Globalization of Enterprise

2012 Nigel. S. Paltoo A11904 10/9/2012 globalization of opening 715 GE fountainFlikr. com ASSIGNMENT COVER SHEET(to be completed by the student) AIB student ID anatomy A11904 schoolchild crap NIGEL. S. PALTOO Course name MBA -GENERIC yield name ball-shapedization of Enterprise 715-GE Subject facilitator Dr. Brian OToole Teaching Centre NATIONS UNIVERSITY-GUYANA no. of pages 17 Word count 2708 from front well-nigh appearance to Conclusion (2500 +10% tolerance) DECLARATION I, the in a higher place named student, confirm that by submitting, or causing the attached assignment to be submitted, to AIB, I lose non plagiarised twain other(a) persons piece of die in this assignment and except where suitably acknowledged, this assignment is my own work, has been expressed in my own advancedss, and has not previously been submitted for perspicacity. judging SHEET(to be completed by the examiner) Student name NIGEL. S. PALTOO Course name MBA -GENERIC Sub ject name Globalization of Enterprise 715-GE assessor/marker COMMENTS Principles learnt (for example, number and understanding of principles referred to, their charm on the structure of this paper, number and turn citations ofreferences, use of appropriate jargon) /4 finishing of principles. That is, theanalysis and evaluation of the example caper seatd on the principles, including the last recomm supplantations and their plea /8 How well the example hassle was described, including the extent and depth of information (including the data) upright tenuously it that was accessed /4 Structure and typifyation /2 demeanor, grammar and linguistic process /2 Total little penalties GRAND TOTAL /20 superior general comments FOR MODERATORS USE ONLY I agree with the assessors assessment I disagree with the assessors assessment and the b atomic number 18-assed mark is as follows for the following reasons /20 Moderator NATIONS UNIVERSITYGUYANAAUS TRALIAN shew OF BUSINESS-MBA GLOBALIZATION OF ENTERPRISE-715 GEASSIGNMENT Comparing and contrasting more(prenominal)(prenominal) than than or less(prenominal) countries for multi res publicaal en astronomicalment into by local anaesthetic anesthetic anesthetic app bel comp whatsoever Denmor turn Manu itemurers. identification You atomic number 18 the manager of a job (in your rustic or region) that is thinking of leaving global. Compargon and contrast dickens various overseas grocerys for the planetary expansion of your furrow, lotion a stipulation of 1 semipolitical scrimping issues pagan issues 3 access schema 4 strategic t disclose ensembleiances proceed your assignment with a very drawing description of the entrepreneurial billet that you argon writing close. This condescension stooge be your own billet or iodin that you atomic number 18 familiar with, or it stomach be a hypothetical i base on an amalgam of several(prenominal) descentes of which you are aware. Conclude the assignment with whether the business should go to unriv everyed or the other of the two countries, or n one and only(a), or some(prenominal). The bring number of words should be 2500 words.For penalties regarding stupendous the word limit, enjoy refer to AIB Style Guide. For guidance on how to write an assignment, please refer to AIB Assignment Guide. Please note, the word count does not include your put out page, an abstract, table of contents, enumerate of references or appendices. thus you poop place whatever financial backing material that exceeds this word limit into appendices. til now, a reader should not keep up got to notion at an appendix to know about the main thrust of the points you are do in your assignment.So make sure all your main points are in the body of your report and refer there to the appendices that go forth support the points you are making in the body of your report, because the reader may not aroma at the appendices otherwise. Abstract In the last quarter of the 20th hundred to ease up day the mankind economy has beseem to a greater extent(prenominal) integrated and dependent than ever before, with businesses some(prenominal) large and dishonor-ranking increaseing beyond their traditional local marketplaceplaces as barriers to earth cover came down and technology advanced resulting in signifi grasstly move communication and transportation exist.This phenomenal trade in the international environment in which business is call fored has resulted in enlarged takes of impertinent direct investment by companies from certain countries in lesser articulateed economies much(prenominal) as the Third humans as sparing benefits were sought through the globalization of business as well as markets. (Hill 2011, p. 5)With the benefits organism widely seen to outweigh the disadvantages eleganter companies are feel for the arrangements internationally that would outstrip serve their interests of growth and expansion with companies from lesser developed countries now too flavour to capitalize as well by creating synergies at the basic aim by expanding their market horizons overseas, penetrating first and expanding as demand and relationships develop. This shift in the world economy towards greater integration and interdependency is one counseling of describing Globalization (Hill 2011, p. ). Globalization can be seen as the annex of functional integration between internationally dispersed economic activities, which is quite recent, as opposed to the older phenomenon of Internationalization which refers to the geographic spread of economic activities across borders and oceans which number oneed in the 17th century when the colonial proponents started dividing up continents in the New earthly concern in search of raw materials and markets (Devaraja 2011).In Guyana, the more realized companies call for been seeking avenue s to expand their markets overseas through merchandiseings and by establishing dismay direct strategical bails. Hardly any local company has sought to globalize its ingatheringion to augment its positivity. For any company visiting for to embark on international sham the interdependent political, economic and legal agreements of the purpose rustic along with its underlying heathenish fabric must be examined and study in detail before any investment is do (Hill 2011, p. 45).In Guyana, a diminutive English address, third world country in southwest America, the more completed manu occurrenceuring companies maintain been seeking avenues to expand their markets first through exports and also by establishing lower level strategic alliances overseas. Denmor Garment Manufacturers (DGM) is one much(prenominal) SME within the apparel intentness in Guyana that has benefited from the effects of Globalization by having contracts to manufacture specific formulates from companies owning major shuffling names in the USA (which are looking to lower their production costs) as well as by exportation directly to major retailers overseas.Table of Contents Page. 1. 0 Introduction 9 2. 0 Denmor Garment Manufacturers 9 3. 0 Current musculus quadriceps femoris with DGM 10 3. 0 The scrap of international expansion 11 4. 0 policy-making and Economy Issues 12 5. 0 ethnic Issues 15 6. 0 Entry Strategies 16 7. 0 Conclusion 17 Bibliography 18 1. 0 Introduction The aim of this investigate is to analyze the potential of two countries trivial listed as possible candidates for the further international expansion of DGM.These two options are reviewed in the perspective of the main issues that redeem to be taken into account when bowl overing business expansion into international markets viz Political economy issues, pagan issues, Entry strategy and Strategic alliances with the dissimilariate of af exquisites in both countries be compared and contrasted with a decision being arrived at as to whether to expand into one, both or none of the two countries. It would be unsufferable to look at all aspects of the Socio-Economic, Cultural and Political landscape of the countries being considered thusly only the reas most homogeneously to accept an impact on DGMs venture are considered in the context of the nature of its business and the products on offer. Denmor Garment Manufacturers (DGM) Location 7, 8, 9 Coldigen Industrial Estate, East Coast Demerara, Guyana. DGM is a private company in Guyana which commenced trading procedures in 1997 and presently employs 1000 persons of which 97 % are women. Denmor has the capacity to respond to orders of up to 50,000 dozens of dos per month, and can produce up to 15 different styles at the similar time.Approximately 75 percent of Denmors activities deal amply production (where the maker manages all aspects except design), demonstrating an ability to carry out measure out-added manufact uring activities and translateing-chain management. 100 percent of its products are exported, with its customers including near of the worlds leading brands and plane section stores, including Russell Athletic, Victorias Secret, Paris Accessories, wagon train Heusen, JC Penny and Wal-Mart. (Goinvest n. d) 2. 0 Current home with DGMAs it is DGM is presently a small part of a buyer operate value chain environment where the large retailers, marketers and brand name manufacturers have accomplished a diverse decentralized net of production in third world and developing countries and are leveraging at the design and retail stages (Devaraja 2011). Having had a average level of success from its operations and acquired wide know-how from its alliances DGM is looking to expand its market base and production capacity but is cumber locally by the limited supply of force for any new mill and weak local demand for shore wear and sport uniforms.The distinguish processes of DGMs op eration are very fight intensive involving the cutting of fabric and making of components by sewing machine and assembling into final product, this postulates a semi-skilled to skilled level of labour. The take exception facing DGM is to remain a matched player and to be able to increase profitability either by acquire a bigger bite of the value chain from the companies overseas (expanding more into full production),developing its own brands or by securing new large brand name manufacturer customers and orders.It is therefrom logical implicationant that DGM look to increase its manufacturing plant capacity while at the same time keeping costs down thereby increasing attracter to buyers. Faced with a limited labour supply and a high cost of energy and sometimes erratic power supply for sewing machines and air-conditioned factories it has become critical that DGM seriously consider the resource of moving overseas. After much consideration DGMs management has concluded that th e area with greatest growth potential would be to expand using its own designs and brands.DGM has acquired significant expertness in the production of high end female underwear and in acrobatic uniforms from producing Victorias Secret products and Russell Athletic brand uniforms for the US NBA and is confident that it can tap into the supply chain for fabrics and using its own design police squad produce a new line of female underwear, beachwear and generic association football uniforms that would have a higher gauge and a outlying(prenominal) cheaper price, nonetheless in Guyana it is constrained by weak local demand and labour supply. . 0 The challenge of international expansion Like any other firm contemplating international trade is faced with three strategic decisions about which countries to enter, when to enter and at what scurf the inlet would be. Consideration would have to be addicted to potential opportunities as well as areas of jeopardize which must be almost analysed (Hill 2011).The countries selected for consideration would first be compared and contrasted with their diaphanous political, economic and ethnic realities being looked at then options relating to possible entry strategy (ies) leave considered along with strategic alliances that may be advantageous or necessary The two countries being considered for expansion into are brazil nut and Trinidad. Before these two countries would have been brought up for further consideration they would have been on a longer list of potential candidates he rest of which would have been eliminated with brazil-nut tree and Trinidad encounter the basic criteria of having a significantly larger population than Guyana, they are both developing countries (better off economically than Guyana), with a free market system in place, manageable national debt and oneness digit inflation rates and both countries are geographically close by. A decision has been make that once the two options are found t o be pleasing then entry into that market will be made within half a dozensome months. Map of South America and Confederate Caribbean Islands showing brazil nut, Guyana and Trinidad & Tobago. Source www. worldatlas. comPolitical economy issues brazil-nut tree and Trinidad are both democracies, having had free and fair elections for the past two decades. Both countries currently have female presidents. brazil-nut tree is a Federal nation consisting of twenty- hexad states the smallest of which is furthest larger than Trinidad which is a twin island republic with a sister island Tobago. Both countries can be considered politically still with the most recent incidence of serious paroxysm being twenty two years ago when Trinidad had a failed coup with members of the Jamaat al Muslimeem trying to seize power. Individualism is prise in both countries but more so in Trinidad.Indicator brazil Trinidad size 3,287,357 square miles 1,980 square miles Population 197 zillion (201 1 est. ) 1. 3 million (2011 est. ) Government Federative country Democratic Republic Legal brass brazil is a former colony of Portugal. The brazil-nut treeian legal system is found on Civil Law. Former British colony. The legal and judicial system is based on English common natural law and practice. ECONOMIC brazil Trinidad gross domestic product GDP USD $2. 45 trillion brazil is the ordinal largest economy in the world. USD $ 24. 63 million GDP per Capita USD $4,803 USD $16,699GNI per Capita USD $11,500 USD $24,940 Exchange rate BRL 1. 00= GYD $100. 00 TT $1. 00 = GYD $30. 00 Inflation 5. 24 % 5. 4% militia US$ 349. 708 trillion US$ 9. 692 billion Debt as a % of GDP 65. 1% 37. 3% Unemployment 6% 5. 5% Source Communicaid and Central Intelligence Agency World Fact loudness and www. tradingeconomics. com The data presented augurs that both Brazil and Trinidad are about as politically stable as Guyana with both countries being economically better off. However in Bra zil there is a greater divide between exuberant and poor and a higher level of crime relative to Guyana and Trinidad.Both Brazil and Trinidad are currently experiencing low levels of inflation and unemployment Brazil foreign Trinidad has a tax on financial work outions Brazil is far more bureaucratic when it comes to starting a business taking up to six months to get all the paperwork done whereas in Trinidad it is considerably easier and should only take one to two months. In Brazil get certain legal permissions for establishing a business expedited may engage the payment of bribes. there are no limits to repatriation of registered capital and no taxes on profits repatriated from both countries.DGM would have to consider the higher level of bureaucracy in Brazil when it comes to acquire things started (which creates opportunities for bribes to be extorted) as compared to Trinidad. A business var. visa is required for investing and doing business in Brazil with a stripped level of investment being USD $50,000 being required. A Guyanese can transact and conduct business in Trinidad without a visa as yet a work permit would be required. In Brazil it may be necessary to strike a middleman (despachante) to navigate the snarl of bureaucracy. (CIA World fact book 2012, Communicaid 2012).On the key issue of protection of position rights both Brazil and Trinidad have legal furnish for the protection of real assets and intellectual property rights, both countries having signed international agreements, that, the workbench in Brazil is inefficient and number to political as well as economic operate with piracy of copyright material being fairly widespread. Brazil presents a higher degree of riskiness due to lower levels of property rights protection. Trinidad un equal Brazil is a member of CARICOM just like Guyana which imparts free trade among members. there is a free trade geographical zone in Manaus in Brazil.Taxation in Brazil is extremely com plex and not as uniform as in Trinidad. apostrophize of labour in both Trinidad and Brazil is higher than in Guyana but is more available. Cost of energy is cheaper in both countries relative to Guyana. (CIA World fact book 2012, Communicaid 2012). Politically and economically there are fewer challenges for DGM to expand to Trinidad as compared to Brazil, however with inflation levels and unemployment levels being almost equalize and exchange rates being stable there is still a degree of attractiveness to expand to Brazil if ways a cycles/second the red tape can be achieved.CULTURAL ISSUES Cultural differences can present a variety of problems when looking to conduct business in foreign markets from language barriers, employee behaviour and work ethic to strategic planning, it is therefore essential that entrepreneurs familiarise themselves with more than just the laws governing a hunting lodge and obtain an understanding of the underlying values,norms and mores so as to be able to greet what is different and what is the same, what is acceptable and what maybe considered prohibited or disrespectful. (Hill 2011)Trinidad is an English speaking Caribbean country with a diverse multi ethnic gild that has fused relatively well into a distinct Trini culture with a mixture of East Indian, African, European and American influences, theology is mainly Christian, Hinduism and Islam. Carnival is celebrated p.a. with Soca and Calypso music, elaborate costumes and floats, parades and beach parties over a one week period. Trinidad like Brazil is very nationalistic and elevated of their country and its national symbols and flag colours. Trinidad is also a soccer crazy nation but not to the extreme as Brazil.There is a strong American influence in the way business is conducted in Trinidad which is very much alike with the way fall uponings and other business dealings are conducted in Guyana however it is somewhat different in Brazil. Brazil is Portuguese speaking with a far larger population who are predominantly Roman Catholic, however just like Trinidad there is an yearbook Carnival and a strong soccer and beach culture since Brazil has some of the most attractive beaches on South Americas Eastern Atlantic coastline and year round sunny weather.There are more heathen issues to be considered by DGM in looking to expand to Brazil than Trinidad (CIA World fact book 2012, US Commercial Service-US division of traffic 2012). Brazilians do not like to discuss business during lunch whereas that would be ok in Trinidad, coffee tipsiness is a ritual in Brazil whereas having a semi formal meeting over beers or whiskey is sane in Trinidad. There are a few hand signals acceptable in Guyana and Trinidad like the OK that would be considered haughty in Brazil (Communicaid assort Ltd 2012).It would therefore be a bit more challenging from a cultural perspective for DGM to do business in Brazil as compared to Trinidad. Both countries have a well dev eloped tourism manufacturing with visitors from the US and Europe looking for differentiate products with unique designs, fabrics and colour. Although both countries presently have female presidents, males dominate business as such initial business meetings should be male led, but with DGM trading in the female apparel industry including a female during negotiations would be wise.Entry Strategy Having made a decision to expand to some other country the management would need to consider all the risks and decide on the timing, way of life and scale of entry to be pick out (Hill, 2011). In entering a foreign market there are six modes of entry that a firm can consider each with advantages and disadvantages ranging from Exporting, Turnkey contracts,Licensing,Joint Ventures to solely Owned Subsidiary. (Hill 2011,p. 32) Brazil presents a more challenging environment both politically, economically and culturally but DGM should not predominate out expansion into the Brazilian market place since the sheer size of its population and law of proximity to Guyana offers immense potential, however, at this time DGM should look at exporting finished products by finding a wholesale electrical distributor with a wide network of resellers to export beachwear to and also seek to market team uniforms directly to soccer teams especially in the lower divisions and have a local representative do meetings and collect sizes and measurements etc. ith delivery being done through this intermediary but with payments being remitted by bank transfers directly to DGM. By firing the export route to Brazil import tariffs would be an additional cost as opposed to having a factory in the Manaus free trade zone, as such DGM should gauge the acceptance of its offerings and then look to develop strategic alliances at the manufacturing level later on if market conditions indicate the potential for higher profitability. DGM should be circumspect in its business arrangements and look to vo uch transactions using letters of realization until levels of trust are established.In Trinidad DGM should look to develop a joint venture with a suitable partner who has excess memory space suitable for establishing a garment factory thereby reducing the level of capital investment required, register its brands in Trinidad, establish a small scale factory and produce both beachwear and soccer and other sport uniforms in Trinidad and market both to the local Trinidad market and export to the distributors in Brazil and further afield. Strategic alliances would also be needed to market products across Trinidad as such a partner with appropriate channels already in place would be utilizable at the entry phase.A strategic alliance with a business in an uncorrelated industry that has excess building space would be preferred to one that is in the same industry with spare labour and machine capacity due to the risk of having that partner appropriating designs and customers. Timing of th ese two ventures is important, however with the slow pace at which negotiations and business dealings flow in Brazil it may be prudent to start interim talks with potential distributors at the same time as getting the joint venture arrangement and factory setup in Trinidad.Products would be differentiate in both markets according to designs and colors, more revealing beachwear is acceptable in Brazil and labeling would have to be in Portuguese as such a multi-domestic climax would be necessary with products being made specifically for each of the two markets with a slight overlap. This strategy should not be too costly given that the slight differences between products do not require different skills and machines and the designs for the Brazilian market would require less material but have the same selling price.Conclusion The beach and gymnastic wear segment of the apparel market is already established in both countries, as such there is no first mover advantage to be gained, ho wever DGM is confident that it can undertake a niche by proviso an overall better quality product (stitchwork,design,fabric) at a far lower price. Brazil which has the largest potential market has relatively more political economy and cultural barriers which increase the levels of risk and possibility for unsuccessful person so DGM should be cautious when expanding into this market.Trinidad on the other hand has much more political economy and cultural similarities with Guyana and this would allow for easier entry, allowing DGM to be more aggressive, which could end up solving the production capacity problems for DGM to meet the anticipated new demand when the export channels into Brazil open up which would in turn satisfy the present need for a wider market base. If both of these expansions come to fruition DGM can behave growth in demand and profitability over the long term with economic benefits accruing to each of the three countries. BibliographyCIA World fact book, Trinida d 2012, viewed 1 October 2012, https//www. cia. gov/library/publications/the-world-factbook/geos/td. hypertext mark-up language CIA World fact book, Brazil 2012, viewed 1 October 2012, Communicaid Group Ltd. 2012, Doing Business in Brazil- Brazilian affable and Business Culture UK, London, viewed 30 kinfolk 2012 http//www. communicaid. com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20Brazil. pdf. Devaraja, Dr. T. S 2011, Indian Textile and Garment Industry-An Overview, University of Mysore, viewed 30 September 2012 http//sibresearch. rg/uploads/2/7/9/9/2799227/working_paper_-_dr_devaraja. pdf Goinvest 2012, Denmor Garment Manufacturers Competing in the Global Garment Industry, viewed 29 September 2012 http//www. goinvest. gov. gy/manufacturing. html Hill, CWL 2010, Global Business Today, 7th edn, McGraw Hill, capital of Massachusetts US Commercial Service-US Department of Commerce 2012, Doing Business In Trinidad and Tobago A inelegant Commercial G uide for U. S. Companies, viewed 1 October 2012, http//trinidad. usembassy. gov/uploads/images/bLR3mH7MwdrEvCke0jB6Tw/CCG2006. pdf complete of Assignment.