Business
Globalisation
Executive Summary
Qantas is one of the largest airlines in the world, which offers more than 800 international services. International expansion into new emerging markets is essential for Qantas to achieve its growth potential.
Methods of International Expansion
There are five main methods of international expansion. In the case of Qantas, foreign direct investment has been the main means of international expansion
Exporting
Exporting is selling products in overseas markets. It allows a business to penetrate global markets at low cost prices and at low risk
Foreign Direct Investment
Foreign direct investment occurs when a business makes an investment to control foreign operation and business.
Relocation of Production
In this era of globalization, business usually has many potential locations to operate. Businesses will often search for the best location with 3 main objectives:
1. Reduce labour costs
2. Get around trade barriers
3. Get close to customers
Management Contract
These contracts enable companys to provide services overseas. The company Nike, is the best example of using management contracts as Nike has tried to reap the benefits of low labour costs in the developing world by installing their operations in these countries
Licensing/ Franchises
There are two other methods of international expansion which include licensing and franchising.
Licensing is when a business sells another business the right to use their property such as brand name, logo etc. It reduces the cost of establishing independently overseas but leads to a loss of control over quality.
Franchising refers to a business giving permission for another business to use its operating system and reputation in another country. Product quality is maintained but could have high buyout fee. Eg....
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