Going Global: Risk Versus Reward
Going Global: Risk Versus Reward
The following Course Outcomes are assessed in this assignment:
MT497-3: Evaluate how economics, government, and law affect value creation in the global context.
GEL-1.02: Demonstrate college-level communication through the composition of original materials in Standard English.
GEL-6.06: Apply research to create original insights and/or solve real-world problems.
A global mindset is essential when embarking on a new business venture. Management must think through how to grow revenue while managing costs and minimizing risk quickly. Not every country imposes the same level of risk and reward. In this assignment, you will delve into the legal, economic, political, and government business environment to best determine a future course of action.
Read the scenario and then address the checklist items in an informative essay.
Somnio (fictional company), a start-up customizable running shoe company based in California, has decided to go international from the very start and begin selling its products in the European Union (EU). What business environment factors do they need to consider and why? You will do some research and address the three areas below.
Evaluate the key challenges and subsequent decisions specifically addressing the three areas of the business environment for Somnio in California and the EU.
Research and assess these three areas of the business environment.
Legal: Determine the government laws and regulations that Somnio must consider.
Laws and regulations differ from country to country and present a challenge for international firms. Sometimes laws can even vary from region to region, compounding the difficulty in manufacturing and shipping logistics (i.e., Canada). In the United States, California and arguably New York have the strictest state laws that may also need to be considered, particularly around privacy when doing business abroad.
Economics/political risk: Assess the risk of loss of assets, earning power due to currency fluctuations, and managerial control due to political changes in the EU.
This instability may include internal conflicts such as social unrest, ethnic violence, social activism, and politically-motivated terrorism. Cyberthreats would also fall under this category.
Government: Determine tariffs, duties, and taxes that may affect imports/export costs that must be considered when making key decisions. Justify your assertions with your research.
After evaluating Somnio’s economic, government, and legal environment, decide upon the following:
Organizations can move quickly to a global market by seeking cheaper material and labor sources or by developing markets for products and services outside their home countries, particularly the United States.
In the situation of Somnio, determine how you would decide to go about the manufacturing of goods. Decide how you would decide whether to:
globally outsource, or
create a joint venture.
Provide your rationale and cite your sources.
Additionally, make sure that your evaluation response:
Is written in Standard English with correct grammar, style, and mechanics.
Has a purpose clearly stated in your introduction statement.
Demonstrates logical and appropriate transitions from one idea to another.
Is highly organized, logical, and focused.
Includes additional title and reference pages in APA format and citation style.
Respond to the checklist items in a Microsoft Word document in a minimum of 3–4 pages with additional title and reference pages using current APA format and citation style (for APA assistance, see the unit reading area).
Access the Unit 2 Assignment rubric on the Assignments tab at the top of the course room.
Submit your paper to the Unit 2 Assignment Dropbox.
Be sure to access the assignment resources on the tab above.