International Business

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International businesses refer to firms that operate in different markets across the globe. The international companies venture into these worldwide markets through franchises, management contracts, as well as e-business.

Franchising    

It refers to an international company offering its trademark to a local company which then operates under the name of the international company. During franchising, the franchisee pays a given amount of fee to the franchisor. In turn, the franchisor which is a global firm, support the franchisor which is a local company and offers it’s the rights to operate under its royalties.

Advantages of franchising

•    It helps in establishing a customer base using the established brands of the mother company

•    It helps in market support because often the local companies enjoy the support of the national campaign and they have pre-arranged resources for a local campaign.

Disadvantages of franchising

•    The royalty payment may consume a huge percentage of revenues which could help to build the business

•    Receiving the best market support requires the franchisee to pay a marketing or advertising fee.

Management contract

It refers to an arrangement that involves controlling the operations of a business using another firm which is part of the business under a contract agreement. The contracted firm performs the important management duties for money.

Advantages

•    It can be established within a short period

•    It is simple and does not involve many procedures

Disadvantages

•    It reduces efficiency in a business and prevents private investors from establishing firms

•    It is only applicable to already operating infrastructure

E-business

It refers to the business by use of the internet. The key stakeholders use the internet to operate, for instance, supplier, customers, and marketers.

Pros

•    It offers global presence for a business

•    It uses cost-effective promotion and marketing strategies

Cons

•    Sectorial limitations for instance perishable good like food is hard to sell

•    The security of data is at risk due to cyber attacks

REFERECES

Hill, C. (2008). International business: Competing in the global market place. Strategic Direction, 24(9).

October 30, 2023
Category:

Business Economics

Number of pages

2

Number of words

328

Downloads:

31

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