INTRODUCTİON TO BUSİNESS

Import substitution is an economic policy which defends replacing foreign imports with domestic products.

A multinational corporation (MNC) is an organizational form, which has operations in more than two countries and it consists of a central firm – usually in the home country- and branches or subsidiaries in foreign countries.

We should examine the realities of international competition to find some answers to this question. There are several active international car brands in Turkish automotive market and these are linked to MNCs. These MNCs are not only manufacturing cars for Turkish market but also for their branches in other countries. MNCs generally have an advantage to achieve economies of scale. Economies of scale is the cost advantage that arises with increased output of a product.

Emerging markets are the transition economies such as Brazil, Russia, India, Mexico, Nigeria, and Turkey that are characterized by high levels of growth despite insufficient infrastructure.

There would be many reasons for MNCs to expand into foreign markets as a way of growth. There is a close link between competitiveness and intentions of these firms to globalize their operations. The basic contributions of global business operations to a firm’s competitiveness are; cost reduction, spread of risk across wider environments, capitalization of core competencies, gaining access to new customers, and valuable natural resources.

In the globalizing world, the business endeavor necessitates to consider many diverse factors. For example, cultures and life styles differ remarkably among countries. Other factors could be listed as follows:

Companies decide for going international as well as which strategies to follow based on the resources they can allocate for international operations. Following strategy options are frequently used to compete in foreign markets;

In order to build a global competitive advantage, activities might be required to concentrate in certain locations. For example, if costs of production or transportation are lower; if there is a possibility of scale economies or if there is a steep learning curve effect in certain locations, it would be beneficial not to disperse the activities. On the other hand, if it is necessary to be close to buyers; if transportation costs or trade barriers support the decentralization or if fluctuating exchange rates, supply interruptions, and adverse politics should be buffered, activities should be dispersed.

Culture plays a significant role in determining success or failure in international business.

The characteristics of emerging international markets may be different and as a result, competition in these markets should be arranged accordingly. Companies have to attract buyers with bargain prices and have to achieve a better fit to local requirements. Specially designed or packaged products may be needed to accommodate local market circumstances. Management teams for these firms must be consist of a mix of expatriate and local managers. For emerging markets, competition should be based on low price. The companies aiming at emerging markets may need to develop new business models to accommodate local conditions.

Licensing is an appropriate choice when a firm has valuable technical know-how or a patented product but lacking international capabilities for positioning in foreign markets. If a firm desires to avoid risks of committing resources to unfamiliar, volatile, unstable markets, licensing would be a good start. Basic disadvantage is the risk of providing valuable technical know-how to foreign firms and losing some control over its use.

The correct answer is D.

The correct answer is B.

The correct answer is A.

The correct answer is E.

The correct answer is D.

• incorporate whatever country-specific variations in product attributes are needed to satisfy buyers, and

• make whatever adjustments in production, distribution and marketing are needed to compete under local market conditions.

The correct answer is A.

The correct answer is E.

 However, reduction of tax rates is not necessarily a result of a strategic alliance between two companies. The correct answer is B.

The correct answer is D.

The correct answer is D.