Global Expansion to the U.S. and Asian Markets

Global Expansion to the U.S. and Asian Markets
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Word Count: 2342
Table of Contents Abstract 3 Introduction. 4 Theoretical Framework. 5 Solutions. 7 Mergers and Acquisitions. 7 Lean Approach. 8 Conclusion. 11 References. 12  
Abstract
The simulation challenge that our organization faced was the desire to venture into a foreign market. The United States and Asia present vast opportunities for any business because of plenty of raw materials and skilled labor, as well as a ready market for the products. However, such ventures present major risks for any firm, especially in the modern COVID-19 pandemic recovery phase. As the organization seeks to explore these markets, it would be important to understand the uncertainty involved and take appropriate measures to avoid the risks, as noted in the real options theory. The mergers and acquisitions present one of the potential options that the organization can utilize in venturing into the new markets. The organization can also work on reducing its working capital to ensure that it has sufficient resources for backup in the event that the plan does not go as expected. Besides, it should assess the environment to ensure that there are no hidden rules and adopt a lean approach to reduce its expenses as much as possible. These approaches will give the firm an opportunity to make mistakes and learn from them without paying a huge price.
Global Expansion to the U.S. and Asian Markets
Introduction
Geographic diversification is one of the major strategies that international firms use to reduce their portfolio risk by avoiding excessive concentration in one market. This type of diversification allows firms to bring new foreign operations within their boundaries and can utilize both tangible and intangible synergies. There has been an increasing number of studies analyzing the relationship between international diversification and firm performance. Some of these studies reported a linear relationship, emphasizing the benefits of international diversification (Mendoza et al., 2019). However, other studies have also reported a negative relationship between diversification and a firm’s performance. These studies have often cited high costs as a major determinant of the expansion efforts. Since the geographic diversification on the international scene entails moving into another territory with new rules, events, such as the COVID-19 pandemic, have a significant impact on any institution’s expansion efforts.
The COVID-19 pandemic had a direct negative impact on many economies around the world. According to a news article published in the Bank Post (2020), stock markets around the world suffered the biggest falls in history following the pandemic. Despite the quick recovery that many companies have made, many economies have gone into recession. The virus has resulted in several structural and lifestyle changes as people and businesses have adopted other operational mechanisms, abandoning the traditional ones. The rise in e-commerce and the sudden shift towards online consumption have forced many companies to also shift in their approach toward service delivery (OECD, 2020). The lockdown measures ...