Challenges and opportunities
Clearly there are a multitude of challenges and opportunities arising from the global business environment …
As the accelerating shift in the global economic landscape from Europe and North America to Asia, Latin America and Africa intensifies, global business enterprises are happening to find themselves operating in new and sometimes unfamiliar market environments.
Such global dynamics create new opportunities, challenges, risks and threats, which would need to be understood if such businesses are to succeed.
Inevitably such challenges and opportunities vary between companies and sectors but some frequently cited opportunities and challenges include:
|Access to customers in new countries||New competition for existing customers in domestic markets|
|Learning about customers in new markets||Adjusting products to local tastes and cultural peculiarities|
|Access to new, cheaper sources of finance||Global financial contagion|
|Government incentives to relocate||Costs of meeting a multitude of local/national laws and regulations|
|Access to regional trading agreements/avoidance of trade barriers||Exchange rate fluctuations|
|Economies of scale||Managing long supply chains|
|Access to new resources (e.g. cheap of skilled labour, natural resources)||New competition for local resources (e.g. more demand for labour pushing up local wage costs)|
|Cross-cultural communication e.g. language barriers, differing body language and etiquette|
|Corporate social responsibility issues|
|Capricious political environments/political risk /bias in favour of domestic companies|
Read a 2009 IKEA case study Why IKEA Is Fed Up with Russia (available on Bloomberg’s website).
Explore and discuss IKEA’s rational for entering into Russia (one of the BRIC members) and evaluate the potential challenges and risks that could be faced. How would you overcome them?
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