Q.

1 What are the cultural and economic factors that are to be considered in international
expansion of an organization? Explain.
International expansion is a growth strategy that involves taking a company’s business,
product, and services from home country to foreign countries. It is also referred as overseas
expansion or foreign expansion. There are few factors that are needed to be considered in
expansion of international business and they are cultural and economic factors:
Cultural factors:
Culture is very important because it influences how multinational and cross-cultural teams
interact and collaborate in order to achieve the ultimate goal of the organization.
Few cultural factors are:
 Languages:
Language spoken and used in a foreign country have a impact on the product that is
going to be sold. Different countries have different languages and few countries have
2 or more official languages. This factor has to be taken into consideration because to
advertise or to provide more information about the product has to be done with the
native language. Canada has two official language English and French, so the
company has to do marketing in both the languages.

 Education:
Education level in one particular region can justify the status of the consumers. If the
consumers are highly educated they can easy understand about the product introduced
in the country and it also indicates that higher education lands up high paying jobs
and can more will be their purchasing power.

 Value or Ethics and Attitude:

Value or attitude might not be same in every country, something right in the home
country might be wrong in a different country. For example: selling products made of
beef is wrong in India whereas same is right in different countries. While expanding
business one should take value and ethics into consideration very seriously.

 Religion:
Religion is another major aspect that can impact on international business like
consumption of food, clothing habits, way of lifestyle. Few religions may only prefer
vegetarian food and few might consume both non-vegetarian and vegetarian food. A
mistake in this might cause a huge backslash to the company which moved into
foreign market.
Economic factor:
As much as cultural or socio-cultural factors are important, even economic factors are very
important for international expansion of the business.
Few economic factors are:
 GNI:
Gross national income is the value of goods and services produced in the country.
GNI per capita directly indicated the purchasing power and standard of living of the
population. If the GNI is not growing with the population then the GNI per capita is
isn’t rising and this shows that the purchasing power and standard of living of the
population is a country is not good.

 Unemployment rate:
This factors indicates how many people in the country are unemployed or actively
looking for employment. Higher unemployment rate in a foreign country indicates
that a organization is not ready to make an investment or to expand its business in that
country.

 Inflation:
It represents the increase in the rate of general price level. If a organization tries to
expand its business in a country where there is high inflation, then the price that an
organization has to pay for general input such as raw material, freight charges, labour
might be very high and might cause a huge loss to the company.

Q.2 Analyse the expansion strategies of a multinational organization of your choice.

For a organization to expand in foreign market it has to come up with strategies for efficient
and affective establishment of business. It will help to access new market, high return on
investment, establish a brand, enjoy collaborating with other international brand and also
building foreign relationship.

Following are the expansion strategies for Walmart:

 Setting up company goals for:
The thing for a company to do before going global is to set up clear and transparent
goals. It will help a company to know where they are and what is their future vision.
Walmart might set up a goal of opening up more that 100 stores in a foreign country
and also focus on building relationship with their customers so that they can gain
maximum profit once they establish in a foreign country.

 Thorough market research:

Walmart might need to do a market research before entering or expanding business
internationally. If Walmart wants to come into India then it has to research on its
Economic, Social, political, cultural, technological factors to sustain in the market.
 Evaluation of different strategies:
Walmart might first think about how to export its goods or services and then think
about licencing and franchising and also evaluate pros and cons of the market in order
to efficiently enter the market without any problems

 Selecting local partners:

Lot of companies first create their portfolio to set up with local partners when it
comes to supply of raw materials, logistics and legal compliances. Walmart has to
setup local partners so that it will be easy for them to establish their business