Global Business Plan Need it in 12 hours

Global Risk Assessment

Globalization has brought about large profit margins to many countries. Businesses that are engaging in global ventures are increasingly earning more profits daily. However, the same ventures are disastrous to some economies, especially for the developing countries. This is because most of the developing countries lack enough technologies to support the globalization changes. Moreover, every country has different techniques in their business operations. The difference in structures of organizations between the various businesses ventures are hindrances to successful productivity. The selected enterprise in this paper is online that is set to sell design products such as shoes and clothes. The venture will be analyzed on political, legal, cultural, financial and ethical risk as it pertains to the United States market.

The United States economic and political conditions are stable enough to support the new venture. In regards to the security of the country, U.S. have effective security measures to protect all citizens as well as their businesses. Terror attacks are prepared for properly, and thus, the business is not at from threat from terrorist attack. However, the company is likely to be faced with some of the county’s risks that maybe as a result of change.

Changes in the economic, political and social conditions are at times risky to new venture (Leeman, 2010). Variations in the political sector may affect the stability of governance in the country. Political instabilities in the country are not favorable to businesses mostly the new ones. Secondly economic changes or uncertainties are also a threat to a new business. This is because in the case of a financial crisis such as recession the new business is likely to experience more losses than profits from the sale of its products.

Social, cultural conditions are also other significant factors. The US have a favorable culture but nevertheless, at times, cultural differences may hinder the success of a new business in the economy. Environmental conditions such as floods among other environmental risks may also be a threat to the success of a new venture as it affects the entire country’s economy. Lastly health conditions such as a disease outbreak in the country may also reduce the success of a new business. This is because the business is likely to have fewer finances to overcome the risks.

On the other hand, the venture will face exchange and currency risks while operating in the global market. Currency risk arises from changes in the value of one currency against another. In light of the new venture, change in the price of a dollar will either affect the venture positively or adversely. The exchange and currency risk will be reflected in changes in cost or returns the venture incurs or earns over a given period. For instance, if the venture realizes 15% return in the Canadian market but the Canadian dollar depreciates by 15% against the U.S. dollar, there will be no gain at all. The risk will be overcome by hedging against exchange rate risks through purchasing derivative instruments such as options, put and call and forward contracts.

Another risk that the venture will encounter is a competitive risk. The e-commerce in the United States has been in existence for more than two decades, and we have large players in the industry which are also key players in the global arena. The new venture will have to compete with companies such as Amazon.com and eBay. The degree of this risk is significant, and it can dwarf all the operations of the new venture. However, the venture can engage in the good mass advertisement to create awareness among the target consumers. Another way to overcome this risk is to specialize in a particular market that adequately meets the needs of the customers. Also, the venture can contain this risk by operating in markets that have less competition for its key product line.

Furthermore, there are social, ethical and cultural risks that the venture will face. Working in the global market to benefit from globalization exposes the venture to diverse cultures and moral values and standards. The American culture will vary with that of other continents and sharply differ with Asian culture hence a significant threat fir the new venture seeking to sell products online. To overcome this risk, all cultural activities and preferences of customers should be known by the venture so as to ensure the products sold to them is what they demand. Further, the venture will invest time and resources to learning ethics and social norms of different nations before launching its operations.

Taxing e-commerce is a universal challenge for revenue authorities and firms alike. In light of this, the new venture faces the risk of taxation as well as double taxation. As a company incorporated in the United States, the venture will be governed by the U.S. tax law that requires all domestic corporations to be taxed on their worldwide income. Precisely, the new venture will most likely be taxed as Residents Company of other nations where it operates. This dual problem will give rise to double taxation issue through taxability of more than one nation as well as loss of particular treaty benefits. The venture cannot resolve the taxation risk but when all nations adopt the Ottawa Framework that requires e-commerce to be taxed in the place of consumption the problem of double taxation and even non-taxation will be overcome.

Strategic Planning processes summary

The mission of the new venture in online retailing is to be the world’s most customer-centric firm: to build a place where consumers can visit to find and discover any design clothing they might want to purchase online. The objective of the venture will be to become the best place to buy, explore and find any design outfits available online. The venture will continue to improve its brand, client base, and electronic expertise with an aim of creating consumers’ preferred online shopping destination both in the U.S. and across the world.

On the other hand, marketing will play a significant role in selling design products. The company marketing efforts will focus on creating satisfying relationships with clients which benefit both the firm and the customers. The first role of marketing will be to develop demand for the design products to earn the venture substantial revenues. The other function of marketing will be to develop product distribution systems which provide access to products to a large number of clients and numerous geographic regions around the world. Furthermore, marketing will help in building products which satisfy fashion needs of customers as well as enhancing the quality of digital life of diverse communities across the world. Lastly, marketing will provide techniques which have the ability to relay messages that change societal behavior in a positive way.

SWOT analysis of U.S. economy

While entering the global market, the appropriate mode of entry for the venture will be a joint venture. The strategy of entry will be favored by import barriers, some political risks, government restriction on foreign ownership, enormous cultural differences and the local firm can offer skills, resources, brand name, and distribution network. Among the benefits of this mode of entry include less investment requirement, potential for learning and synergy. However, the venture will have to dilute its control, deal with the risk of knowledge spillover and management difficulties while leveraging on this mode to enter the global market.

The contingency plan

A contingency plan exists to define the recovery process developed to restore the firm’s crucial business functions. The objective of this emergency plan is to: facilitate timely recovery of critical business functions, minimize data loss, and mitigate the loss of customers and to protect the well-being of the employees and clients. The business functions in the venture will be recovered on priority sequence while communications relating to recovery will be achieved through coordination of the business contingency team. For non-critical company functions, they will be cleared without backup as appropriate to support the recovery efforts. The contingency team is made up of plan coordinator, senior management, line management, human resources, safety director, legal, public relations and insurance. Further, the firm will always maintain at least two vendors who can offer each of the critical products required to support the business operations. The communications will facilitate achieved by maintaining the firm personnel call list and identifying offsite call center operations. Lastly, the only staff of the business contingency planning team will authorize, supervise and perform a facility shutdown.

Conclusion

Analysis of the product, country risks as well as the region of the new venture is significant in making the establishment a success (Kosmidou, Doumpos, and Zopounidis, 2008). This is because any new business is likely to face difficulties in adapting a new environment. Therefore, having knowledge of the market demand as well as possible risks helps the business to be prepared at all times. The venture’s most viable global entry strategy is a joint venture.

References

Kosmidou, K., Doumpos, M., & Zopounidis, C. (2008). Country Risk Evaluation: Methods and Applications. Berlin: Springer US.

Leeman, J. (2010). Export planning: A 10 step approach. Düsseldorf: Institute for Business Process Management.

Sinha, G. (2012). Financial statement analysis. Place of publication not identified: Prentice-Hall Of India.

Thissen, M., & Edward Elgar Publishing. (2013). Regional competitiveness and smart specialization in Europe: Place-based development in international economic networks. Cheltenham: Edward Elgar Pub. Ltd.