The global financial crisis has caused much uncertainty in the international business community. Many firms are hoarding capital and looking for ever more ways to cut expenses in preparation for an indefinite period of economic contraction. Governments, similarly are hesitant to make foreign investments as the possibility of default in some nations leads to apprehension and doubt in others. Economic and financial data that point to recovery in some areas of the world are skewed by opposing indicators in other areas. The apprehension is exemplified in this article:
http://www.reuters.com/article/2011/10/30/us-economy-global-weekahead-idUSTRE79T2IE20111030, which mentions China's hesitation to pour capital into stressed European markets as well as Euro zone nations' collective dissent over aid sent to distressed countries that use their currency. It also mentions the opposing indicators in different regions and how they affect each other.
Given our discussion of different entry strategies, How do the uncertainty of the financial crisis and global economic outlook affect businesses' willingness to enter new international markets? How do they affect their market entry strategy?
Nico and Shane
4 comments:
The economic uncertainty is hindering growth in new international markets unless there is a proven niche in that area. There are a lot of companies and countries that are reacting as China has. They have to be able to protect their country and their people/employees. To that note, there has also been an uptick of American companies that have outsourced pulling their business back to the states under fear of economic turmoil.
I would say the economic uncertainty is definitly hindering the gorwth of businesses in international markets. These companies like Dan said, have to protect themselves and the countries have to do the same. If the market isnt their, than the companies should have no business trying to enter that market. Like we talked in class, America has stopped outsourcing and has started to keep their business at home to reduce costs and minimize risk.
The current recession has played a major impact not only on the expansion of international business, but domestically as well. Most companies are just trying to get by and do not have the capital or resources to globalize. Like Nick says if their is not a profitable market to enter into the juice is not worth the squeeze.
A company's main objective is to maximize profit. Currently, companies are trying to stay alife. Going international means greater investment. So if the company is barely making it locally, it would not think international and vise versa.
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