International Entrepreneurship

Introduction

International entrepreneurship is a rich growing area of study that provides opportunities for organizations, and people to establish themselves beyond the domestic domain. It involves exporting goods and services investing directly in foreign companies; opening new subsidiaries in other countries; and licensing agreements to manufacture goods in other countries. Transnationalization, as this process is also called, often yields sizeable growth, and thus, new ideas and higher economic returns.

This blog post has discussed the facets of international entrepreneurship and the benefits and difficulties associated with the same. We talked about why businesses expand into the global market, the strategies firms can use to enter new countries, and the advantages & disadvantages of globalization. We also reviewed some of the cases of successful international businessmen and businesswomen and how they affected the global society.

International Entrepreneurship

International entrepreneurship is a process through which firms and individuals generate new value through the creation, exchange, and consumption of economic products and services across national borders. It encompasses entry to new markets with a different country’s products or services, establishment of operations in the domestic market but in another country, or identification of opportunities for development in another country. 

The global environment requires them to comprehend distinct regulations, cultural differences, as well as economic environment. This discipline involves certain planning and understanding of the international environment enabling persons to cope with challenges and to take advantage of the beneficial conditions globally.

Importance of International Entrepreneurship

• Economic Growth: International entrepreneurship can be highly beneficial to the growth of the global economy as it creates employment and productivity chances thus adding more revenues to the enhancement of economic development.
• Innovation: Also, the expansion of the businesses into different, and unfamiliar market situations, enables entrepreneurs to adapt to new behaviors and to discover new demands from the customers that result in the creation of new goods and services that create an environment of innovation.
• Market Diversification: Venturing into international markets is an excellent way through which firms can spread their markets thus decreasing their dependence on one economy and at the same time eliminating issues that are associated with poor performance in the different economies.
• Cultural Exchange: International entrepreneurship builds bridges between societies as people understand each other better since they engage and learn from each other hence making the world a relatively peaceful place.
• Competitive Advantage: International market operation helps organizations acquire competitive advantages through new resources, technologies, and people needed for long-term business development and expansion.
• Knowledge and Skills Development: The young entrepreneurial ventures have to work under different regulatory, economic, and cultural settings which help them to become more capable and robust persons in business.
• Social Impact: International entrepreneurship can also benefit society by providing employment opportunities and resources to the communities to spur development in underdeveloped areas, hence reducing the poverty rates in these societies.
• Challenges and Risks: International entrepreneurship also comes with different challenges and risks such as; fluctuations in currency, political risk, culture, legal system, and competition. These factors must be analyzed and the strengths sought, while the threats must be avoided or worked around.
• Importance of Global Perspective: With the ever-growing globalization, understanding cultural differences is also very important to business and its success. International entrepreneurship is an absolute necessity for the modern entrepreneur to be able to look at the big picture and not be bound by some conventional confines that may hinder technological and business progress.

Benefits of International Entrepreneurship

• Economic Growth: International entrepreneurship employs people in the home country and the host country, as well as provides an increase in the economic activities of the two countries.
• Market Diversification: It helps the firms in spreading the risks of the market which in turn minimizes concentration in one particular market.
• Access to New Customers: Entering new territories offers the organization access to different clients, which in turn makes the company diversify its revenue sources and the overall possibilities for its development.
• Innovation and Learning: Globalization plays a crucial role in the transfer of expertise from one country to another, thus the firms have a chance to observe and adapt hi-tech working experience, equipment, and tendencies of the foreign countries’ markets.
• Competitive Advantage: Thus, the strategic market entry enables the firms to overcome the key problem associated with the existence of unique resources and capabilities in the foreign market which can be unavailable for the purely domestic competitors.
• Increased Brand Visibility: The operations internationally can result in improved branding and recognition of a firm on an international level.
• Resource Access: Global expansion can help to create opportunities to obtain new resources such as basic materials, workforce, and innovation.

Challenges and Risks of International Entrepreneurship

• Regulatory Complexity: Dealing with different legal systems and regulations, taxes and other compliance issues might be quite challenging.
• Cultural Differences: Lack of knowledge about the culture of the soil, the business environment, as well as the consumers’ buying behavior may be a barrier to market penetration and expansion.
• Economic Instability: The impact is that changes in exchange rates, inflation rates, and business cycles in the relevant markets affect profits.
• Political Risks: These usually occur due to shifts of power, policy, or even instabilities which pose some risks to the business.
• Intellectual Property Protection: Protecting patents, trademarks, and trade secrets in these countries is often not an easy task.
• Supply Chain Disruptions: Operating via cross-border supply chains exposes an organization to political risks, natural disaster occurrences, or pandemic health risks.
• Market Entry Barriers: There are key challenges that include high tariffs, and rigorous regulation of imports as well as competition from local companies when branching into new markets.
• Access to Capital: It is generally hard to secure funding in foreign markets owing to unfamiliarity with the financial system in the foreign country and its investors.
• Communication Barriers: Due to language barriers in business, communication may be a challenge and this may cause challenges in negotiations and other business interactions.
• Legal Disputes: It takes time, and costs a lot of money to settle cross-border business disputes because of the difference in legal systems.

Motives for Establishing International Entrepreneurship

International entrepreneurship refers to the activities a firm or individual undertakes in its attempt to operate in different countries. 

Motives for establishing international entrepreneurship are:

• Increased Profitability: international business offers a greater profit margin to domestic business through the advantage of large-scale operations.
• Increased Growth Opportunities: where uniformity and diversification are the fundamental business development strategies of many businessmen, international business is the way through which such goals are realized because, at a certain time, the home market gets saturated.
• Increased Competitiveness: As the competing companies have to compete globally they have to look forward to global scale efficiency.
• Dominant Position in the Market: Competition being one-sided in favor of firms in terms of patent rights, control over technology, product differentiation, and other ancillary services prompts them to go for international operations.
• Government Policies: Competent authorities’ policies and legal requirements as well as opportunities and threats associated with business can also promote the internationalization of business.
• Internationalization of Resources: The essential inputs regarding the business need can be bought at the lowest possible price in any part of the world. For example, labour is cheap in Underdeveloped countries; but capital and technology are also cheap in developed countries.
• Pay-offs of International Business: An organization having businesses in other countries is seen in a better light in the domestic market too.

Examples of International Entrepreneurship

• Alibaba Group: Alibaba Group was started in the year 1999 by Jack Ma today is one of the largest e-commerce and technology companies in the world. Ma’s vision was to provide a platform that directly links Chinese manufacturers to overseas consumers, which was altogether an innovative and broad idea that changed the scope of online trading.
• Spotify: Spotify is an example of an international entrepreneur as it was started in Sweden and is streaming services all across the globe. Its strategies for global expansion incorporated the concept of catering to the local market peculiarities and embracing digital technology to deliver the music experiences precipitated by the difference between the geographical locations.
• Tesla, Inc: Elon Musk who is the founder of Tesla has also taken his company internationally to other nations in Europe, China, and other countries. The company spread manufacturing plants and sales channels across the globe to meet the rising consumer demand for electric cars and green energy.
• Unilever: Unilever is an MNC organization that applied the appropriate strategies for business within various countries all over the world. Finally, coordination of marketing is done by understanding the consumer trends in the different countries and the regulations which allows Unilever to market its wide variety of products and services across the globe successfully.
• Airbnb: Created in America, Airbnb has become an international conglomerate of short-term accommodations for such persons who wish to let out their premises to other individuals. It also overcomes different cultural and legal requirements to address users in the same coherent and functional manner regardless of the country.

Difference Between International Entrepreneurship And Domestic Entrepreneurship

Some such differences or complexities are:

Modes of Entry Into International Entrepreneurship

Exporting

This simply refers to the selling of products produced in one country to another country either directly or indirectly through a resident of the home country. Compared to direct exporting, indirect exporting is convenient and not highly risky.

II. Licensing and Franchising

The licensor is an entrepreneur who allows the foreign manufacturer, the licensee, to utilize a patent, and trademark technology, product, or production process for the consideration of royalty payment. It is comparatively a safe business as compared to the direct exporting methods. It also gives steady income in terms of royalty.

However, it may turn risky as the licensee may become the biggest competitor of the parent company. Licensing could be generally described as a special sort of joint venture that includes rights to a business concept called franchising. 

For example, The franchise in India is run by a local company, making two Indians the managers of the McDonald’s franchise. Currently, while M.D Hardcastle Restaurants Pvt. Ltd. is led by Amit Jatia Owns Mcdonald’s in West & South India, Mcdonald’s in North & East India is owned and operated by Connaught Plaza Restaurants Private Limited owned by Vikram Bakshi.

Turn-Key Projects

The foreign operation entails that the entrepreneur constructs a plant, a factory, or any kind of establishment. Local talent is employed to be trained in the areas of management and technology to oversee the facility. As soon as the facility is ready for use, the ownership will be handed over to the local entrepreneur; this usually results from an agreement made with the government. That is why the name is Turn-key Projects Indeed, NAME is Turn-key Projects. The entrepreneur who erects such a project earns initial revenue.

Management Contract

It is an understanding according to which the day-to-day management of an enterprise is placed in the hands of another business venture which in turn provides the requisite managerial services for consideration. The contract enables the purchasing country to get foreign experience, and people’s skills without surrendering its resources to a foreigner. Thus, the entrepreneur can earn without using their funds.

Joint Venture

The entrepreneur enters into a joint venture with a firm in another country and a new joint venture is created. The two have equal ownership, capital investment, control of losses, and earnings of the business. It is a most suitable form of international entrepreneurship when: It is the most suitable form of international entrepreneurship when:

• the entrepreneur wants to use a well-established manufacturing/marketing facility;
• he wishes to quickly enter a foreign market;
• it will be synergy since the two entities complement each other in terms of skills acquired.
• The host country government does not allow fully owned foreign firms.

Foreign Branch

 In the real sense, an entrepreneur may engage in the setting up of a branch in a foreign nation. For instance, Patanjali has extended its outlets in many other countries among the listed ones. VII. Foreign Subsidiary: A WOS is beneficial due to the full control it affords in operation in a foreign country. VIII. Mergers: A merger, which is a union of two or more companies where one of them is a foreign company is another strategy of international entrepreneurship.

In my point of view, International entrepreneurship is not only a way of expansion but a way of exchanging culture and promoting innovation. When corporations transact in foreign nations they exchange information, know-how, and effective organizational practices making for a complex and evolving global economy. It is possible to make the world a better place through business ventures; all that is needed is proper strategies and adherence to common standards of conduct.

Conclusion

International entrepreneurship is therefore an attractive proposition to any business since it offers new markets, access to resources, and cyclical growth. However, one needs to consider specifically some difficulties related to cultural differences, legal issues as well as fluctuations in the economy. This paper finds out that by identifying these and other factors, coupled with an entrepreneurial strategy, the entrepreneurs are in a position to be able to venture into the international market and create an entrepreneurial presence.

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