RISK AND UNCERTAINTY FOR A FIRM ENTERING A FOREIGN MARKET. EXECUTIV

RISK AND UNCERTAINTY FOR A FIRM ENTERING A FOREIGN MARKET. EXECUTIV This report looks at Risk and Uncertainty as variables affecting a firm(s) in or entering foreign markets. From the onset it sets out to give an overview of the topic through a summary of risk that comes with the quest for expansion and further highlighting the motives for expansion which could be Market-lead, Capability-lead or Economics-lead. Risk refers to the likelihood and consequences of an undesirable occurrence(s). Uncertainty refers to doubt or indecision, and is inherent in company strategy as the future is never certain. Uncertainty Avoidance refers to the extent to which people can tolerate risk and uncertainty in their lives. This report then goes on to tackle the different Topic-related subjects as outlined by the contents page. It is my sincere hope that as you study this report it will prove to be a comprehensive framework for the subject matter at hand, of Risk and Uncertainty in relation to entering foreign markets. It also draws a distinction between the two variables that should be notable by the end of your study of this report. Yours Sincerely Jotham Mwale BA (HONS), BS STUDENT. METHODOLOGY The information used to compile this report is research-based and derived from a combination of learned knowledge, references from various updated management texts and windows internet explorer. INTRODUCTION Companies, in this day and Age, are on a quest to expand market share and profitability to achieve and maintain a position of competitive advantage. Globalization, as such, has been a strategy that many companies have adopted towards this end. Globalization refers to the linkages between markets that exist across national borders. This implies that what happens in one country has an impact on occurrences in other countries (Henry, p.260). However, the concepts of risk and uncertainty cannot be ignored even as we refer to globalization and companies urge to venture into it. There are many unknowns in the world of business, more so for international business. Organizations in international business or those seeking to venture into such or any other business are prone to face risk and uncertainty. Thus when a firm is entering a foreign market or internationally expanding for the first time there are many potential risks. This report tackles the question of the unknowns that firms are faced with when entering foreign markets, distinguishing between the concepts of risk and uncertainty. MOTIVES FOR EXPANSION INTO FOREIGN MARKETS A firm has various motives for expansion into foreign markets that would make it prone to risk. These motives may be Market-lead, Capability-lead or Economics-lead; Some Market-Lead motives are as follows; Globalization of markets and competition- this exerts pressure on the firm to adopt internationalizing strategies, and not just larger businesses. Internationalization of the Value Network. Exploiting differences between countries. Some Capability-Lead motives are as follows; Leveraging Capabilities- by doing this across its businesses in a number of countries, the firm is able to achieve competitive advantage. Enhancing Capabilities- through international acquisitions and strategic alliances the firm may acquire new capabilities. Enhancing Learning- entry into some markets, foreign inclusive, may enhance organizational learning. Some Economics-Lead motives (reducing costs) are as follows; Economies of Scale- the firm can derive economies by increasing the scale of its operations. Economies of Scope- by spreading costs over a larger output per unit costs may be reduced. RISK Assuming a firm is trying to enter the American market for the first time, it is bound to face a lot of challenges and risk, especially since it is one of the worlds biggest and active markets. Risk refers to the likelihood and consequences of an undesirable occurrence(s). A firm entering a foreign market like the American market for the first time will face risk. There are many potential risks that are posed on a firm on the verge/with the motive of venturing into a foreign market for the first time. Types of Risk POLITICAL RISK- there is potential threat to a companys operations in America due to the ineffectiveness and inefficiencies of the different political systems. For example, a change in governments from the republicans to the democrats would lead to a significant change in policies. Other laws and regulations that can affect a business in a foreign market are as follows; Revenue and tax laws as concerns remissions and what percentage of revenue is required to be ploughed back into the local economy of the foreign state. Laws on pollution limits. Tariffs, trade embargos and sanctions will also affect whether a business operate in a foreign market or not. Labor laws as concerns wages and pension. Health and safety laws. Laws as regards use of local material in production ECONOMIC RISK This is the potential threat to the firms operations in a country due to the economic policies and conditions in that country. In America, for example, interest rates may prove to be too high for a business that is coming from sub-Saharan Africa. Government economic policies such as; Monetary and Fiscal Policies will affect a business and can either be beneficial or a threat to them. CURRENCY RISK This is the potential threat to a firms operations in a country due to fluctuations in the local currencys exchange rates. The United States dollar is a strong currency and fluctuations in it have, and may prove either disastrous or beneficial to businesses the world over. MANAGEMENT RISK This is the potential threat to a companys operations in a country due to the problems that managers have making decisions in the context of foreign markets. Different countries have different cultures. Hosted identified four national cultures that would have an impact on management styles in different countries; Power distance- defining the extent to which a culture accepts different distribution of power within society. For cultures/nations with high power distance like France, Spain and Brazil; management style is autocratic with a lot of centralization, close supervision and top-down command chains. This must to be taken into account as venturing into such cultures without such knowledge would indeed prove risky or hazardous. Cultures like that of the United States and United Kingdom have less power distance and as such employees are more involved. Uncertainty avoidance- referring to the extent to which order, security and control are preferred to ambiguity, uncertainty and change. For nations with a high uncertainty avoidance culture, employees value task culture, written rules and regulations, and standardization. Deviance and/or ignorance of these values pose a threat to a firm wanting to operate in that nation. On the other hand, nations with a low uncertainty avoidance culture like the United States, the United Kingdom and Australia, value flexibility and creativity and greater variability. Deviance and/or ignorance of these values would place a firm operating within such a nation at a risky position. Individualism/Collectivism- referring to the preference to hire and work in an individualistic way (focusing on the I identity as opposed to the We identity) as is the case in the United States and the United Kingdom. Collectivism refers to countries that value organizational family, corporate social responsibility (CSR) and relationship over task; Japan. Deviance and/or ignorance of such values poses risk for a firm operating in such a nation. Masculinity/Femininity- Masculinity refers to the extent to which a society values attributes such as; Assertiveness Status Personal achievement These are masculine traits prominent in countries like the United Kingdom, the United States and Australia. Feminine traits are those that emphasize on sympathy and service quality of life as is the case in Scandinavia and the Netherlands. Such values and traits need to be considered when venturing into a foreign market to avoid putting a firm at unnecessary risk. MARKET RISK- potential threat that a company faces by it being a part of a certain market. This risk can further be divided into; Industry risk Positioning risk Misys risk description according to their Annual Report on principal risks and uncertainties (2010) under the heading Business environment and market risks is as follows; As an international company, we operate across the globe and difficult or unexpected economic conditions in the markets we serve may affect the financial position of our customers and their willingness to commit expenditure. Other developments in the markets we serve may also impact the Group. The financial services sector is currently subject to regulatory review which could increase taxes on, or curtail certain of the activities of our customers leading them to reduce expenditure. Our Healthcare business is benefiting from the Healthcare Stimulus program in the United States, however, we must ensure that we comply with the requirements for meaningful use as defined by the United States Department of Health and Human Services across our healthcare product portfolio. In addition, we operate in highly competitive markets that are characterized by changing technology, industry standards and customer needs and by commercial pressures from customers. Four further classifications of risk as classified by Misy in their Annual Report (2010) are: Strategic Risk- which further embodies; Business environment and market risks Business strategy risks Operational Risk- which further embodies; People risks Product development risks Contract implementation and service level risks Business continuity risks IT risks Intellectual property risks Financial Risk- which embodies; Foreign exchange and interest rate risks Compliance Risk- which embodies; Legal and regulatory risks Strategy and Risk There are a number of strategies that can be employed in relation to risk, that is, the various types of risks. In response to positional risk this report considers the following strategies; The Strategy Clock The Strategy Clock (et al, p. 225) is a vital tool in determining the positioning of a firm. A firm entering a foreign market for the first time can assess which of the eight strategies/positions on the strategy clock to pursue, with full understanding of the risk that the various positions pose. Generic Strategy Needs/Risks No Frills Likely to be segment specific. Low Price Risk of price war low margins; need to be cost leader. Hybrid Low cost base reinvestment in low price differentiation. a) Differentiation; without price premium Perceived added value by user, yielding market share benefits. b) Differentiation; with price premium Perceived added value sufficient to bear price premium. Focused Differentiation Perceived added value to a particular segment, warranting price premium Increased price/standard value Higher margins if competitors do not follow; risk of losing market share. Increased price/low value Only feasible in monopoly situation. Low value/standard price Loss of market share. Porters Competitive Forces Porters 5 forces (1980) is another tool for positioning in relation to risk. The ideal situation (especially for a firm entering a foreign market for the first time) is one of low risk where; Bargaining power of buyers is low Bargaining power of suppliers is low Threat from potential entrants is low Threat from substitutes is low Competitive rivalry is low Why Companies Expand/Venture into Foreign Markets To spread business risk across a wider market base. It will not depend entirely depend on operations in domestic markets. To achieve/maintain core competences. To lower costs and enhance firms competitiveness. To gain access to new customers- expanding into foreign markets offers potential for increased revenue, profit and long-term relationships and growth, and becomes an especially attractive option when a companys home market is mature RISK MANAGEMENT It is important that risk is identified in advance, recorded and managed. A firm entering the United States market for the first time can do this using one of the following four strategies; Avoidance- where the factors that give rise to the risk are removed or the profit is undertaken. Reduction/Mitigation- these measures tend to reduce the likelihood and the consequence of the risk/risky event. Transference- where the risk is passed on to or stored in another party. Absorption- where potential risk is accepted in the hope that the consequences can be coped with if necessary. UNCERTAINTY Uncertainty refers to indecision or doubt over options. Uncertainty is inherent in a companys strategy, because nobody can be sure about the future or the stability of an economy. There is therefore even more uncertainty for firms in international business or those planning to enter foreign markets. Uncertainty Avoidance refers to the extent to which people can tolerate risk and uncertainty in their lives. People in societies with high uncertainty avoidance create institutions that minimize risk and ensure financial security. Companies emphasize stable careers and produce many rules to regulate actions and minimize ambiguity. Uncertainty Avoidance determines whether or not risk will be an issue for a company. Higher profits do come with greater risks and vice versa. Therefore for a firm entering the United States market for the first time will have to undertake risk management in order to identify risks and gauge whether or not they are able to tolerate whatever risks are discovered. FOREIGN DIRECT INVESTMENT (FDI) Another option that companies wanting to enter a foreign market like that of the United States can consider is FDI. FDI is an internalization strategy in which the firm establishes a physical presence abroad by acquiring productive assets such as capital, technology, labor, plant and equipment. FDI is the most advanced expensive, complex and riskiest entry strategy that a firm could use. It is undertaken by and targeted at firms from both advanced economies and emerging markets. Some considerations relevant to choice of foreign market entry strategy are; Degree of control that the firm wants to maintain over decisions, operations, and strategic assets involved in a venture; Degree of risk that the firm is willing to tolerate, and the timeframe in which it expects returns; Organizational and financial resources (for example, capital, managers, technology) that the firm will commit to the venture; Availability and capabilities of partners in the market; Value-adding activities that the firm wants to perform itself in the market, and what activities it will leave to partners; Long-term strategic importance of the market CONCLUSION AND RECOMMENDATION From the above analogy it can be derived that the question at hand has been adequately addressed. This report has affirmed that a firm will face unknowns in the world of business, more so in foreign/international markets. This report has also affirmed that risk is indeed a factor of concern for firms seeking to venture into such markets. It has significantly defined risk and highlighted a considerable range of types of risk. This report went further in even suggesting risk-related strategies and outlining the risk management framework. Uncertainty has also been addressed. It has also addressed the issue of FDI, its associated risks and how it is an option for venturing into foreign markets. The concept of uncertainty does not seem to hold as much water as that of risk. It would seem uncertainty is a by-product of risk as doubt or indecision over a promising/profitable venture would be sparked by the risk that comes with it. In conclusion, Risk cannot be avoided in business whether it is local or international. Risk is always present and can either be high, medium or low, but never absent. What differs is how tolerable different firms are to risk and how they individually manage their risk. I would recommend that firms engage in wide-scope risk management as even the smallest of risks can prove to be huge blows to competitive advantage. The business environment is turbulent, more so now than in the past years. It would be unwise to invest in business and not be able to make any profit whatsoever due to falling prey to unforeseen risks and subsequent consequences.

The Relevance of Sophocles to Today’s World :: Biography Biographies Essays

The Relevance of Sophocles to Today’s World A play is meant to entertain. A play that amuses the audience is considered a comedy, and a play that saddens is classified as a tragedy. Sophocles wrote tragedies about ordinary people and their interaction with fate. All of Sophocles’ major characters posses a heroic flaw. A heroic flaw is a trait that brings both good and bad events upon the character (Magill 3). Sophocles’ use of heroic flaws, the irony between a prophecy and a characters attempt to avoid it, his definition of what makes someone great, and his view of laws are the reasons why his plays are still read almost two thousand years after they were written. Sophocles was born in Colonus, Greece in 496 b.c.e. At the time of his birth, there was a legend about an exiled Theban king, Oedipus. It was said that Oedipus disappeared somewhere around Colonus, and because of this he protected the area (Magill 1). This tale was the source of three of Sophocles’ greatest plays: Oedipus the King, Oedipus at Colonus, and Antigone (Romilly 2). Sophocles’ involvement in theatre started at a young age. He sang in a chorus celebrating an Athenian naval battle. As an adult, Sophocles was credited with playing the lyre, a musical instrument, and he also played the lead role in one of his plays. However as he aged, he stopped appearing on stage because of his weakened voice. This ended the Greek custom of playwrights playing the lead role in their own plays (Magill 1). Sophocles won his first award for his plays at the festival of Dionysius in 648b.c.e. The other contender for this award was Aeschylus, an older and more experienced Greek playwright. A legend about this first victory states that because of high tensions over the competition, ten Athenian generals presented Sophocles the award instead of the customary ten government officials. Sophocles went on to win this award twenty more times, more frequently than any other playwright. When he did not win, he came in second. He never came in last place (Magill 2). A position in the government was a symbol of a person’s status in society. When Sophocles’ plays were at the peak of their popularity, he served as the head of the treasury and as a general for the city of Athens (Magill 2). Sophocles’ power, popularity, and the greed of his eldest son provide an insight into how he viewed himself.

Handlin vs. McNeill Essay

Although events in history occurred over a long span of time and development, history first became an academic subject a little more than 100 years ago (McNeill 12). Since then, a plethora of controversies appeared regarding how historians, scholars, and intellectuals should examine and analyze history. Among the initial methods of studying history was the scientific research method, or scientific source criticism, which fundamentally extracts valid, legitimate facts from a diverse range of historical sources. Throughout time, however, the facts derived from this method of historical study gradually altered, leading to a new method of historical study: using facts and combining them with opinions and goals to constitute personal interpretations. As Oscar Handlin zealously asserts, historians and scholars should provide a strict examination of history based on a chronological study of known and verifiable facts as opposed to using verifiable facts as the basis for their own interpretation, influenced by their own group, experiences, beliefs, and personal motives. Through implementing a strict examination of history, historians can successfully detect and eradicate bias in their writings, allow the government as well as individuals to gain an insight into the past in order to secure and progress the future, and grasp the magnitude of truth. First, because strict examination of history based on a chronology and conclusive evidence can aid in discerning bias from genuine fact, historians should utilize the scientific method of research. Although Oscar Handlin admits that historians are never â€Å"totally free of bias† (7), he does claim that removing facts from interpretations eliminates bias, opinionated statements, and fiction from history, which is supposedly the chief goal and use of history (Handlin 5). On the contrary, when scholars employ William McNeill’s method of investigating history through interpretation, biased and one-sided analyses emerge, and, therefore, scholars may elasticize actual truth to suit their purpose. Historians who use interpretation to depict history â€Å"are likely to select facts to show that we-whoever ‘we’ may be-conform to our cherished principles† (McNeill 16). Consequently, a fusion between fact and bias results, distorting the truth and leading to ignorance. Take, for instance, the example of Christopher Columbus. When examined through strict examination based on chronology and evidence,  historians determine truths including the fact that Columbus’s voyages increased Europe’s rate of expedition to the Americas and the fact that Columbus contributed to the horrifying genocide of Native Americans. These derived facts provide insight into two perspectives of Columbus, and so, it diminishes the threats of bias. However, when explored through interpretations to suit purpose or please the audience, historians exaggerate Columbus’s prominence by omitting the negative perspective mentioned above and using overarching descriptions, verifying the detriments of bias. Essentially, the scientific method of research assists historians in limiting the bias and opinion used in their writing to produce exact facts that do not serve to please the audience. In conclusion, when historians adhere to a specific study of history founded on chronology and corroborative facts, they can locate truth amidst clouds of speculation, myth, opinion, and bias, and they can use this truth to advance the human race. Rummaging through the treasure chest of historical sources and only selecting the jewels of absolute truth can facilitate the process of abolishing partiality and attaining objectivity and allow humans to use the past as a tool for enhancing the future. Handlin aggressively proclaims, â€Å"Truth is absolute; it is as absolute as the world is real† (5). If historians truly possess profound feelings and support for the success of humanity, it is crucial that they acknowledge Handlin’s statement. If McNeill’s views are adopted and excessively used, however, absolute truth and its advantageous properties may be lost forever, masked by interpretations involving a blend of fact, fiction, and ideology. By working in accordance and using the scientific method of research, humans can conquer subjective interpretations and win the war against â€Å"faction-a combination of fact and fiction† (Handlin 8).

Theme Of Faithfulness In The Odyssey - 958 Words

Themes are a very important concept of any story. Themes show what a story is all about. In the story, The Odyssey, there are quite a few important themes. Each one has a different meaning. The theme of faithfulness stands out the most in The Odyssey. Faithfulness is shown many different times in this story. Faithfulness is shown through Odysseus with his crew and family, Athena, and Penelope himself. All of these characters show faithfulness in different ways. Faithfulness is definitely a key trait to have that pays off in the end of every epic journey. Odysseus is an epic character full of many qualities. He is kindhearted, loving, loyal, and most of all faithful. Odysseus had to leave him family and kingdom behind to battle in the†¦show more content†¦The windbag is then opened by someone on accident and they lose their chance of getting home. Though, Odysseus is saddened by this he still tries his best to keep his crew safe and his family on his mind. Odysseus’s faithfulness will soon pay off. Trip planning, divine inspiration, and social advice are a few of the many gifts Athena aids Telemachus and his father with. Athena is a key figure throughout the entire Odyssey. She seems to see the incredible knowledge both Telemachus and Odysseus have. Athena sees this as an opportunity to aid the two. The goddess, Athena goes to Zeus and persuades them that the time has come for Odysseus to try and reunite with his beloved son. Telemachus on the other hand is gifted with the curiosity of his father. Athena gave him this curiosity to help them reunite. The faithfulness of Athena shines throughout every move both Telemachus and Odysseus makes. They both have the urge to find each other with Athena’s help. While Odysseus and his crew were stuck on Calypso’s island, Athena convinces Zeus to send Hermes there. Hermes tells Calypso that the time has come for her to let Odysseus free. Without Athena’s faithful help, Odysseus would have been stuck with Calypso foreve r. With Athena’s extraordinary help, Odysseus is able to eventually find his way home. Athena’s faithfulness will always be an important part to Odysseus’s epic journey. Penelope, the wife of the epic hero Odysseus. OdysseusShow MoreRelatedThe Aeneid And The Odyssey1547 Words   |  7 Pages â€Æ' The Aeneid and The Odyssey The Aeneid and The Odyssey are two of the most famous poems written in their time. While there are other poems that are also notable, these two poems are well known for showing strong battles between mythical creatures and strong heroes. Homer and Virgil have written incredible poems that have stood the test of time. The depth of their vision was beyond their time and is still used around the world thousands of years later to show honest, loyal, strong heroes. The AeneidRead MoreLoyalty in Odyssey Essay824 Words   |  4 PagesLoyalty in The Odyssey Loyalty is defined in the Websters dictionary as faithfulness or devotion to a person, a cause or a duty. Through this definition, it can be expressed that loyalty is a major theme in Homers epic, The Odyssey. The author presents four mayor illustrations of loyalty, which are given by Penelope, Telemachus, Eumaeus and Philoetius and Odysseus. Penelope is Odysseus faithful wife who not only doesnt re-marry but also keeps hope that Odysseus is still alive and willRead MoreLiterary Criticism Of The Odyssey1604 Words   |  7 PagesAssessment Task 1: Essay on The Odyssey The Odyssey by Homer was written during around 700 B.C and it is the second-oldest extant work of Western literature. The Odyssey is an epic poem and can be understood through the lens of archetypal criticism which explores themes that are based on heroism and the protagonist Odysseus is an epic hero who undergoes a ten-year journey to return to Ithaca. Northrop Frye explains the value of archetypal literary criticism in helping modern readers appreciate theRead MoreGo and Catch a Falling Star1047 Words   |  5 PagesSong: Go and catch a falling star The poem â€Å"Song: Go and catch a falling star† was written by the cherished poet, John Donne. In this satirical poem, through a series of images, he conveys his belief on the faithfulness, or rather the unfaithfulness of women. Donne’s use of diction, allusion, imagery, sound effects, and tone create a unique richness in the language of the poem, which make it enjoyable to read. The denotations and connotations of this poem create more depth and richness. InRead MoreThe Analysis : The Tree Trunk Bed 1224 Words   |  5 PagesTrunk Bed The Odyssey and The Ramayana both contain the theme of love with the relationships between Penelope and Odysseus, and Rama and Sita, but The Odyssey shows us a lasting relationship based off loyalty. Neither culture shows their love, physically, the way we would today. Emotions and love are very important to us in our lives today. I believe they are what keeps us happy and wishful. We see two very similar ways to portray love as well as two very different ways in The Odyssey and The RamayanaRead MoreLoyalty, Sacrifice And Compassion Of The Heart1714 Words   |  7 Pagestheir lives out of loyalty for the interest of their master. In Homer’s The Odyssey, loyalty is a major theme that underlies the entire story. There are several examples of loyalty, such as one of the most apparent ones; Penelope’s loyalty to her husband, Odysseus’s loyalty to his men throughout their quest and even some smaller examples such as Odysseus’s dog and servants. Loyalty defined in The Odyssey is a constant devotion to someone, most of the time it’s someone longing for the returnRead MoreAnalysis Of Homer s Odyssey By Homer1095 Words   |  5 Pagesused in Homer’s Odyssey is the digression. The digression is departure from the main storyline that does not alter the action of the story, but adds a layer of sentimental content to the plot which usually helps underscore themes central to the story. The digressions in the Odyssey are meticulously written with great attention to detail just like the rest of the epic, and they truly help readers grasp the important aspects of the story. The libe ral use of digression in the Odyssey helps build a vividRead MoreAncient Greek And Roman Empires Essay1643 Words   |  7 Pagesare able to gain an in depth, and maybe sometimes biased, view into the lives of the people of the time and what was going on in the period. Despite being two vastly different genres of primary sources, Cicero’s letters and Homer’s epic poem The Odyssey, give some of the best ideas into life for the ancient Greek and Roman empires. Through analysis of these two works, some key similarities and differences of how both empires functioned are brought to light. During Odysseus’s travels and Cicero’sRead MoreEssay on Gender in the Odyssey1002 Words   |  5 Pages(Book X, Line 297) However, these traits and Odysseus ability are constantly challenged by the temptation of women. In the Odyssey, myriad examples of such temptation reflect the importance of gender and the role of women. Odysseus numerous interactions with women make this influence clear. A prime example of the importance of the roles of women in the Odyssey is their roles as seductresses. When Odysseus crew arrives on Circes island, they are attracted to Circes house because of theRead MoreHuman Themes Of Homer s The Odyssey1261 Words   |  6 PagesHuman themes that dominate Homer’s The Odyssey is hubris. During his adventure with the Cyclops, Odysseus cleverly blinded the beast with a stake in his eye. He even went as far as saying that his name was Nobody so when the Cyclops would scream in pain and try to get help, nobody would help him for he would say â€Å"Nobody is hurting me†. However, Odysseus went to far when he escaped by not only yelling out his actual name but saying exactly who he is and where he can be located. I find this quite funny