Environmental Factor International Business -Myassignmenthelp.COm

Question: Discuss About The Environmental Factors International Business? Answer: Introduction: Last two decades witnessed the rapid and sustainable growth of the international business, and it is considered as one of the most dramatic and important trends of the world. There are number of markets across the globe which becomes flexible for maximum goods, services, and especially for financial instruments of all types. Product trade in the world has expanded by more than 6% from the period of 1950, and this growth is considered as 50% faster growth of output because of the most dramatic increase in the globalization occurred in financial markets. This report answers the question Whether Alibabas internationalization approach is working or not? Internationalization is the approach in which every business shows interest. However, this term does not have any definition, but in context of economics approach it is referred as a process in which business take actions and get involved in the international markets (Hill, 2012). Strategy for internationalization mainly covers three areas that are global, multinational and international strategies. These three areas are considered by the organization while making strategies for international expansion (Pondiuni, n.d.; Techtarget, n.d.). Research question of this report includes the discussion related to the internationalization strategy of the Alibaba group and it also evaluates the effectiveness of this strategy. Lastly, report is concluded with brief conclusion which includes summary of key points of the report. Strategic issue presentation: Alibaba group holding limited is a Chinese company, and the mission of this organization is to simplify the conduct of the business at anywhere. This group mainly aims to enable the business to transform in such a way as it becomes easy to market, sell and operate. Alibaba provides the fundamental technology infrastructure and access to marketing for the purpose of helping the merchants, brands and other business organizations to influence the internet power for the purpose of engaging with their users and customers. Business conducted by the organization includes core commerce, cloud computing, digital media and entertainment, innovation initiatives and others. Alibab group also participates in the logistics and local services sectors through their subsidiaries that are Cainiao Network and investee affiliate Koubei. Additionally, organization also has profit sharing interest in Ant Financial Services, the financial services group that operates mainly through alipay, the leading thir d-party online payment platform in China (Gala, n.d.). Alibaba group conduct different businesses and also provide support to the bionetwork from the activities of their main and other related organizations. Our major business and the businesses of related companies include Taobao.com, aliexpress, alibaba.com, alimama, etc (Alibaba group, 2018). Strategic issue and its IB- Relevance: Internationalization includes various things and it is not only considered as growth of the business from its domestic market to the international markets. Decision of the firm to internationalize the business is considered as strategic and importance decision which directly affects the firm and also operations conducted by the firm internally or externally. It also affects the management of the company. Recently, rates on which organizations are operated in international markets have increased. Some reasons because of which internalization is opted by the organizations are stated below (Gillespie Hennessey, 2010): Increased productivity and profitability in the organization. Help in expanding the business in different markets across the globe. Helps n dealing with the insufficiency of domestic demand. Effective strategy for the internationalization is very important and organization must consider all relevant factors before taking the decision to enter in the international market. Strategy related to the international business includes the plan of the organization to operate its business in international market and to position positively from its rivals. The main purpose of this strategy is to provide help to the managers in framing an international vision, distribute resources, participate in major international markets, be competitive, etc. therefore, for conducting all these functions effectively and accurate internationalization strategy is required (Shaikh, n.d.). Key aspects of internationalization: Internationalization is considered as strategy of the organization which is used by maximum executives for the purpose of reducing the operations cost in the organization. Business organization with above costs can have the advantage of extra reduction of costs in those countries that have relatively emptied currencies as well as low cost of living. Those companies which are interested in expand their business internationally must reflect those arcades that have low cost of living because it makes cheaper for the organizations to hire employees. Some organization chooses option of internationalization in their financial crises. Companys executive experiencing financial crises in the domestic market will decide their budget for entering into international market. Some reasons of popularity of internationalization in the present organizations include opening up of trade borders, elimination of trade barriers, etc. Now, companies does not feel safe to stay only in domestic market and because of this maximum company choose for internationalization. It must be noted that, communication and technology makes the internationalization much easier. Some organization chooses high aggressive approach which includes acquisition of firms, business alliances, joint venture or establishment of subsidiary. Key factors of internationalization in international business environment: Some of the key factors of internationalization are stated below: Economic environment: it includes the nature of the economic system and also the institutions in particular country or region, and it also consider the nature of human and natural resources. Political environment: it is closely related to the economic environment but it also includes some wide factors such as local and international conflicts, role of state, etc. Legal environment: it includes he legal framework and other restrictions imposed by law of particular country or region. Social structure: it includes behavior and values of society (Johnson, 2017). Strategies of Alibaba group: Alibaba group ensures the global trade by providing a trusted system for the purpose of market globalization. Company use transnational strategy for internationalization. In this strategy organization possess the characteristics of both the global and multi-domestic firm. The main aim of this strategy is to maximize the response at local level but also to gain benefits from global integration. For this purpose, Alibaba use e-commerce to connect and facilitate the engagement of B2B and B2C transactions (Wang, 2017). From last few years, jack Ma flying to number of countries for the purpose of meeting their business leaders and other heads of the state for expanding his business. There are number of small business organizations across the globe which is trading freely and securely on the platform of Alibaba. Goals of companys chairman are ambitious and ma wants that organization it $1 trillion in gross merchandise value by 2020 and by 2036 Ma wants to serve two billion customers and be effectively becoming the worlds 5th largest economy (Ramos, 2017). Evaluation of strategy: Alibaba group recently defeated eBay in its domestic market in China but after some time this company internationally listed itself on the New York Stock Exchange in September 2014, and becomes the largest initial public offering (IPO) in world history. Strategy used by Alibaba group is the clear example of use of technology in such way as it enhances the trading on internet platform at international level, and it also helps the organization to provide more fast and convenient services to customers. Key aspects of strategy which resulted in success include implementation of different structure and the will of the organization to adapt to current trends (Featherlight, 2015; Alibaba Group, 2016). Recommendations: Alibaba group can also use other strategies for internationalization such as licensing under which international licensing firms can give out their patent rights, copyrights, trademark rights, or even know-how on processes and products to the licensee. I this licensee manufactured the products of the licensor products or conduct marketing on behalf of licensor. In the licensor can charge fees and royal in lieu of payment. This strategy is effective in nature and used by various multinational organizations for entering into the different markets of the world. One more strategy is also there which is similar to licensing and that strategy is franchising (Schroeder, 2011). Internationalization is the strategy which is used by the firms of different sizes in worldwide and this strategy is facilitated by multiple factors and some of these factors include elimination of trade barriers among other trading countries. There are some other advantages also that can be taken from internationalization of business such as organization can access less saturated markets. Alibaba group is also using effective internationalization strategy which provides various benefits to the organization. This report highlights various important aspects of internationalization process in context of Alibaba group and it also sates the importance and effective of international business environment. Some key points of this report are stated in brief: Internationalization is the approach in which every business shows interest. Strategy for internationalization mainly covers three areas that are global, multinational and international strategies. Internationalization strategy in the organization is used by management for the purpose of reducing the operations cost in the organization. it mainly includes the plan of the organization to operate its business in international market Alibaba group ensures the global trade by providing a trusted system for the purpose of market globalization. Company use transnational strategy for internationalization. In this strategy organization possess the characteristics of both the global and multi-domestic firm. For this purpose, Alibaba use e-commerce to connect and facilitate the engagement of B2B and B2C transactions. Recommendation for future development: Alibaba can use other approaches for future development such as organization can expand its business in emerging markets. These markets provide environment to the competitive companies in the world for doing the business in simple manner. These markets are mainly developed in such countries which have lower economic development. These type of markets are also found in those countries which have transitional economy and in which domestic society is promoted. In this government make efforts to create such environment which increase trade options for both internal and external investors. Alibaba can expand its business in these types of economies as it helps the organization to touch new heights (Fabling Sanderson 2013). Conclusion: After considering the above facts, it can be said that e-commerce and other globalization strategy used by the Alibaba group is effective in nature as it helps the organization to get success in its internationalization process. Alibaba also get some other advantages also from internationalization of business such as organization can access less saturated markets. Therefore, it is proved that Alibaba group is using effective internationalization strategy which provides various benefits to the organization. References: Alibaba group, (2018). Company Overview. management on 30th January 2018 from: https://www.alibabagroup.com/en/about/overview. Alibaba group, (2018). Our Businesses. Retrieved on 30th January 2018 from: https://www.alibabagroup.com/en/about/businesses. Alibaba Group, (2016). Alibaba Group Holding Limited. Retrieved on 30th January 2018 from: https://www.alibabagroup.com/en/ir/pdf/agm160524_ar.pdf. Featherlight, (2015). Alibaba. Retrieved on 30th January 2018 from: https://featherlight.net/focus/alibaba. Gala. What is Internationalization?. Retrieved on 30th January 2018 from: https://www.gala-global.org/language-industry/intro-language-industry/what-internationalization. Gillespie K. Hennessey HD. (2010). Global marketing. Cengage Learning. Hill CWL, (2012) International Business: Competing in the Global Marketing Place. (9thedn), McGraw-Hill Higher Education. Johnson, W. (2017). Environmental Factors of International Business. Retrieved on 30th January 2018 from: https://bizfluent.com/about-5626186-environmental-factors-international-business.html. Pondiuni. International Business An Overview. Retrieved on 30th January 2018 from: https://www.pondiuni.edu.in/storage/dde/downloads/ibiii_ibe.pdf. Ramos, A. (2017). Expand Globally, Using Alibabas Ecommerce Ecosystem Strategy. Retrieved on 30th January 2018 from: https://business.ebanx.com/en/blog/expand-globally-using-alibabas-ecommerce-ecosystem-strategy. Schroeder A. (2011). Entry strategy for Carrefour for entry into the UK market. Shaikh, S. Importance of International Business. Retrieved on 30th January 2018 from: https://www.economicsdiscussion.net/business/importance-of-international-business/13945. Techtarget. internationalization (I18N). Retrieved on 30th January 2018 from: https://whatis.techtarget.com/definition/internationalization-I18N. Wang, J. (2017). Can Alibaba Realize Its Global Ambitions?. Retrieved on 30th January 2018 from: https://www.forbes.com/sites/ywang/2017/07/02/can-alibaba-realize-its-global-ambition/#78f4339762dc. Fabling R. Sanderson L. (2013). Exporting and firm performance: Market entry, investment and expansion. Journal of International Economics 89: 422-431.