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The positive effect

2012 Nigel. S. Paltoo , A11904 10/9/2012 Globalization of Business 715 GE Source: Flikr.

DECLARATION| My spouse and i, the above called student, make sure by submitting, or creating the attached assignment to become submitted, to AIB, I possess not plagiarised any other individual’s work in this assignment and except in which appropriately identified, this task is my own work, has been expressed inside my own words, and have not previously been submitted pertaining to assessment. | ASSESSMENT SHEET(to be accomplished by the examiner)| Student name: | NIGEL. S. PALTOO| | | Course term: | MBA -GENERIC| | |

Subject matter name: | Globalization of Enterprise 715-GE| | | Assessor/marker: | | | | COMMENTS| Principles discovered (for case in point, number and understanding of rules referred to, their influence within the structure of the paper, quantity and correct info ofreferences, make use of appropriate jargon)| | /4| | | Putting on principles. That is, theanalysis and evaluation of the example difficulty based on the guidelines, including the last recommendations and their justification| | | /8| | |

NATIONS UNIVERSITY”GUYANAAUSTRALIAN INSTITUTE OF BUSINESS-MBA GLOBALIZATION OF ENTERPRISE-715 GEASSIGNMENT Contrasting and contrasting two countries for foreign expansion into by local apparel organization Denmor Outfit Manufacturers. | Assignment: You are the administrator of a business (in the country or region) that is thinking of going global. Compare two different overseas marketplaces for the international expansion of your business, covering an option of: you ¢ Personal economy concerns ¢ Cultural issues 3 ¢ Access strategy 5 ¢ Strategic alliances Start your project with a very brief explanation of the gumptiouspioneering, up-and-coming business that you are writing about. This kind of business will be your own organization or the one which you are aware of, or it can be a hypothetical one based on an amalgam of several businesses of which you are aware. Deduce the assignment with perhaps the business can go to one and also the other with the two countries, or non-e, or both equally. The total number of words needs to be 2500 phrases.

For penalties regarding exceeding beyond the word limit, please consider AIB Design Guide. Intended for guidance on how you can write an assignment, please refer to AIB Assignment Information. Please note, the phrase count does not include your cover page, an abstract, stand of contents, list of referrals or appendices. Thus you are able to place any supporting materials that exceeds this phrase limit into appendices. However , a target audience should not need to look at a great appendix to be aware of about the main thrust of the points you are making inside your assignment.

So make sure all your main points happen to be in the body of your report and refer right now there to the sortie that will support the details you are making in the body of your report, for the reason that reader might not look at the appendices otherwise. Fuzy: In the last 1 / 4 of the 20th century to provide day the earth economy has become more built-in and interdependent than ever before, with businesses the two large and small increasing beyond their very own traditional local markets while barriers to world control came straight down and technology advanced resulting in significantly reduced communication and transportation costs.

This remarkable change in the international environment in which business is executed has ended in increased levels of foreign direct investment by simply companies via developed countries in lesser developed financial systems such as the Third World as economic benefits had been sought throughout the globalization of production and markets. (Hill 2011, p. 5)

Together with the benefits being widely noticed to surpass the drawbacks smaller companies are looking for the arrangements internationally that would finest serve all their interests of growth and expansion with companies via lesser developed countries today also trying to capitalize as well by creating synergies at the basic level by simply expanding their very own market périmètre overseas, going through first and expanding while demand and relationships develop. This shift in the world economic system towards greater integration and interdependence is a sure way of explaining Globalization (Hill 2011, p. ). Globalization can be seen as the increase of functional integration between internationally dispersed economical activities, quite recent, rather than the older phenomenon of “Internationalization” which identifies the geographic spread of economic actions across borders and oceans which started in the seventeenth century when the colonial forces started separating up continents in the ” new world ” in search of raw materials and marketplaces (Devaraja 2011).

In Guyana, the more proven companies have already been seeking techniques to increase their markets overseas through exports through establishing reduced strategic forces. Hardly any community company features sought to globalize it is production to increase its success. For any company looking to attempt international opportunity the interdependent political, financial and legal systems from the target country along using its underlying cultural fabric should be examined and analyzed in more detail before any kind of investment is made (Hill 2011, p. 45).

In Guyana, a small English speaking, third world country in South America, the greater established companies have been in search of avenues to expand their markets first through export products and also simply by establishing reduced strategic units overseas. Denmor Garment Manufacturers (DGM) is usually one such SME within the clothing industry in Guyana which has benefited from the effects of Globalization by having contracts to production specific models from businesses owning main brand names in the united states (which are looking to lower all their production costs) as well as by simply exporting straight to major retailers overseas.

Desk of Contents| Page. | 1 . 0 Introduction| 9| 2 . zero Denmor Garment Manufacturers| 9| 3. 0 Current Circumstance with DGM| 10| several. 0 The task of foreign expansion| 11| 4. 0 Political and Economy Issues| 12| a few. 0 Ethnical Issues| 15| 6. 0 Entry Strategies| 16| 7. 0 Conclusion| 17| Bibliography| 18| 1 ) 0 Intro: The aim of this research is to analyze the potential of two countries brief listed as is feasible candidates pertaining to the further more international enlargement of DGM.

These two choices are evaluated in the perspective of the primary issues that have to be taken into account when considering business expansion into foreign markets viz Political overall economy issues, Ethnic issues, Access strategy and Strategic alliances with the situation in the two countries becoming compared and contrasted having a decision becoming arrived at whether or not to expand into one, both or non-e of the two countries. It will be impossible to consider all areas of the Socio-Economic, Cultural and Political landscape of the countries being regarded as therefore the particular reas almost certainly to have an effect on DGMs’ opportunity are considered in the context in the nature of its organization and the items on offer. Denmor Garment Suppliers (DGM): Site: 7, 8, 9 Coldigen Industrial House, East Coastline Demerara, Guyana. DGM is known as a private organization in Guyana which commenced operations in 1997 and currently employs 1000 individuals of which ninety-seven % are women. Denmor has the capacity to respond to orders up to 50, 1000 dozens of apparel per month, and will produce about 15 different styles at the same time.

Around 75 percent of Denmor’s activities require full creation (where the manufacturer manages most aspects besides design), demonstrating an capability to carry out value added manufacturing activities and supply-chain management. 100 percent of its products are exported, with its clients including some of the world’s leading brands and department stores, which include Russell Athletic, Victoria’s Top secret, Paris Equipment, Van Heusen, JC Dime and Wal-Mart. (Goinvest in. d) installment payments on your 0 Current Situation with DGM:

As it is DGM is definitely presently a little part of a buyer motivated value chain environment where the large retailers, marketers and brand name suppliers have established a diverse decentralized network of production in under developed and expanding countries and are leveraging in the design and retail levels (Devaraja 2011). Having had a fair degree of success from its functions and obtained considerable know-how from its complicité DGM is looking to increase its marketplace base and production potential but is definitely constrained in your area by the limited supply of work for any fresh factory and weak community demand for seaside wear and sport uniforms.

The key processes of DGM’s operation are incredibly labour intense involving the cutting of fabric and making of components by simply sewing machine and assembling into last product, this requires a semi-skilled to experienced level of work. The challenge facing DGM should be to remain a competitive gamer and to manage to increase earnings either by getting a greater bite from the value chain from the companies overseas (expanding more into full production), developing its very own brands or perhaps by acquiring new huge brand name company customers and orders.

Hence, it is important that DGM look to enhance its factory capacity while at the same time keeping costs down thereby increasing charm to customers. Faced with a limited labour supply and a top cost of energy and sometimes irregular power supply pertaining to sewing machines and air-conditioned factories it may be critical that DGM you should think about the alternative of moving international. After much consideration DGM’s management provides concluded that the location with very best growth potential would be to grow using its personal designs and brands.

DGM has attained significant competence in the production of high-end female underwear and in athletic uniforms coming from producing Victoria’s Secret companies Russell Athletic brand uniforms for the US NBA and is also confident it can utilize the supply cycle for fabrics and using its own style team create a new brand of female under garments, beachwear and generic sports uniforms that would have a better quality and a far cheaper price, however in Guyana it is constrained simply by weak neighborhood demand and labour source.. 0 The battle of intercontinental expansion: Similar to other firm contemplating intercontinental trade can be faced with three strategic decisions about which countries to enter, when to get into and at what scale the entry would be. Consideration will have to be given to potential options as well as areas of risk which must be tightly analysed (Hill 2011).

The countries picked for account would initially be in contrast and in comparison with their specific political, economical and ethnic realities getting looked at in that case options associated with possible entry strategy (ies) will regarded along with strategic units that may be helpful or essential The two countries being regarded as for expansion into are Brazil and Trinidad. Ahead of these two countries would have recently been brought up for even more consideration they can have been on a longer set of potential prospects he rest of which would have been eradicated with Brazil and Trinidad meeting the basic criteria of obtaining a considerably larger inhabitants than Guyana, they are both developing countries (better off monetarily than Guyana), with a totally free market program in place, workable national personal debt and solitary digit pumpiing rates and both countries are geographically close by. A decision has been produced that after the two alternatives are found to get acceptable in that case entry in that market will be made within half a year. Map of South America and Southern Caribbean Islands showing Brazil, Guyana and Trinidad , Tobago. Source: www. worldatlas. com

Political economic climate issues: Brazil and Trinidad are both democracies, having had free of charge and fair elections within the past two decades. Equally countries currently have female presidents. Brazil can be described as Federal republic consisting of twenty-six states the tiniest of which is usually far larger than Trinidad a twin island republic having a sister area Tobago. Both equally countries may very well be politically steady with the latest incidence of serious turmoil becoming twenty two years back when Trinidad had a failed coup with members of the Jamaat approach Muslimeem planning to seize electricity. Individualism is usually respected in both countries but more so in Trinidad.

Equally Brazil and Trinidad are experiencing lower levels of pumpiing and joblessness Brazil contrary to Trinidad includes a tax about financial orders, Brazil is far more bureaucratic when it comes to starting a small business taking up to six months to get every one of the paperwork carried out whereas in Trinidad it truly is considerably much easier and should only take one to two weeks. In Brazil getting specific legal permissions for developing a business fast may require the payment of bribes. You will discover no limitations to repatriation of authorized capital with out taxes in profits repatriated from both equally countries.

DGM would have to consider the higher standard of bureaucracy in Brazil in terms of getting things started (which creates chances for pièce to be extorted) as compared to Trinidad. A business course visa is required for investing and performing in Brazil with a minimal level of investment being USD $50, 500 being required. A Guyanese can transact and carry out business in Trinidad without a visa, nevertheless a work enable would be essential. In Brazil it may be required to hire a middleman (despachante) to find their way the web of paperwork. (CIA Universe fact book 2012, Communicaid 2012).

Within the key concern of security of property rights equally Brazil and Trinidad include legal conditions for the protection of real property and intellectual property legal rights, both countries having agreed upon international negotiating, however , the judiciary in Brazil is inefficient and subject to personal as well as financial influence with piracy of copyright materials being pretty widespread. Brazil presents a higher degree of risk due to decrease levels of real estate rights safeguard. Trinidad in contrast to Brazil is part of CARICOM exactly like Guyana which allows free transact among associates. There is a free of charge trade area in Manaus in Brazil.

Taxation in Brazil is very complex and never as standard as in Trinidad. Cost of work in both equally Trinidad and Brazil is usually higher than in Guyana nevertheless is more readily available. Cost of strength is cheaper in both countries relative to Guyana. (CIA Universe fact publication 2012, Communicaid 2012). Critical and monetarily there are fewer challenges to get DGM to expand to Trinidad as compared with Brazil, however inflation levels and unemployment levels staying almost similar and exchange rates becoming stable there exists still a qualification of charm to grow to Brazil if techniques around the red tape can be accomplished.

CULTURAL ISSUES: Cultural distinctions can present a number of problems in order to to perform business in foreign market segments, from language barriers, employee behaviour and work ethic to strategic planning, it is therefore vital that business people familiarise themselves with more than just the laws regulating a culture and obtain an understanding of the actual values, norms and mores so as to manage to discern precisely what is different and what is similar, what is suitable and what maybe considered taboo or perhaps disrespectful. (Hill 2011)

Trinidad is a language speaking Caribbean country which has a diverse variable ethnic culture that has joined relatively well into a specific “Trini” lifestyle with a mixture of East American indian, African, Euro and American influences, religion is mainly Christian, Hinduism and Islam. Carnival is recognized annually with Soca and Calypso music, elaborate outfits and floats, parades and beach parties over a seven days period. Trinidad like Brazil is very nationalistic and proud of their country and its national symbols and flag colors. Trinidad is additionally a sports crazy land but not to the extreme because Brazil.

There is also a strong American influence in the way business is usually conducted in Trinidad which can be very much likewise with the method meetings and also other business transactions are conducted in Guyana, however it is definitely somewhat diverse in Brazil. Brazil can be Portuguese talking to a far larger population who happen to be predominantly Both roman Catholic, nevertheless just like Trinidad there is a Carnival and a strong sports and seaside culture seeing that Brazil has some of the most attractive beaches on South America’s Eastern Ocean coastline and year round sun-drenched weather.

You will discover more social issues to become considered by DGM in looking to broaden to Brazil than Trinidad (CIA Globe fact book 2012, ALL OF US Commercial Service-US Department of Commerce 2012). Brazilians usually do not like to go over business during lunch while that would be ok in Trinidad, coffee consuming is a routine in Brazil whereas using a semi formal meeting above beers or whiskey is normal in Trinidad. There are a few palm signals acceptable in Guyana and Trinidad like the “OK” that would be regarded as insulting in Brazil (Communicaid Group Limited 2012).

It would therefore become a bit more difficult from a cultural point of view for DGM to do business in Brazil in comparison with Trinidad. Both countries include a well developed tourism market with visitors from the US and The european union looking for differentiated products with unique designs, fabrics and colour. Though both countries presently have got female presidents, males dominate business as a result initial business meetings should be male led, good results . DGM trading in the feminine apparel industry including a girl during negotiations would be smart.

Entry Technique: Having made a decision to broaden to another country the management would need to consider each of the risks and decide on the timing, method and range of entrance to be adopted (Hill, 2011). In getting into a foreign marketplace there are six modes of entry that the firm can consider every single with benefits and drawbacks ranging from Transferring, Turnkey agreements, Licensing, Joint Ventures to Wholly Owned or operated Subsidiary. (Hill 2011, g. 32) Brazil presents an even more challenging environment both noteworthy, economically and culturally although DGM probably should not rule out development into the Brazilian marketplace because the sheer scale its human population and closeness to Guyana offers huge potential, however , at this time DGM should look at exporting finished products by finding a wholesale distributor which has a wide network of shops to foreign trade beachwear to and also seek to market staff uniforms right to soccer clubs especially in the reduce divisions and have a local representative do gatherings and accumulate sizes and measurements etc . ith delivery being done through this intermediary but with obligations being remitted by bank transfers directly to DGM. By going the export route to Brazil import tariffs would be one more cost in contrast to having a manufacturing plant in the Manaus free operate zone, consequently DGM should gauge the acceptance of its offerings and then look for develop ideal alliances in the manufacturing level later on in the event that market conditions indicate the opportunity of higher earnings. DGM ought to be prudent in its business arrangements and look to secure transactions employing letters of credit till levels of trust are founded.

In Trinidad DGM will need to look to produce a joint venture which has a suitable partner who has surplus warehousing space suitable for establishing a clothing factory thus reducing the degree of capital expenditure required, signup its brands in Trinidad, establish a small-scale factory and produce both equally beachwear and soccer and other sport uniforms in Trinidad and market both to the local Trinidad market and export for the distributors in Brazil and additional afield. Ideal alliances might also be had to market products across Trinidad as such an associate with suitable channels already in place would be useful in the entry phase.

A strategic cha?non with a organization in an unrelated industry which includes excess building space will be preferred to 1 that is inside the same market with extra labour and machine ability due to the risk of having that spouse appropriating designs and customers. Timing of those two ventures is important, however the sluggish pace at which negotiations and business transactions flow in Brazil it might be prudent to begin interim reveals with potential distributors concurrently as obtaining the joint venture arrangement and factory setup in Trinidad.

Goods would be differentiated in the two markets in respect to designs and colors, more exposing beachwear is definitely acceptable in Brazil and labeling will have to be in Portuguese as such a multi-domestic strategy would be necessary with products being made especially for each of the two markets using a slight terme conseillé. This strategy must not be too costly provided that the slight differences between products usually do not require different skills and machines plus the designs pertaining to the B razil market could require fewer material but have the same selling price.

Conclusion: Outdoor and athletic wear section of the clothing market is already established in both countries, as such there is not any first ocasionar advantage being gained, on the other hand DGM is usually confident it can protected a niche by simply supplying a general better quality product (stitchwork, design and style, fabric) by a far lower price. Brazil which has the largest potential market has fairly more personal economy and cultural barriers which raise the levels of risk and opportunity for failing so DGM should be mindful when expanding into this market.

Trinidad however has considerably more political economic climate and cultural similarities with Guyana and this would allow to get easier admittance, allowing DGM to be more aggressive, that could end up solving the production capability problems intended for DGM to meet the awaited new demand when the export channels into Brazil clear which would in turn satisfy the present dependence on a larger market foundation. If these two expansions arrive to fruition DGM can anticipate growth widely used and success over the permanent with economical benefits accruing to each in the three countries. Bibliography:

CIA World fact book, Trinidad 2012, looked at 1 August 2012, &lt, https://www. cia. gov/library/publications/the-world-factbook/geos/td. html code &gt, CIA World truth book, Brazil 2012, seen 1 Oct 2012, Communicaid Group Limited. 2012, Performing in Brazil- Brazilian Sociable and Business Culture UK, London, viewed 30 September 2012 &lt, http://www. communicaid. com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20Brazil. pdf&gt,. Devaraja, Dr . T. H 2011, American indian Textile and Garment Industry-An Overview, University of Mysore, viewed 35 September 2012 &lt, http://sibresearch. rg/uploads/2/7/9/9/2799227/working_paper_-_dr_devaraja. pdf file &gt, Goinvest 2012, Denmor Garment Producers: Competing in the Global Clothing Industry, seen 29 September 2012 &lt, http://www. goinvest. gov. gy/manufacturing. html &gt, Hill, CWL 2010, Global Business Today, 7th edn, McGraw Hill, Boston ALL OF US Commercial Service-US Department of Commerce 2012, Doing Business In Trinidad and Tobago: A Country Commercial Information for U. S. Companies, viewed 1 October 2012, &lt, http://trinidad. usembassy. gov/uploads/images/bLR3mH7MwdrEvCke0jB6Tw/CCG2006. pdf &gt, End of Assignment.

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