Table of Contents
Individual Notes 1.
Individual Notes 2.
2.0 Analysis of domestic market
3.0 Strategy for ASDA to internationalize in the UAE market
4.0 Environmental analysis of UAE.
5.0 Mode of entry, challenges it may find in the UAE and possible solutions.
6.0 Leadership qualities of ASDA that support the market entry in UAE.
Individual Reflective Essay.
Individual Notes 1
1.1 The European Economic Community (EEC)
The European Economic Community (EC) is regarded as an economic association established in 1957. The number of members of this association was 6 countries including Belgium, France, Italy, Luxemburg, Netherlands and West Germany (Kenton, 2020). It had changed its name to the European Community (EC) in the year of 1993. The main functions of EC are making policies and governing the economic activities of the member countries. The head of the association is considered as president. At present, this association is a part of the European Union (Kenton, 2020). The reason behind the establishment of this organization was the cold war after World War II. This association is also considered a pillar of the EU. It includes 13 currencies of its member countries (Kenton, 2020). This association has made the asylum policy, border control, agricultural policy, fisheries policy and customer protection policy to create an effective market in Europe (Kenton, 2020).
1.2 What are the pros and cons of the EEC?
The main functions of the EU are making policies and governing the economic activities of the member countries (Kenton, 2020). Therefore, European Community had made the trade policy for eliminating trade restrictions and increasing the common market for all participants. This organization also helps to establish economic integration among the countries that are the members of this association. This association has made the asylum policy, border control, agricultural policy, fisheries policy and customer protection policy to create an effective market in Europe. This association helps to mitigate the trade barriers and apply a unique range of policies for creating stable economic and political relationships among the members of the association. It brings also the common market areas for every country by which they can involve in profitable trade all over the world.
However, EEC has faced some criticisms due to its several imperfect functions. Firstly, this association has forced the European countries for running the common monetary as well as fiscal policy to ensure similar interest rates all over Europe (Eichengreen, 2010). It hampers the independence of the country that affects the macroeconomic policy of every country. For example, when Italy faced a recession, the central bank of Italy has set up lower interest rates, increase the money supply, and reduce the exchange rate for eliminating the situation of recession. But this had created a problem in the other European countries because EEC has tried to set a common monetary policy for all countries (Eichengreen, 2010). Another problem was created in Germany in 1993 that also hampers the acceptability of EEC.
Individual Notes 2
2.1 Changes in the domestic market
Michel (2018) stated that the domestic market indicates the markets within the border and within the same country. The domestic market transaction depends on the same currency. That is why; there is no risk of foreign exchange. The rate of social and political risks is also less for the domestic market than the foreign market. However, the domestic market changes due to several factors including market structure, competition level and maturity of the organization. At present, the market structure of the domestic areas is highly protected by the central government (Armstrong, 2018). The competition level is also increasing day by day in the domestic market because most of the new organizations are coming with more quality and creative products in the market. Due to this reason, the business organization has faced a higher level of competition in the domestic that lead them to run the business operation in the foreign market.
Armstrong (2018) stated that the changes in the domestic market are also occurred due to maturity. The higher maturity leads to the organization in decline. The organization has several life stages from the beginning to the decline. The growth stage is not running at all times. At a certain period of time, the business organization has gained the maturity that can be reduced the performance of the firm. In addition, the domestic market changes due to the changes in the entry mood and government rules and regulations. The choices of customers, social issues and environmental issues are also changed in the domestic market (Michel, 2018). For this reason, most organizations feel good in running business operations in both the domestic and international markets.
2.2 Reasons why MNCs internationalize
The models of reasons behind the MNCs internationalization include stage models, Uppsala model and entrepreneurship model (Autio, 2016). The stage models indicate that MNCs are going to do international business by indirect sourcing; direct sourcing; licensing; joint ventures; and wholly-owned subsidiaries. On the basis of the Uppsala model, MNCs have run the international business due to gain market knowledge, Psychic distance and market commitment (Casson, 2016). The network theory indicates that MNCs have run the international business due to creating local and foreign business relationships and relationships with customers, suppliers and competitions. On the basis of the entrepreneurship model, the MNCs have run the international business due to understanding the entrepreneurial behavior and activities, international entrepreneurship and gain international experience.
The reasons behind the MNCs internationalize are described below:
Adequate Knowledge of the international market
Chandra (2017) mentioned that large of part MNCs are engaged in international business to gain enough knowledge about the international market. The knowledge of the international market assists the MNCs to find business opportunities and adopt new business strategies to hold these opportunities. According to Davidsson (2017), knowledge about the international market also assists the entrepreneurs to get the market scenario, create innovative ideas, generate a good communication network and find the potential threats and opportunities in advance. Therefore, it is an important reason for involving international business by the MNCs.
According to Hill (2016), Physical distance also affects the mindset up of MNC’s business holders to start a business in the international market. For example, Tesco has a good demand not only UK market but also in other markets. Due to this reason, Tesco has started the international business in several countries.
Aguilera (2015) stated that Most organizations start international businesses to ensure their market commitment. Market commitment is an important tool affecting the customers’ purchasing behavior. The mission and vision of MNCs are to provide quality products and services to all potential customers throughout the world. To maintain this market commitment, MNCs are starting an international business in the global market (Hill, 2016)…………………………..