Discuss about the International and Global Business.
The Commonwealth Bank of Australia is a financial system that is based in Australia and has its main office in Sydney. The business of the company is spread in a variety of markets across the world, which is inclusive of places like the United States, some Asian markets, Fiji, United Kingdom and New Zealand (Commbank.com.au 2018). The year of establishment for the bank was 1911 and it became a public company in the year 1991. The company provides various services, which includes financial, management of funds, retail businesses, insurance services and others. It is listed as the biggest company in the Australian Stock Exchange and includes various products and services under them. The company has made its presence felt outside Australia as well and is looking for better opportunities in the distant lands. With the expansion in an international manner, the company will be able to increase its margin of profit as well (Commbank.com.au 2018).
The analysis of the theories have helped in identifying the changes that are present in the global markets, which shows that there are little development with respect to the segmentation of market and using the proper methods of pricing (Ferreira et al. 2014). The current market has to be assessed accordingly so that the firm can start its operations without facing any difficulty after they have entered the market.
Structural differences of the different markets
The primary objective of the company is to use the various strategies in an influential manner so that they can set up their company in part of the globe. it is inclusive of the markets that are present in Asia, South America and some of the markets in Europe. Apart from the markets that are developed in a proper manner in countries like South Korea and France, the company has also considered to start its operations in the Brazilian market as well, as it is a developing economy. The primary plan of the company is the development of financial plans that are well developed and specific so that the demand of the market can be met efficiently (Geringer et al. 2016). The company should use the proper strategies in the selected markets such as South Korea in the Asian market, Brazil in South America and France in Europe.
France being the cultural capital of Europe is one of the most powerful economies in the current world scenario. The country is in this limelight position due to the strong economy in the European Union zone. The country has a favorable environment with respect to its commercial activities, which will help the company in operating in a better manner. The country also has some differences with respect to society and culture; it will create some problems for the organization but will not be a threat for the organizational development within the market (Papadopoulos and Heslop 2014). The French people take interest in trying out the innovative products so that it can help them in exploring the opportunities that they may get. Geringer et al. (2016) identified that the banking sector faces competition due to the development of better banks in the market. In most of the European countries, the channels of distribution that are traditional in nature mostly dominate the digital economy. This results in making the competition intense for the new organization. The upper management of the organization needs to ensure that they enter the market with all the digital solutions that the customers may be looking for in the market. Due to the increased process of digitization, the banking system that is present in France is offering more incentives to the non-financial agents so that it can help them increase the level of transparency and efficiency to serve the customers.
The market that is present in Brazil is yet to be developed, which shows that it can have a better future due to the recent increase in the number of industries and the establishment of the financial companies in the country. The country has hosted some of the biggest sports events namely Fifa World Cup in 2014 and the Summer Olympics of 2016, which has helped in boosting the economy in the countries that are present in South America. The country is expected to increase its economy by $24.5 million by the year 2025. The management of the organization has made a decision that the market present in Brazil has a major number of tourists who visits the country on an annual basis. The structure of the South American market is more of a free economy, which helps the operations of the business to be conducted in a better manner (Gonzalez, Dabic and Kiessling 2015). The organization has to apply the same strategies so that it can help them in capturing the market in an easy manner.
The Gross Domestic Product in the South Korean market is $1.8 trillion, which makes the country eleventh largest economy of the world. The main strength of the country is with respect to the expertise that they have in the area of engineering and technology and in the industries like electronics, steel, petrochemical and shipbuilding along with other industries as well. The standard of the industries is that they maintain a set of transparent guidelines, which gives rise to a competitive business environment. The country also uses the latest technological innovations so that it can help them in getting better returns with respect to the financial investments (Gonzalez, Dabic and Kiessling 2015). The large scale industries that are present in the market is one of the major reasons for the Commonwealth Bank to get established in the Korean market. Nevertheless, in the modern times, the market is facing a landslide in the financial market, which has posed as a serious problem in the Asian market. Moreover, the organization can take help of the suitable strategies so that they can succeed in the market (Piekkari, Welch and Welch 2014).
The expansion of the banks in an international manner depends on various activities and the modes of entry. This may lead to trade agreements, start-ups, joint ventures, acquisitions and may other procedures. The research that will be conducted by the organization regarding the various markets will help them in finding the suitable markets.
The Commonwealth Bank has planned to expand its market in the new economies that are present, which includes the market of Brazil, South Korea and France (Xie, Batra and Peng 2015). The major products of the bank will include savings account, transactions in the share market, mobile banking services, loans, and other activities as well.
France
The major factors that will help in the estimation of the size and profitability are:
South Korea
The major factors that will result in estimation of the profitability and size are:
Brazil
The major factors that will result in determining the size and factor of profitability are:
The organization functions in a similar manner as the other banks who are also facing problematic situations in establishing their operations in the new countries across the globe. Some of the problems are:
Brazil
The Brazilian financial market is developed and provides scope of future development of the market as well. The country in the South American market is still facing the recession effects, which has led them in meeting the demands of the markets in a struggling manner. The International Monetary Fund (IMF) estimated that the country may be at the bottom of the developing countries that are developing at a slower rate in the upcoming years. The rate of inflation in the country has been stagnant for a while and the Reserve Bank along with the government of the country is unable to provide better solutions so that the mess can be removed (Xie, Batra and Peng 2015). The Commonwealth Bank has to start its journey within the country by implementing some of the useful practices that are available in the bank. These are:
France
The growth of the economy in this country would be 1 percent in the year of 2018-19. This is due to the fact that the external demand is strong, which has resulted in the rise of tourism activities and creation of better jobs for the citizens. In spite of the decrease in the taxes of capital income and business, there has been a strong deficit growth, which will result in decreasing the budget at 3 percent. The country has the strongest economic zone in the world, which attracts the companies for foreign investment (Zheng 2017). The market is competitive, which has been a positive factor for the country in attracting financial industries in the market as well. The country already has a large number of financial sectors, startup initiatives and development and research centres, which makes it more feasible in attracting the foreign investment.
The company has a marketing team, which will help them in analyzing the potential advantages that are present in the country, which will help them in carrying out their operations in a better way. The management has to keep them updated with the latest technologies that will help them in operating in the market. The organization needs to establish long-term understanding with the customers so that they can remain sustainable in the market.
South Korea
The introduction of new policies in finances by the government of the country in 2005 has helped in grabbing the attention of the local markets that are present in the country (Zheng 2017). Firstly, the promotional plan for overseas investment and secondly the imposition of clauses that will limit the transactions of financial accountancy. The government of the country implemented these policies, which has helped in the overall success. With respect to banking in the country, the companies are converting their policies so that it can help them to be sustainable in the market. The research team of the company has used the concept of branches of the bank, which needs to be replaced with the new services such as mobile banking, banking based on applications, e-statements, internet banking and other digital technologies (Winata, Mia and Langmann 2016).
The consideration of foreign exchange is one of the major factors that will help the bank to succeed in the internal markets. This process includes the conversion of the pounds and dollars in the form of local currency at the exact value. This results in implication of the trade policies, cash flows, political issues along with the profits that the banks can make in the international markets (Suzuki and Okamuro 2016). In the case of the Commonwealth Bank, they have to convert the currencies in to the international rates so that they can enter the market.
The business that is entering in to a new market has to understand the different barriers that are present so that the operations within the country do not face any challenge. The increase in the level of globalization has opened the chances for the foreign businesses to enter new markets and expand their businesses as well. The increase in the level of competition will make it difficult for the organization to earn profits and sustain in the present market at the same time. The management of Commonwealth Bank has to overcome the challenges such as legal, cultural and environmental factors so that they can succeed in the market (Strizhakova and Coulter 2015).
Most of the countries have their definite set of cultural identities, which has to be taken in to consideration by the bank (Stahl and Tung 2015). The citizens need to provide ample time to the customers so that they can get accustomed with the various cultures with respect to the services that are being provided by them
The major cultural aspects that need to be considered by the organization is as follows:
Conclusion
Therefore it can be stated that the various aspects have to be considered by the organization before entering in to the international market. The research by the organization has to be carried out in a proper manner so that it can help in identifying the problems, which can pose a problem for the company to continue its operation in the international market. The analysis has helped the organization in understanding the best mode of entry along with the products and services that can be used in the new market. The organization also had a better understanding of the competitors that are present in the market as well
Reference List
“Personal Banking Including Accounts, Credit Cards And Home Loans – Commbank.” Commbank.com.au. N.p., 2018. Web. 16 Jan. 2018.
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Geringer, M., Ball, D.A., Minor, M.S. and McNett, J.M., 2016. International business. McGraw-Hill Education.
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Lawrence, A.T. and Weber, J., 2014. Business and society: Stakeholders, ethics, public policy. Tata McGraw-Hill Education.
Lynch, R. and Jin, Z., 2016. Exploring the institutional perspective on international business expansion: Towards a more detailed conceptual framework. Journal of Innovation & Knowledge, 1(2), pp.117-124.
McFarlin, D. and Sweeney, P.D., 2014. International management: strategic opportunities & cultural challenges. Routledge.
Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in international marketing. Routledge.
Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.
Piekkari, R., Welch, D. and Welch, L.S., 2014. Language in international business: The multilingual reality of global business expansion. Edward Elgar Publishing.
Stahl, G.K. and Tung, R.L., 2015. Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship. Journal of International Business Studies, 46(4), pp.391-414.
Strizhakova, Y. and Coulter, R.A., 2015. Drivers of local relative to global brand purchases: A contingency approach. Journal of International Marketing, 23(1), pp.1-22.
Suzuki, S. and Okamuro, H., 2016. Determinants of Academic Startups’ Orientation toward International Business Expansion. Administrative Sciences, 7(1), p.1.
Winata, L., Mia, L. and Langmann, C., 2016. Strategic Alliance, Information and Communication Technology, and Customer-Related Performance: The Role of Industry Characteristics. Contemporary Management Research, 12(3), p.337.
Xie, Y., Batra, R. and Peng, S., 2015. An extended model of preference formation between global and local brands: The roles of identity expressiveness, trust, and affect. Journal of International Marketing, 23(1), pp.50-71.
Zheng, C., 2017. Globalization and international human resource management.
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