Running head: Assignment 3: Successful Domestic Company Goes Global 1

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Assignment 3: Successful Domestic Company Goes Global

Name

MGT510

Name

09/01/2014

Successful Domestic Company Goes Global

The following paper will seek to analyze the procedure that should be followed before leveraging expatriates to other countries. Subsequently, the paper will also analyze South Africa as the country where my company will most likely expand to. On top of that, the paper will explore Kenya and Rwanda as key areas where foreign investors triumphs.

A guide to leveraging expatriates

To begin, expanding a business is the dream of all major organizations that have achieved self-actualization. However, before expatriates travel oversees they should have the following tips in mind. The first one is sticking to what they know. They should not be brainwashed by the new culture (Mitchell et al, 2011). The second tip is for the expatriates to find a trusted local partner. An expatriate should find a trusted local personality who has relevant experience in the business. The third tip that all expatriates should know is to bring the best of the west. Instead of getting influenced by the local culture, an expatriate should influence the local population with his or her western culture. The last tip is to ensure that all expatriates use their foreignness to their advantage. Being in a foreign country can be humiliating. However, selling quality products can ensure that as a foreigner you get a nickname according to the quality products your company offers.

The major benefits that this report can provide for the organization

While expanding overseas, there are several factors that the company will put under consideration (Mitchell et al, 2011). It is good for any organization to consider such factors so as to avoid any form of glitches as it conducts business in the new markets. It can be a great loss to a business, when it opens up new markets only to find that the nation of investment does not have a pleasant business environment. Therefore, before my company goes beyond domestic operations and launches global investments, the following factors will be considered.

At first my company will not buy land. Instead, I will make sure that land is bought with the revenues my company fetches from the country (Orr et al, 2012). For this reason, the company will lease a building where most of the company’s affair will be run. The time under which the expatriates will operate oversees will be no more than three years. After a period of three years, an expatriate may chose to remain or get back to his/her country of origin.

My company would like to open new branch in South Africa. The country is situated in a strategic position in the southern parts of Africa. The country being a former Boer colony has rich infrastructure. Under the country’s constitution, foreign investment is allowed as long as the company pays taxes and dues to the government of the day. Additionally, the South African parliament has created legislations that protect foreign investors from any form of domestic aggression (Orr et al, 2012).

Analyze the major factors that would influence company’s choice of countries into which company would expand

South Africa has good roads that connect with major parts of the country. Almost three quarters of the country’s roads are tarmacked. Therefore, there is simple access. For example, while transporting finished products to the markets, it would be a simple procedure unlike countries with poor infrastructure. In such countries, there is poor access and the transportation of goods becomes difficult. Sometimes, the goods might perish on the way. When the goods perish, it can be a very great loss. The other means of transportation is railway. South Africa has ultra-modern railway that is in line with the new technology. Hence, transportation of bulky commodities becomes a simple task. In addition, the country has a good air terminal that connects to the rest of the world so easily. The air terminals are operated by both local as well as international airlines such as Virgin Airways, Kenya Airways, Ethiopian Airlines and British Airways among others. With such quicker access, the country has attracted international investors (Hisrich et al, 2012). For this reason, my company has decided to invest in Pretoria which is among the largest cities in South Africa.

Politically, South Africa is a democratic republic where leaders are elected through a popular vote. A person running for an elective post is required to seek mandate from the citizens. With such provisions in the constitution, South Africa elects only able leaders. Nelson Mandela, an Icon and a person who was loved worldwide hailed from South Africa. He was the nation’s founding father. In addition, he was the first ever South African black president after the collapse of apartheid (Hisrich et al, 2012). Under his regime, the nation attracted a good number of foreign investors. On top of that, the nation developed in terms of infrastructure. Nelson Mandela was succeeded by Tambo Mbeki who also steered national development. However, under his regime foreigners were being discriminated and chased out of South Africa by what was known as the xenophobic attack. The current President, Jacob Zuma, has been applauded for bringing up new developments and completing the stagnant ones.

In terms of culture, South Africa is a multi-ethical nation. The country has diverse culture. Most of the occupants are Zulus and Xhosas. These people are so friendly and they welcome foreigners with a big heart, unlike other countries where foreigners are either chased away or discriminated. In such areas, the investments are also burnt. For example, Zimbabwe, the nation lacks foreign investors. The latter is because; the nation’s president Robert Mugabe chased away all foreign investors. Their properties were looted by the local communities and their accounts were frozen by the local banks. Such environment is not pleasant for foreign investments.

Basically, in South Africa, English is the main language. It is even the national language. However, there are other minor languages such as Zulu. Despite that, the language that is used to conduct business is mainly English. Thus, if my company opens up new investments in South Africa, language barrier would be evaded.

In terms of religion, the country is inhabited by Christians. They make up almost 85% of the total population. Other minor religions are Hinduism. It is practiced by about 1% of the remaining population, mainly Hindus. The Hindus came during the colonial period. They are entrepreneurs who run small and medium scaled businesses. The remaining population is comprised of Muslims who form Islam religion. The Muslim in South Africa is friendly. They don’t practice what other Muslim around the Muslim world practice. They have refuted mujahedeen.

The other factor that will influence my choice of country is trade tariffs and Government taxes. In countries that taxes and trade tariffs are high, a company cannot get revenues to sustain and operate the business (Peng, 2013). Instead, all the revenues will go to the governments in form of taxes. In addition, all the trade barriers that creates an unpleasant working environment scares away foreign investments. Luckily, South Africa is a nation that has set good legislations that are aimed at limiting trading barriers and high government taxations. The latter makes South Africa a perfect place to conduct business.

The last factor I will consider is natural epidemics. I would not like to invest in a country that is affected by diseases. Instead i will concentrate in countries that are free from diseases and other epidemics. For this reason, my company will not invest in countries such as Liberia and Sierra Leone where Ebola has forced major businesses to shut down due to lack of customers.

Apart from South Africa I would recommend that my company opens up new branches in countries like Kenya and Rwanda. Kenya, being the heart of East Africa has a strategic position that holds business potential. Since, the country is still developing, establishing an investment in it will make our company successful. A good percentage of Kenyans love foreign products. They have a notion that foreign products are of high quality. Kenya has a stable government which has laid down good policies that has attracted foreign investors. Uhuru Kenyatta’s administration has enriched capitalism. Capitalism is simply a system of private ownership, which is open for fresh ideas. Capitalism could be traced during the times of Adam Smith. Smith suggested that, the aspect of many buyers and many sellers in the market would be a waste of necessary resources. In the Marxist economies, capitalist enjoyed free market where they sold their commodities without interference from the government. It is evident that capitalism existed under the many forms of governments. It existed after the collapse of feudalism. As days progressed, capitalism became the dominating ideology in the western worlds. It is believed that capitalism was implemented by imperialists during globalization. In the 19th century, this theory became the dominant in the globe. Presently, capitalism is practiced in most blossoming economies. The Kenyan concept of capitalism is based on three key things. The first one is wage, private ownership and lastly production for exchange and profits. On the other hand, Rwanda has good business environment.

The criteria that company would consider when deciding which employees to send abroad.

In deciding which employees will be sent abroad, my company will use three criteria. The first one is experience. Before sending any employee abroad, it is good to make sure that the employee has a knowhow of how the affairs of our organization are conducted. An experienced employee will enhance the smooth running of a business. On the contrary, a lesser experienced employee might fail to conduct business. For that matter, my company will send experienced employees abroad to launch our business globally (Peng, 2013).

The other criteria are education level. A well-educated employee will blend in so easily will most likely blend in with the local population. An educated person was taught communication skills in college. Hence, interacting with the local community would not be a problem. The last criteria are socializing skills. My company will pursue an employee with good socializing skills. An employee with good socializing skills will interact at ease with the local population. Such interaction will generate potential leads to my company. In addition, my company will analyze performance. If an employee has three of the aforementioned qualities, performance will be used to determine the employees going abroad. A performing employee will be encouraged to apply for the position. To supplement the workforce, my company will employ local graduates with relevant education. They will be used to fill up positions such as sales. This is because; they know what the local population consumes and what sells the most. Transport department will also be supplemented by the local population because they know the local road networks. Additionally, my company will liaise with the local media for advertisement purposes (Peng, 2013).

The major methods company would use in order to encourage the selected employees to become expatriates.

As a good way of encouraging the selected team of members to go abroad, my company will promise promotions, the individual who have met the criteria and have relevant experience will be given promotions inform of responsibilities. For example, a person with the highest level of education will become the chief executive officer. Others will fill other positions as they will be created such as human resource managers, operations managers among others.

Good salary is the next thing my company will promise employees who will answer to the calling of shifting abroad. Salary will be calculated based on the cost of living in the country of investment. On top of that, workers will be given an allowance for their loyalty. The allowance will be termed, “Oversees allowance.” Furthermore, the company will oversee that workers employed oversees get proper housing. In addition, the company will give employees housing allowances.

Strategy to ensure that both the Executive Committee and the Board of Directors are committed to the expansions

To make sure that, the Executive Committee and the Board of Directors are committed to the expansions, I will use globalization as a strategy, globalization in terms of expansion. I will express and prove the importance of going global. A company with global markets attracts huge customer base as well as reputation. For example, Toyota has been so successful worldwide unlike other car manufacturing company (Briscoe et al, 2011). It is easier to find twenty or more Toyota Harriers in third world countries like Uganda than finding two Lamborghinis in the same country.

Recommend two books that the selected expatriates should take with them when they go overseas.

Before the expatriates leaves for the new country I would recommend that they take two books. One of the books should be “Think Big” by Ben Carson. The book is so relevant as far as encouragements are concerned. It has words of wisdom that allows a person to rethink his or her decisions twice before coming into a conclusion. Making decisions out of critical thinking allows an individual to arrive at a proper decision that will ensure that all parties are satisfied. The other one of the books should be “The Big Guide To Living And Working Overseas” by Jean-Marc Hachey. This guide does cover many, if not, all the major aspects of living and working overseas. A gem of The BIG Guide is its professional career building advice, offering unparalleled expertise when compared with other US publications.

A guide for expatriates

While the expatriates leave to work abroad. South Africa is well known for its outdoor lifestyle, the high quality of life expats can enjoy and a working environment with plentiful opportunities for those with an elevated level of education or a unique skill set. Furthermore, adapting to the culture is relatively easy and enjoying the new lifestyle is absolutely effortless. They should take with them their own furniture that is customized according to their specific needs. The furniture should be shipped using popular channels such as DHL. The company is not only cheap but reliable. Since South Africa doesn’t experience winter, it is good to carry light clothes that will serve in cold and warm climatic conditions. Many reputable companies offer shipping and air freight services to South Africa. Cost usually depends on volume of goods, as well as length of time involved in shipping. Air freight services are more expensive, although quicker. Some companies also offer storage services and insurance on goods. Shipping pets to South Africa requires a Veterinary Health Certificate, or equivalent, and may involve a quarantine period of three to six months. In terms of accommodation, the company will make sure that all expatriates have acquired a decent accommodation.

In conclusion

In conclusion, according to Rostow and Galbraith in their theory of linear stages of growth model suggested that for a company to develop and grow economically, it should focus upon the accumulation of both domestic savings as well as foreign investments. As per Galbraith (Galbraith, 1980), a company should make sure that it has domestic applause before seeking international markets. Therefore, before my company materializes the dream of going beyond the domestic markets, as the Chief Executive officer, I will ensure that we have domestic approval. With good reputation from home, my company will earn global applause easily.

References

Mitchell, S. M., & Powell, E. J. (2011). Domestic law goes global: legal traditions and international courts. Cambridge University Press.

Orr, G., & Roth, E. (2012). A CEO’s guide to innovation in China. McKinsey Quarterly, 1, 74-83.

Hisrich, R. D. (2012). International Entrepreneurship: Starting, Developing, and Managing a Global Venture: Starting, Developing, and Managing a Global Venture. Sage.

Peng, M. (2013). Global business. Cengage Learning.

Briscoe, D. R., Schuler, R. S., & Tarique, I. (2011). International human resource management: Policies and practices for multinational enterprises. Routledge.

Galbraith, J. K. (1980), The Nature of Mass Poverty. Cambridge, MA: Harvard University Press.

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