Discuss about the International and Global Business.
This particular assignment is based on Australian and New Zealand banking group. Australian and New Zealand banking group is considered as the fourth largest bank in the Australian market. This bank is quite dominating in the commercial and the retail banking. Presently it has been found that all the international banks is trying to expand and develop their in the other countries.
By expanding the business, the Australian banks can easily enhance their service level to the customers in the market (Wild et al. 2014). The Australian and the New Zealand banking group is quite reputable in Australian and New Zealand market. Currently, through merger and acquisition the Australian Bank is planning to enter in the new market namely to France, Brazil and Korea. By developing the business in the other markets, the Bank is trying to gain some additional advantage compared to the other existing banks of Australia (Hill et al. 2013).
This particular assignment mainly focuses on the structure of the different market and the profitability of the each market. Additionally, it also discussed the future development as well as the trade implications. Suitable recommendation has been mentioned to the bank for the developing the business in the market.
While developing the business in the other market, it is much essential for the business organizations to identify, assess and understand the exact market structure of that particular country (Mellahi and Frynas 2015). By effective analysis, it becomes much easier for the respective business organizations to adopt effective strategies and trends to develop and expand the business in the market. Ferraro and Brody (2015) commented that both the political parties and the governmental bodies play an important role in the respective countries. Presently, Australian and New Zealand banking group is trying to enter in the new market through acquisition. It directly helps the company to strategically expand the business in the market. Additionally, it also helps to control operations of the other existing firms (Cox et al. 2013).
France market:
The France market is considered as the sixth largest economic market in the world. It has been found that the governmental bodies play an important role in France. Presently, the governmental bodies are taking much initiative to develop more banking and financial sectors in France. Ball and McCulloch (2012) commented that structure of the France market is considered as the free market. The free market structure helps the other organizations to effectively develop themselves in the market.
Moreover, France maintains a huge export and import businesses in the market. The country mainly exports its goods and services at 14.7% in Germany. Due to lack of political reform, it becomes difficult to increase the size of the market. Additionally, the unemployed rate ahs drastically affected the market. The France market is fixed market, it becomes easier for the organization to develop the business in the market (Kaynak et al. 2014)
Brazil market:
Brazil is considered as one of the emerging markets. It has been found that this market structure helps the other business organization to rapidly grow and develop in the market. The service industry of Brazil contributes at least 67.5% in the total nation GDP. On the other hand, it has been found that the banking and the financial structure of the country is quite strong and additionally the inflow of the foreign investment is quite high compared to the other countries (Ball and McCulloch Jr 2012). The banking sector maintains a high interest rate in the world. The market structure of Brazil is free market. It will be easier for the other companies to expand their business in Brazil.
Korean market:
The Korean market is mainly divided into South Korea and North Korea. The Korean market is considered as the 12th largest economy in the world. South Korean market has a free market structure. Korea is considered as the most technological advanced country and digitally upgraded country. Due to the rapid growth and development, the economy of the country is considered as the tiger economy. The South Korean market provides huge opportunities to the other business organization to develop their business in their market (Beugelsdijk et al. 2013) On the other hand, it has been found that the Korean capital market is quite small in Size but has got huge expansion scope in the market.
Potential size and profitability of each market:
Australian and New Zealand banking group is presently trying to enter in the new market in order to enhance their service level to the customers in the market. It has been fund that the potential size of Korean market is small. However, there is huge opportunity for the Australian and New Zealand banking to expand their in the Korean market. As the market structure is free, it will be easier for the bank to adopt the new trends in the market and develop its business respectively. On the other hand, the potential market size of the France market is quite large. The government helps the organizations to expand their business in the market (Hooper and Newlands 2012).
The country is economical strong, it will help Australian and New Zealand banking is grab the new customers and sell new policies and provide loan to the targeted customers in the market. The free market structure will provide huge profitability to Australian and New Zealand banking in the market. Ferraro and Brody (2015) commented that by entering and expanding the businesses in the three different markets, Australian and New Zealand banking could easily enhance the number of account holders.
Analysis of potential problems:
Wolfe (2014) commented that different market has got different structure, trends and nature. Sometimes, it becomes quite difficult for the other business organizations to expand and develop their business and services in different country’s market. It has been found that the governmental bodies of each countries plays an important role for helping the other business organizations to develop their business in the market.
Moreover, it has been found as per the market trends of the different countries, the business organizations needs to adopt new strategies and marketing techniques. Mellahi and Frynas (2015) put forwarded that the cultural different becomes a huge barrier for the organizations to develop their business effectively in the market. Additionally, it also becomes quite difficult for the business organizations to understand the attitudinal behavior of the targeted customers in the market.
As the France market is fixed, it will become easier for Australian and New Zealand banking group to develop the business through acquisition in the new market. There is no such threat for the company to develop their business in the market. On the other hand, it has been found that as the Korean market is free flow market, it becomes difficult for the bank to develop the business through acquisition in the market (Hill et al. 2013). Based on the economic condition of the country is quite strong, the bank needs to sells their policies in lower rates in order to attract large amount of customers in the market (Mellahi and Frynas 2015).
Moreover, it has been found that the Brazil market is also free-floating market. There is a huge threat for Australian and New Zealand banking to develop their business in the market (Ferraro and Brody 2015). Through acquisition, it becomes difficult for the business organization to adapt all the practice of the existing organization (Cox et al. 2013). In order to develop the business effectively in the three different markets, the business organization needs to adopt suitable strategies and techniques in the market.
Analysis of future development:
For the future development, the Australian and New Zealand banking needs to implement new effective strategies and techniques for expanding the business in the new market. For the future development, the bank needs to adopt and understand new cultural practices within the organization. It will become much easier for the bank to develop the business smoothly in the market. Additionally, as per the nature of the market, the bank also needs to develop the policies and interest rates for the loan. The company also needs to focus on the foreign exchange rates. Moreover, the banks needs to constantly monitor the market for adopting the new strategies in the organization. Other than this the Australian and New Zealand banking also needs focus on the activities of the rival banks exist in the market.
Foreign exchange and trade implication:
The term exchange rate refers to the ratio of domestic and international currency. The fluctuation of exchange rate affects the overall economy of both the countries (Buch and Goldberg 2015). Therefore, it is highly important to assess the exchange rate of a particular country before implementing entry strategy. In other words, an organization needs to understand the economical viability of the targeted country by measuring the exchange rate of that country. On the other hand, trade implication refers to the policies of different countries, which helps the businesses to maintain sustainability in international market (Meyer and Peng 2016). Different countries have different business policies for improving business environment. However, the policies are sometimes beneficial or sometimes disadvantageous for organizations and therefore, investigating the trade policy of the targeted country is important (Beamish and Lupton 2016). Following is the evaluation regarding exchange rate and trade implication of France, Brazil and Korea.
|
Country Name |
Foreign Exchange |
Trade Implication |
|
France |
France is maintaining a fixed exchange rate in which the country can maintain the official exchange rate with the major currencies mostly with the US dollar (Cacciatore, Ghironi and Stebunovs 2015). The risk factor recession is very low in this kind of foreign exchange rate. Currently 1 Euro is equals to US$1.12. |
Government of France has implemented different business policies. The objectives of France government are to promote foreign investment and trade (Su, Huang and Liao 2015). Additionally, government of France encourages open market services and goods in order to maintain flow of capital. |
|
Brazil |
In Brazil, the type of exchange rate is floating. This kind of exchange rate increase risk factors and on the other hand, high growth in international market can increase capital flow of the country (Kerl and Koch 2015). As per the current market, 1 Brazilian Real is equals to US$0.28. |
Brazil is a developing country in which government has implemented different policies for encouraging foreign investment (Wong, Tsang and Kong 2015). The government of Brazil focuses on fair trade policies in order to improve overall economy of the country. |
|
Korea |
The exchange rate of Korea is free-floating, which means the currency value of the country depends on the foreign currency (Beamish and Lupton 2016). In such exchange rate, a country can face difficulties and advantages both according to the overall market condition. |
The Korean government encourages gradual improvement of access in the market (Meyer and Peng 2016). Additionally, government of Korea has implemented trade policy for promoting export. |
Cultural aspect influencing entry:
The term culture refers to the values and faith of people, which can influence behavior and attitude of people in an effective manner. In case of business, an organization needs to evaluate the cultural aspects of the targeted country in order to achieve objectives of the market entry strategy (Beamish and Lupton 2016). In case of ANZ bank, the company has planned to expand in three different markets with the help of acquisition strategy. In this particular strategy, it will be easy for the organization to understand the cultural aspects of the targeted consumers. The cultural behavior and attitude people influences the trust factors remarkably (Su, Huang and Liao 2015). The banking sector depends on consumers’ trust factor and reliability, which farther influenced by reputation of the banking organization. Therefore, it is very much important to make the consumers agree with the company’s vision for ensuring that consumers will accept the services. Following is the discussion regarding cultural aspects and its influence on the market entry strategy of ANZ bank.
France: As per the cultural aspects of France, people are very pride regarding their national and apart from that, government of France has taken proactive approach for punishing people who comment negatively regarding the nation. This particular behavior of French people affects dignity of the foreigners and therefore, cultural difference between France and other countries especially with American people is not suitable in terms of business (Kerl and Koch 2015). Therefore, ANZ bank can face difficulties while entering in this particular market.
Brazil: As per the cultural aspects, people of Brazil are polite while communicating with other people. On the other hand, Australian people generally speak louder in order to build business communication (Wong, Tsang and Kong 2015). Therefore, it will be difficult for ANZ to build business relationship with the social community of Brazil.
Korea: Koreans gives value to the long-term relationship in business and personal context as well. Therefore, expanding in this particular market by acquiring a domestic company of Korea will be disadvantageous for ANZ bank. In order to influence trust factors of Korean people, the organization needs to build a global essence in Korean market (Meyer and Peng 2016).
Conclusion:
After conducting this report, it can be concluded that expanding in international market involves both positive and negative impact in sustainability. In order to implement acquisition for entering in international market, it is highly important to evaluate economical position of the targeted market. Additionally, the organization needs to consider the cultural aspects of the targeted market. This report shows that French market depends on fixed exchange rate in which the organization can maintain sustainability even in recession period. On the other hand, Brazil and Korean market is free-floating in exchange rate and therefore, investing in these countries involves both risk and advantages. When it comes to the cultural aspects, every country has different values and attitude. This report shows that ANZ bank needs to understand needs and demands of the consumers in order to increase trust factors and being reputed within short time period. Furthermore, this report consists of evaluation regarding market structures. From the market evaluation, it can be concluded that ANZ bank needs to monitor the risk factors of cultural aspects of economical aspects in order to successfully enter in French, Brazil and Korean market.
In order to expand in international market, ANZ bank should consider cultural aspects of the targeted countries. The risk factors of market entry can be reduced by working collaboratively with the targeted organization. In this manner, ANZ bank will be able to understand the values and attitudes of the targeted consumers. Moreover, it will help the company to understand governmental legislations and policies of the targeted country. Understanding the business policies of the targeted country will help ANZ bank to implement organizational procedures in an effective manner. Furthermore, the company should build effective communication with their alliance in order to maintain business sustainability in international market.
Reference list:
Ball, D.A. and McCulloch Jr, W.H., 2012. International business.
Beamish, P.W. and Lupton, N.C., 2016. Cooperative strategies in international business and management: Reflections on the past 50 years and future directions. Journal of World Business, 51(1), pp.163-175
Beugelsdijk, S., Brakman, S., Garretsen, H., Van Marrewijk, C. and van Witteloostuijn, A., 2013. International economics and business: nations and firms in the global economy. Cambridge University Press.
Buch, C.M. and Goldberg, L.S., 2015. International banking and liquidity risk transmission: Lessons from across countries. IMF Economic Review, 63(3), pp.377-410
Cacciatore, M., Ghironi, F. and Stebunovs, V., 2015. The domestic and international effects of interstate US banking. Journal of International Economics, 95(2), pp.171-187
Cox, H., Clegg, J.L. and Ietto-Gillies, G. eds., 2013. The Growth of Global Business (RLE International Business). Routledge.
Ferraro, G. and Brody, E.K., 2015. Cultural Dimension of Global Business. Routledge.
Frieden, J., 2015. Banking on the world: the politics of American international finance. Routledge
Hill, Charles WL, Thomas Cronk, and Rumintha Wickramasekera. Global business today. McGraw-Hill Education (Australia), 2013.
Hooper, M.J. and Newlands, D. eds., 2012. The global business handbook: The eight dimensions of international management. Gower Publishing, Ltd..
Kaynak, E., Fulmer, R.M. and Keys, J.B., 2013. Executive development and organizational learning for global business. Routledge.
Kerl, C. and Koch, C., 2015. International Banking and Liquidity Risk Transmission: Evidence from Germany. IMF Economic Review, 63(3), pp.496-514
Mellahi, K. and Frynas, G., 2015. Global strategic management. Oxford University Press.
Meyer, K. and Peng, M., 2016. International Business. Cengage Learning
Su, H.M., Huang, C.M. and Liao, T.H., 2015. Corporate Social Responsibility and Business Operations: An Empirical Analysis of Banking Industry.International Journal of Information and Management Sciences, 26(2), pp.151-165
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Wolfe, J., 2014. The global business game: A strategic management and international business simulation. Developments in Business Simulation and Experiential Learning, 27.
Wong, E., Tsang, A. and Kong, S., 2015. International Banking and Liquidity Risk Transmission: Evidence from Hong Kong SAR. IMF Economic Review,63(3), pp.515-541
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