Purpose of Global Expansion
First, the company will have new revenue potential as it obtains access to a broader customer base. Given that the company discussed produces cellphone cases, the demand can be relatively high because most people have cell phones today. However, the competition may also increase if there are some acknowledged case producers in the Argentine market. The second key benefit is the diversification of markets, which means increasing the number of revenue sources. This advantage is crucial, especially when business encounters some difficulties in home country. Finally, it is the opportunity to hire employees from a new country. They can have specific knowledge and skills that may be difficult to find in home country.
Business Impacts of Global Business
Before entering a new market, any enterprise should comprehensively assess probable effects on its operations. The company will need to conduct thorough market research before developing a strategy because markets of other countries may work differently. The corporate strategy will be more potent if it is adequately informed regarding the market environment, possible competitors, supply chains, and so further. The changes also concern marketing strategy, requiring learning the cultural specifics of potential customers. Supply-chain management will need to find new reliable partners who can provide materials at less cost.
Societal Impacts of Global Business
Global expansion may lead to adverse effects in a particular country, though it depends on the industry. For instance, Dorn and Ruiz Peyré (2020) describe that lithium mining supplied two thousand jobs in the Argentine province of Jujuy. Meanwhile, it also raised social tensions between local communities and mining enterprises in environmental terms and water.
Cultural Considerations for Global Business
Culture is a multi-component phenomenon that determines how people live. Without a comprehensive knowledge of a different culture, doing business is impossible, as it is doomed to failure in a foreign country. It is necessary to pay attention to language regarding workplace etiquette and customers. Religion and traditions also play a critical role, but it would be more relevant to consider what is currently popular in a new country, namely singers and bands, football stars, memes, jokes, and so further. Finally, one must consider history to avoid politically and socially sensitive matters, such as colonization, discrimination, LGBTQ rights, and others.
Market Profile
Cultural Profile
The majority of the U.S. population is Protestant, and Catholicism is a dominant in Argentina. The difference may impact the values and attitudes of Argentine customers. Contrary to the U.S., collectivism is higher in Argentina, emphasizing the importance of belonging to a community or family. The UAI index is higher in Argentina, which suggests that people in this country need clear rules to handle their practices (Hofstede Insights, n.d.). These implications are crucial for human resource management and work arrangement for local employees.
Political and Economic Profile
There is a difference in trade affairs, though the U.S. and Argentina have international trade agreements with many countries. The U.S. is more connected to the trading world because it is a member of the World Trade Organization and has many free trade agreements. Argentina is more localized due to its membership in the Southern Common Market. In addition, the GDP per capita in Argentina is lower compared to the U.S., so it may affect the purchasing power of potential buyers.
Legal and Regulatory Profile
The U.S. has a more developed framework for trade and investments, which simplifies the import-export processes. On the contrary, Argentina requires Non-Automatic Import Licenses for various product categories (International Trade Administration, 2022). Moreover, import license applications are now reviewed for a longer time. Finally, such delays can significantly influence business operations and planning.
Market Considerations
Monetary Considerations
The difference in currencies and exchange rates highlights the necessity to develop a risk assessment plan. The company must avoid buying in stronger currency and selling in a weaker one since it affects profit margin. Although the exchange rate is difficult to predict, the enterprise will need to involve additional tools to monitor currency risks.
Management and Logistics Considerations
Considering the culture of Argentina, it is necessary to organize a clear set of corporate rules. In this country, individuals do not tend to strictly follow the laws and prescriptions, and thus the company should develop approaches to encourage potential employees to comply with the rules (Hofstede Insights, n.d.). It will impact the company’s policies and procedures in adjusting local staff’s corporate culture.
Mode of Entry Considerations
A possible mode can be a joint venture considering the possibility of hiring local employees. On the one hand, it allows immediate connection to the local culture and sharing costs. On the other hand, this approach may lead to problems with determining investors and splitting profits.
References
Dorn, F. M., & Ruiz Peyré, F. (2020). Lithium as a strategic resource: Geopolitics, industrialization, and mining in Argentina. Journal of Latin American Geography, 19(4), pp. 68-90. Web.
Hofstede Insights. (n.d.). Country comparison. Hofstede Insights. Web.
International Trade Administration. (2022). Trade barriers. International Trade Administration. Web.