. This software can help the organisation to
give fast information which can aid to take fast decisions regarding development effective
international approaches. In addition to this, corporations should use consumer relationship
management (CRM) which can aid the corporation to take effective reviews from consumers in
international emerging market (Ramamurti, Fleury and Fleury, 2013). This process can aid the
organisation to improve its present services by considering these feedbacks.
To reduce legal challenges, management of corporations can consider many practices to
expand its business in the international market. For example, organisations should follows proper
rules and regulation by evaluating effectively which can aid to avoid any kind of legal obligation
in different countries.
To overcome environmental challenges, organisation can conduct many environmental
welfare activities which can aid to manage its operations in emerging international market. For
example, organisation should organize marathon race, plantation of trees, social welfare events
and corporate socials responsibility activities which aid the to create good image eyes of foreign
government in a appropriate manner (Haufler, 2013). Furthermore, this process can aid the
corporation to improve its brand value and goodwill front of people.
To decrease the competitive challenges, management of corporations can use many
model to know about current rivalry in the international emerging market. For example,
enterprises should use porter five forces to analyse threat of competition. This process can aid the
organisation to make appropriate competitive strategies as per current market trend (Collings,
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2014). In addition to this, it can aid the firm to increase its sales and profit by enhancing its
market share in the global emerging market.
To reduce strategic issues, corporation can use many tools and techniques. For example,
management of organisations should utilize porter generic strategy, SWOT analysis as well as
Anshoff matrix to make better strategies which aid to spread its business in the international
market (Ramamurti, 2012).
To decrease effect of lack of resource availability, organisation can use many strategies
which can aid to manage its business activities in global emerging market. For example,firm can
take help of outsourcing techniques in which corporation can handover the its activities to other
corporations (Henisz,and Zelner, 2016). This approach can aid the enterprises to increases its
business in different countries.
To sort out issues of financial challenges, management of corporation can use approach
(Kiss, Danis and Cavusgil, 2012). For example, organisations can hire financial experts which
can to develop better budget for organisational expenses. In addition to this, they can aid the
organisation to manage monetary funds from bank loan and other sources which support to
invest money in the emerging market.
To overcome from inappropriate human resources, corporation can use following
practices. For example, corporation should hire effective candidates from top management of
institutes of countries. This approach can help the firm to achieve talented candidates. Along
with this, it can support the corporations to make appropriate global strategies by analysing all
factors. Furthermore, it can support corporations to increase chances of success to achieve its
organisational global goals and objectives in international emerging market (Fletcher and
Crawford, 2013).
To reduce issues in selection of STP techniques, management of corporation can consider
many practices. For example, corporations can take suggestions from marketing mangers which
can guide them effectively to select appropriate segmentation, targeting an positioning strategies
in emerging international market. This approach can provide flexibility to manage its global
marketing operations in emerging markets (Hitt, Ireland and Hoskisson, 2012). In addition to
this, it can aid the organisations to target customers effectively which can support to increase its
business in the global market.
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From the report, it is found that challenges like political, economical, social,
technological, environmental , legal, competition and lack of resource availability provide
effective awareness. Further, research related issues and selection of STP techniques create
issues to manage operations of various corporations in the emerging market. In addition to this, it
can be concluded that appropriate recommendations provide better solutions to reduce effect of
these challenges.
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REFERENCES
Books and journals
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Cuervo‐Cazurra, A., 2012. Extending theory by analyzing developing country multinational
companies: Solving the Goldilocks debate. Global Strategy Journal. 2(3). pp.153-167.
Czinkota, M.R. and Ronkainen, I.A., 2013. International marketing. Cengage Learning.
Fletcher, R. and Crawford, H., 2013. International marketing: an Asia-Pacific perspective.
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Online
Henisz, W.and Zelner, B. 2016. The Hidden Risks in Emerging Markets. [Online]. Available
Through: <https://hbr.org/2010/04/the-hidden-risks-in-emerging-markets>. [Accessed on
20th July 2016].
Heshmati, N and Lovic, S., 2012. Opportunities and Challenges in Emerging markets. [Online].
Available Through:<http://www.diva-portal.org/smash/get/diva2:537742/FULLTEXT02>.
[Accessed on 20th July 2016].
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