BUSN 604 Week 7 Assigment Sheila Seal

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Jun 12, 2024

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1 Domestic and International Markets Sheila Seal American Public University BUSN 604: Fundamental of Business Analysis Dr. Shelley Pumphrey 5/19/2024

2 Introduction This feasibility analysis aims to determine whether the company should invest in a new product line overseas or keep the investment within the US. This decision will involve a thorough examination of both qualitative and quantitative factors to ensure that the chosen investment aligns with the company's strategic objectives and financial health. Body When overviewing the US and foreign market's similarities and differences when investing in the markets. Overviewing the similarities between both domestic and foreign investments aims to expand their companies' market reach and enhance profitability. They also require a lot of market research, compliance with local regulations, robust strategies for risk management, and solid mitigation for potential seen and unforeseeable challenges. Investing in US markets requires familiar market dynamics, cost structure, and regulatory environments. Foreign investments need a firm understanding of new market conditions, the ability to navigate complex legalities, and overcoming cultural diversities and operational challenges with new market conditions. This paper will incorporate a broad view of qualitative and quantitative analysis in the foreign and domestic markets. Evolution has played a big part in internationalization. According to Murthy (2019), there are 5 stages in internationalization, which include, “ domestic, international, multinational, global, and transnational” (Murthy, 2019, P., 11). These stages are important and help develop higher economic growth, improve the total and per-capita income, industrial growth, and employment, and increase the rate of income. The approach to domestic and international business can be quite different. There are 5 different approaches to international business but domestic business sticks to the ethnocentric

3 approach. Whereas international business tends to use the polycentric, or regiocentric approach (Murthy, 2019). Qualitative Factors There are several qualitative factors when determining whether a company should invest in any product line in the US or overseas market. The market's US conditions are characterized by its stability and a high degree of familiarity for the company. However, one must understand consumer behavior, market saturation, and the established competitive landscape. Thus, these markets come with a higher uncertainty, several things need to be considered for instance; first, analyze the market potential, secondly, develop a broad understanding of its growth prospects, thirdly, become well versed on the cultural differences, and finally know the political and economic stability of the target country (Daniels, 2019 ). Whether one invests in the US or overseas markets, complex regulatory environments vary greatly depending on location. The US has a complex familiar regulatory environment involving federal, state, local, and governmental regulations. The companies that are in the US already have an understanding that compliance is straightforward due to the company’s existing experience. When a US company is looking to invest in overseas markets, it requires experience in navigating unfamiliar trade regulations, tariffs, and dealing with foreign investment policies. Overseas countries have varying levels of bureaucracy and legal challenges, which can have a large impact on the investment’s feasibility. Global leadership must have a global mindset and think on a different level from their decision-making techniques to adopting and developing impressive positive algorithms, and sophisticated software for international marketing (Hill, 2019).

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4 Moreover, the companies that are deciding to invest in the markets either in the US or overseas must be familiar with and take into consideration the operational structure. US companies can leverage their existing infrastructure and experienced workforce. However, being familiar with local supply chains and labor markets can improve operational efficiency, which can improve and decrease operational costs. Thus, setting up foreign operations involves having a firm understanding of local supply chain logistics, knowing the labor market conditions, well well-versed in communication barriers, and being familiar with all the added costs of hiring foreign interpreters. According to Wang & Hu, (2022), “cross-cultural business communication, including being familiar with the language communication modes of different countries; respecting and tolerant of other cultures; improving the ability to resolve conflicts; enhance business ability; cultivate the comprehensive quality of business personnel in cross-cultural communication” (Wang, & Hu, 2022, p., 2) Working in a foreign market might be a huge challenge and may require adapting to a different infrastructure but may offer and set up a known presence in the country. However, there are risk factors with everything foreign and US markets can make or break investments. Domestic and foreign investments are exposed to risk factors that can be positive as well as negative, especially in foreign markets. The US markets must be concerned about market saturation, and economic downturns. However, in the US markets, these risks can be generally predictable and manageable. Where there are qualitative factors comes quantitative, which this paper will go as well. Quantitative Factors, Cost Analysis When exploring the US and foreign markets cost analysis is a must because operational costs can be a burden and unpredictable. Exploring the operational cost of both foreign and

5 domestic can be a cost-saving strategy for large companies that want to operate in the US or on foreign soil. The US includes labor expenses, taxes, as well as operational and manufacturing costs. However, expenses are higher but predictable. Thus, overseas investments usually see lower labor costs, but the set-up cost can be more expensive internationally. There can be more compliance issues and potential exchange impacts when dealing with international marketing investments. Whether it is a foreign or domestic market, revenue projection and financial metrics are very important because these two areas navigate the dynamics of reliability, profitability, and financial viability of a company. US revenue projections are based on market stability, known competitive dynamics, and consumer preference. Market saturation can be a problematic issue in the US and revenue estimations are more reliable than those overseas. The foreign market projections potentially have a higher revenue growth due to untapped markets but can be highly unpredictable and have high uncertainty. There should be careful planning when tapping into the foreign market. Skilled pricing strategies and market penetration need careful planning. Financial metrics help to determine and compare financial viability and profit margins by using financial metrics such as NPV, IRR, payback, and break-even analysis to evaluate both domestic and foreign markets (Daniels, et al. 2019). Conclusion In conclusion, investing in a new product line overseas or in the US intitles and demands a comprehensive analysis of qualitative and quantitative factors. The company should align the investment with its long-term strategic goals, considering market potential, regulatory environments, operational logistics, risk factors, costs, and revenue projections. A balanced

6 approach, weighing the stability and familiarity of the US market against the growth potential and challenges of foreign markets, will help in making an informed decision.

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7 References Daniels, J. D., Radebaugh, L. H., & Sullivan, D. (2019). International Business : Environments & Operations: Worldcat.org. OCLC WorldCat.org. https://search.worldcat.org/title/International-business-:-environments-and-operations/ oclc/1064597296 Hill, C. W. L. (2019). Global Business Today. Abe Books. https://www.abebooks.com/9781264067503/Global-Business-Today-Hill-Charles- 126406750X/plp Murthy, N. S. (2019). International-Business.pdf. International Business. https://www.sscasc.in/wp-content/uploads/downloads/MCOM/International-Business.pdf Wang, G., & Hu, X. (2022). Research on Intercultural Communication in International Business. https://www.scirp.org/pdf/oalibj_2022072816315600.pdf. https://journalseeker.researchbib.com/view/issn/2333-9721

BUSN 604 Week 7 Assigment Sheila Seal

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