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Almost every business vision to serve in the global market because of its potential benefits. Global business entails the exchange of goods and services in more than one country. It differs from operating a local business because one must consider the key aspects, including international regulations and laws involved, market, entry, supply chain, technology and culture (Worthington et al., 2018, p.12). XYZ is a growing automotive firm established in 2015 and headquartered in London, UK. Its main operations are engineering, designing, and manufacturing of motor vehicles. The vision of XYZ company is to develop a recognisable brand that exhibits luxury and style on a global scale. It is currently focused on producing luxury care with interests in the mid and front engines to fit sports car designs. It mainly sells its cars within the UK and has started sales to neighbouring countries. It also sells vehicle parts and offers vehicle servicing.
Protecting Intellectual Property in Global Market
Intellectual property (IP) protection is critical for maintaining a competitive edge and managing international open innovation that may improve a company’s business development and entrepreneurial success. It protects inventors’ intellectual properties, such as symbols, designs, literary names and images, to help them get commercial benefits from their work. The IPs are categorised into trademarks, copyrights, designs, patents, and trade secrets, among other new developments (Bently et al., 2022). Both small and large companies acquire the IP rights through registration with an authorised body. Protection of IP I The global business offers new opportunities and promotes market position among competitors (Paunov & Planes-Satora, 2019). It is useful in international business activities such as advertising and differentiation. The UK has an IPO (Intellectual property office) that manages IP rights.
UK-based businesses willing to trade internationally can protect their IP through registration using the Madrid protocol. The Madrid protocol operates under the WIPO ( world intellectual property organisation) that manages IP in the UK. Persons found with counterfeit products are charged with criminal activity and products.
Design and Copyrights for XYZ Company
Car design is a conspicuous feature that most clients use to differentiate brands. Relatively, XYZ Company has unique designs with wide flat edges from the front view for its cars. Therefore, the company must protect its designs when entering the global market. According to the registered Design ACT 1949 of the UK, design rights protect the shape, including internal and external aspects (Volkwn, 2021, p.11). Moreover, investors only receive design rights when a design is documented, irrespective of the time used in public. Only new designs with individual characters are registered, where new means it is not similar to any other design. However, vehicles are categorised as complex products because they involve more than two removable parts and qualify for special conditions of registration. The design rights are valid for 25 years and must be renewed every five years.
Patents
Patents are protection granted to firms and individuals towards their inventions to recognise them as the original owner of the idea. It prevents others from creating, using or commercialising the invention without the knowledge of the original creator. In the Automotive industry, patents cover suppliers’ and manufacturers’ technological and innovative aspects (Paunov & Planes-Satora, 2019). XYZ Company, therefore should protect any aspect of technology and innovation used in manufacturing their XYZ-branded cars when venturing into a global business. The Patents Act 1977 states patents last for 20 years (Matheson & Kirkinis, 2021, p.488). With the increasing changes in technology in the automotive industry, Companies should ensure they protect their inventions.
Trademarks
Several well-known and valuable trademarks with high brand value exist in the global automotive sector. A trademark is a unique symbol, phrase, word, sign, or a combination of all listed that distinguishes a firm’s goods from the other firms operating similar business lines. XYZ Company operates within the UK with a combination of symbols and words which will be applicable in global business. Registration of trademarks in the global business, just like other IPs, gives owners a long-lasting right. However, in international trade, some cases may prevent a firm from protecting its trademark, such as those with non-distinctive features (Dratler & McJohn, 2023). Different counties have different restrictions on trademarks. If XY is interested in working with Ukraine, it is important to note that Ukraine does not validate trademarks in the shape of goods.
Managing Business Functions in an International Context
Business functions entail the activities that firms engage in daily basis and are categorised into two that is core functions and support functions. The core functions are main activities that include the production of goods, while support functions facilitate main activities such as marketing, supply and distribution, R& D (research and development), technical and administrative and ICT services (Tien, 2019). In international trading, business functions are the activities carried out by businesses in the global business environment as exporting, importing, marketing, production, administration, ICT and human resources. Marketing is a business function that entails popularising a product or service to potential customers (Tien, 2019). International marketing is affected by legal, political, technological, ecological and demographic issues
Managing exports and imports is an international business function that requires documentation to meet a country’s regulatory requirements. These documents include a bill of lading, customs invoice, certificate of origin and export declaration. Export and importing companies must ensure they have all the right documents for smooth trading. It is also important to manage accounting and finance in international business. Accounting is essential to show stakeholders the business’s financial position (Camfferman, 2020, p. 256). The financial statements should conform to IFRS (international financial reporting standards). Other bodies that standardise accounting are GAAP (generally accepted accounting standard principles and FASB (financial accounting standards Board. Because different countries follow different accounting standards, it is critical to understand the appropriate standard for the trading country.
The WTO is actively involved in helping firms manage their operations in the international market. Its functions are categorised into settling disputes, execution and monitoring of commitments to trade practices, trade negotiations to ensure a smooth flow of products and services among trading countries, and support traders to access participation in countries with free trade (Qureshi, 2022). The WTO aims to improve transparency in the decision-making process, ensure maximum resource utilisation worldwide, environmental protection, and embrace sustainable development.
Impact of National Cultures in International Markets.
The international market contains multinationals and businesses from different cultural backgrounds collaborating in decision-making and other business functions. Culture influences processes, values, etiquettes, practices and thinking patterns. Different nations practice cultures that are different from other countries, influencing trading in the international markets. Many countries value corporate social responsibility in international business (Weatherly and Oter, 2014, p.34). Therefore, firms must study and understand cultures to make informed decisions before entering the market. The national differences using the five dimensions by Hofstede are individualism, power distance, uncertainty avoidance, long-term orientation and masculinity.
Power distance culture
Power distance is a national culture that interferes with business operations in the international market. It refers to the extent to which people with less power agree that power is evenly distributed. Power distances are different, with some considered low while others are high. A high power distance culture tends to consider people in powerful positions as more deserving of respect and power than those in lower positions (Palmer & Harftley, 2011). This kind of culture affects the customer purchase power in the market, whereby consumers tend to prefer widely recognised brands as worthwhile and disregard brands with little recognition. Therefore, firms must first strive to build brand names when trading in such countries.
Uncertainty avoidance culture
Uncertainty avoidance (UA) culture is people’s attitude in a given country to interpret the unpredictability of the unknown future. It shows the risk-taking abilities of a people within a nation in unknown circumstances. Nations that practice high uncertainty avoidance are very strict and do not easily conform to changes (Espig et al., 2021). This means that there is little room for innovation in such countries, and it may be difficult for them to accept goods and products they are not familiar with. Such nations include Greece, Japan, and Portugal, among others. On the other hand, nations with moderate UA welcome new ideas, for example, the US. This offers an opportunity for global business. Nations with low UA can comfortably approach change, making them a good opportunity for international business. These include Denmark, Sweden and Singapore.
Culture of Individualism
Individualism is an unwritten belief within a nation where people develop a sense of self-reliance instead of relying on others for help. Nations that practice individualism believe that their success is embedded in their ability to remain unique (Espig et al., 2021). People in such nations lack the heart to support others, including supporting foreign businesses. They tend to focus more on themselves and forget about social interactions that may benefit them. Some of the nations with individualistic cultures include Canada and Hungary.
Culture of Masculinity and Feminism
Nations that practice masculinity culture prioritise competition, acquisition of wealth and success. They also value men’s contribution to society, making men more competitive and assertive than women. On the other hand, feminist culture is a nation that highly regards the quality of life, caring for the vulnerable and maintaining good relationships (Wenxin & Yue, 2022, p.382). Masculine cultures allow the international market to create competition and a great market as men are willing to acquire more wealth to be successful. Otherwise, feminine culture creates international market opportunities for products that promote quality of life.
Long–term orientation culture
Hofstede defined long-term orientation as the cultural practice of non-western nations where people foster characters that build into the future. According to this culture, what is seen as evil or good depends on the situation. These nations respect market positions and relationships and emphasise persistence. They believe that leisure is not an important part of human life. Long-term orientation culture may mean a foreign business takes longer to develop. Therefore, foreign investors should not expect quick progress but remain persistent in achieving their business goals.
Entry Strategies in International Market
When expanding into international markets, a company must determine whether there is a market for its product and the amount it will cost to operate there. Market entry ideas give companies a road guide for entering foreign markets. Entry strategies are organisations’ techniques for planning, distributing and delivering goods and services in the global markets (Tien et al., 2022, p.24). Numerous strategies require proper initial understanding to make a suitable decision for trading internationally (Ohmae, 1990). Factors such as financial constraints, control of resources, sourcing and marketing greatly impact the choice of market entry strategy. Moreover, analysing the entry strategies is essential for prior planning and management (Sloman & Jones, 2017). Common entry strategies include importing, exporting, franchising, licensing, piggybacking, joint ventures, outsourcing, and greenfield investment.
Exporting
Exporting is a market entry strategy involving producing a service or a good and selling it to consumers in a different country. One could do direct or indirect exporting, where in indirect exporting, an intermediary is assigned the task of selling on behalf of producing company, whereas direct exporting is where the producing firm directly sells to consumers (Tien et al., 2022, p.25). Most start-up ventures in the international market choose indirect exporting to minimise losses by using agents who are well-experienced in the market. The companies can export auto parts or wholly assembled cars in the automotive industry.
Franchising
The IFA (International Franchise Association) define franchising as a license between two firms or persons that operate independently to allow the franchisee rights to engage in business operations using the franchisor’s business or trademark. This is a method used by many businesses to enter the international market. In this agreement, there is standardisation where the franchisee must design the business according to the franchiser’s interest, including staffing uniforms and trademarks. The renewal of the franchising agreement is done according to the franchiser’s terms (Burhanuddin, 2021,p.38)s. However, some countries, such as China and the United States, regulate franchising. Franchising to enter the international market has numerous benefits, such as the low risk for the franchiser because the franchisee takes care of major start-up needs such as staff, land, and local licensing.
Joint ventures
Another method companies may adopt for entering the international market is by forming joint ventures. Joint ventures are where two companies that could be a foreign and domestic partner to start a business in the global market. A domestic firm depends upon the foreign company to offer expertise and support for starting the business in the foreign country. Each party must be committed to each other to make it work. Different countries have different rules and regulations about joint ventures. In some countries, joint ventures must be partially owned by a partner from the country (McAlees, 2004). It is therefore important to study the rules and regulations of various countries to choose the most favourable deal.
Foreign Direct investment
Businesses can enter the international market by directly investing in their country of interest. The company set up a business by identifying a location and acquiring all the legal formalities to start the business. Many companies that use this method do so because of tax incentives offered to encourage foreign investments in the country (Mistura & Routlet, 2019). Alternatively, the business can buy a firm of interest in the target country. This method is risky and costly as it requires the business owner to cover all the business capital. The major challenge with this method is that foreign investment varies widely between nations, and over time, it is difficult to pinpoint the factors that best encourage investment flow.
Appropriate Global Strategy for XYZ Company.
As discussed above, there are many entry strategies that a company can choose to trade in the international market. This offers XYZ Company many choices that it can use to trade in the global market. XYZ Company can start by exporting its luxurious sports cars to the European Union countries. This will offer it a chance to test the reception of its products by the market outside the United Kingdom. Likely, exporting is a favourable opportunity for companies with market experience constraints, and XYZ currently has no expertise in global business. The UK is well known for its great performance in automotive exports, which is an advantage to XYZ because of its good reputation. Besides, there is great market potential for cars globally because most countries do not have domestic car manufacturers, and consumers prefer a wide range of designs from which they can choose.
The company can directly export to selected countries and use intermediaries to sell their products to other selected countries. There are numerous benefits, including increased profits, because the number of consumers increases with expansion into wider markets (Raei et al., 2019). Besides, the international market reaches customers with varied tastes that may fit XYZ’s large production of luxurious cars. Exporting will also increase the competitiveness of the firm, whereby XYZ will be exposed to better marketing techniques and ideas that it can implement to improve its products. Likely, exposure to more customer tastes and preferences when exporting offers a chance for creativity.
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