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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:

Opportunities Challenges
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

Your task

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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This article is from the free online course:

The Global Business Environment: Evolution and Dynamics

Coventry University

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