Product Investment Considerations
Investing in new products is presented to the company as an opportunity to contribute to its development and gain a competitive position in the market. At the same time, the central aspect that requires reflection is the feasibility of investing in a product line overseas or keeping it in the United States. This choice is influenced by qualitative and quantitative factors necessary for a medium-sized company. These critical indicators include cost, market potential, currency, culture, and market competition. Moreover, it is valuable to consider the similarities and differences between investing in the US and in a foreign country.
Qualitative and Quantitative Factors
Quantitative
First, it is worth understanding the quantitative factors that may influence the decision regarding the feasibility of investing in a new product line overseas versus keeping it in the US.
Costs
This aspect involves focusing on the company’s financial expenses to produce goods, such as production, labor, and materials. In addition, there is such a factor of value as the transportation of these products to other countries, which concerns both import and export.
Potential of the Market
This factor considers the potential that investing in a foreign market has compared with a local one. The rationale in this context includes providing an opportunity for the company to grow and strengthen its competitive position in the market.
Currency
When investing in an established market, such an aspect as money has a critical role. This is due to the assessment of the rate fluctuations of foreign currency on such components of production and distribution of new goods as costs, pricing, and profit.
Qualitative
Regarding qualitative factors, the following determinants can also be distinguished:
Cultural Aspect
When investing in a foreign market, it is important to consider aspects such as cultural characteristics and the language barrier. This is necessary to limit problems such as miscommunication and discrimination, which can impair the company’s productivity.
Market Competition
The level of competitiveness poses a significant risk when entering a foreign market (Khan et al., 2020). It can impact the manufacturer’s efficiency and the profits they can get when the product is in demand.
Similarities and Differences Between US and Foreign Country
Similarities
The main similarity when investing in the US and a foreign country is the requirement for market research. This aspect implies the conditions of entry and activity, legal requirements, and competitiveness. These indicators will provide an understanding of the main factors that must be considered in the future to obtain the most successful indicators for the organization. This part also includes research on consumer needs, trends, and demand (Wang et al., 2022). Another similarity is the execution of risk assessments in local and foreign markets. They will help limit the company’s financial and resource losses.
Differences
Regarding the differences, first of all, it is necessary to identify such a determinant as a cultural factor. Research indicated that “pursuing an interest in selling products or services beyond borders begins with an understanding of the cultural norms in the countries of interest” (Sharma, 2022, para. 4). This step is necessary to reduce the possibility of problems with discrimination and bias.
Another distinction is such a factor as labor markets and employment laws. In each country, this feature may have different regulatory norms and rules, which companies should consider when choosing a local or foreign market. It is worth emphasizing that these factors are the most valuable but do not negate other possible characteristics.
References
Khan, M. A., Qin, X., Jebran, K., & Ullah, I. (2020). Uncertainty and R&D investment: Does product market competition matter? Research in International Business and Finance, 52. Web.
Sharma, R. K. (2022). Understanding the value in different cultures when exploring global expansion. Forbes. Web.
Wang, F., Fan, Z., & Qi, Y. (2022). Analysis of consumer product preference and news media based on data mining technology. Frontiers in Psychology, 13. Web.