Taoboa Going Global | EssayIvy.com

Running Head: INTERNATIONAL BUSINESS 1

International Business

Institutional Affiliation

Students Name

INTERNATIONAL BUSINESS 2

International Business

International business is becoming increasingly attractive for most businesses. Global

markets offer great opportunities for the growth of a company. It is, however, important for a

company to evaluate and gauge itself against the demands and needs of international business.

This is because expansion into international business brings along benefits and challenges that

must be addressed for the company to successfully penetrate the global markets. This paper

seeks to examine the different major aspects that a company should consider when expanding

into international business. It uses the proposal of one company to expand its operations into the

international platform.

Overview of the company

Taoboa is a Chinese online shopping company founded in 2003 by the Alibaba group.

The Company provides a consumer to consumer (C2C) retail platform for small businesses and

individual entrepreneurs. The entrepreneurs open online stores on the website form where the

consumers can purchase goods. It is the country’s biggest online marketplace. The website is

designed with features that serve that best interests of consumers and sellers e.g. the escrow

payment method known as Alipay and instant messaging to facilitate communication between

the sellers and buyers. The company controls 65% of the e-commerce market in China.

There are more than 760 million product listings on the website with sellers posting as

many goods as possible on their stores. The goods are sold either through fixed prices, negotiated

price or on auction. The company has more than 370 million registered users. Taoboa also

provides e-commerce infrastructure services for those in the e-commerce market.

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Taoboa is led by a team of 12 members. The team members include a director, senior

researcher, two senior managers, principal engineer, senior architect, senior product manager,

principle specialist, product director, product manager, and two architects. It operates as a

subsidiary of the Alibaba group. It contributes a significant amount of revenue for the Alibaba

group.

The Importance of Expanding the Company Internationally

On expanding into the international business, the company will reach new market

segments (Zong-liscum, 2013). Tapping into a new market translates into increased sales. E-

commerce brings consumers from all over the world into the platform; e- commerce is

borderless. With that said, the company is able to expand its horizons. “Expanding into untapped

markets where there is an appetite for its products allows a business to take advantage of the high

demand low supply situation” (Zong-liscum, 2013). Expansion stretches out the market strides of

the business to sell globally.

Expanding into new global markets will increase the exposure of the business. It will

enable the business to create a global footprint in international business. A global footprint helps

the company gain greater brand recognition in the world market. In return, the company gets an

opportunity to expand its operations. The visibility of the companies brand will increase.

Global markets are full of dynamism and increasing competition. Venturing into such

markets translates to a renewed sense of focus so as to remain on top of the game in the market.

Competition may help an organization to improve the quality of its products and services. It also

fuels innovation in a company in a bid to remain relevant and create a competitive edge in the

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global market. Competing on a global platform is also a learning opportunity for the company, it

will be able to gain tips from its competitors in a bid to outshine them (Zong-liscum, 2013)

Expanding into global markets also enables the company to tap into a greater pool of

talent, ideas, and concepts. The global market is full of unique skills and mindsets. The company,

therefore, can access talent that is not available in its home country. Exploiting the great

technological know-how in the global platform will help propel the organization to higher

heights of operational success. It also helps the organization to create and maintain a competitive

edge in both the domestic and international markets.

Venturing into new global markets may offer the company an opportunity to diversify its

products, services, and markets. The company will be able to take up new designs and models

that suit the needs of the people in the various global markets. Diversification of markets enables

a company to keep afloat in the face of economic turbulence in some markets; the business will

be doing well in the economically stable markets while still concentrating on improving business

in the areas affected by economic instability. “Businesses can utilize the countercyclical

fluctuations of markets with different seasonal demand trends to stabilize their product sales”

(Hill, 2015). When one market is experiencing a down turn, revenues and operations from other

markets can be stream lined to keep the organization stable.

Expanding will help the organization to capitalize on different economies of scale e.g.

technical economies and purchasing economies. This is because expanding into international

business directly translates into the expansion of operations. Some governments also offer

incentives to foreign firms that enter into their markets e.g. low corporate tax. The company will

be able to enjoy these benefits.

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Cultural Factors that affect International Business

Culture affects international business in different and many ways. Expanding into the

global markets means that the company will have to deal with diverse cultures in the different

markets. Each market in the global platform has a myriad of cultural aspects which include, but

are not limited to values and beliefs, norms of behavior, communication, customs and art, music,

dance, and sports (Czinkota et al, 2010). These cultural practices influence the family life,

education, and organizational structure, economic and political structures of a country. All these

factors influence the operations of an organization in the international business. Culture

influences the dominant values of the organization like product/ service quality and customer

orientation. The organization must understand differently the culture of the different markets to

know how to maneuver through the market. In the different markets, the organization must apply

varying professional cultures and systems of rules. Basically, being attuned to the cultural

differences will definitely play a big role in the success of the organization.

Communication is one major cultural element that affects international business. Global

markets are located in different regions of the world whereby different languages are used for

communication. Language barriers are likely to inhibit business activities in the various markets.

Subtle non-verbal communication is also crucial to the functioning of the business activities

(Czinkota et al, 2010). An acceptable communication culture in one market may be

unacceptable, offensive and unusual in another market. Effective communication is vital to the

success of a business. It is therefore important to navigate cross-cultural communication

challenges with sensitivity and openness. To solve the problem of communication barrier in the

venture into international business, the organization should train the employees on the

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communication values and practices of the specific markets. The organization should also

employ staff from the specific market regions to ensure good knowledge of the communication

modes and aspects.

Organizational hierarchy is another cultural practice that affects international business.

Attitudes towards management roles vary widely depending on culture. These attitudes are often

a reflection of the country’s values or equality levels in a society. For instance, in some cultures,

junior and middle management staff members are not allowed to question top-level decisions. In

some other cultures, only top management addresses meetings while the rest remain silent. Roles

and responsibilities are clearly defined throughout the hierarchy. To address this issue

Woodbridge should understand clearly the organizational practices and the different roles and

responsibilities in the hierarchy.

Work etiquette, in addition, is another cultural factor that affects international business.

An example of this aspect is the formality in addressing colleagues, partners, and clients in the

market. Some cultures prefer the use of titles, others the use of surname and others the first

name. Punctuality is another aspect of work etiquette that affects international business. For

instance, Canadians are strict time observers that expect meetings to be started in good time

while in some other cultures starting a meeting late is a non-issue. Workplace attitudes of

confrontation, adherences to rules and regulations and the given working hours also vary with

cultures (Czinkota et al, 2010). It is therefore important for the organization to understand these

aspects of the society in order to enable co-existence and to create long-term relationships for the

business.

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To address the effects of culture on the expansion into international business, Taoboa

should recognize and acknowledge the varying cultures in the different markets. The company

should aim at understanding the culture of each market and tailor its operations to suit the needs

and preferences of each particular culture. The business should also recognize the input of local

employees in defining and educating other staff members on the different cultural aspects. The

business should also employ staff members from the market local community to break the

communication barriers. The business should also tailor its features and services e.g. payment

methods to the needs of the market depending on the culture. The company should treat each

market as independent when it comes to addressing cultural issues.

Marketing/ Sales Strategy

The company should delve into a market research of the various market segments. To

have a strong and successful marketing strategy, the company must understand the market. The

company must have a clear knowledge of the needs, tastes, and preferences of the market. The

business must also know what products are already being offered in the market and the

technology in use so as to find an avenue for providing better quality products and services.

The company needs to design its infrastructure to suit the technology that is commonly

used by the people. Different markets prefer different modes of payment while transacting.

Certain technology is available and acknowledged in some markets while it is unfamiliar in

certain markets. The technology design and features should also be user friendly to ease the

process of the buyers and sellers in the marketplace.

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The company should create a visible brand on the international platform to increase its

sales. Branding helps create loyalty among customers thus maintaining and increasing sales

volumes. Through branding, customers start to identify with the company and its products (Hill,

2015). Brands give customers something to believe in, possible solutions to their needs and thus

increasing sales.

The company should also work with local partners e.g., affiliates, partners, distributors

and agents who are already established in the market. Close consultation and engagement others

who have established a mark in the market is essential in penetrating a new market. The

company should also learn and apply local customs in its customer service practices. The

company should use local agents who understand the cultural practices, needs, preferences and

tastes of the people. Such agents will be able to better penetrate the market and create a

relationship with the customers. The customers will also be able to easily relate and identify

themselves with the local agents thus contributing to sales increase.

Furthermore, the company should use advertising and other modes of promotion to

market its product and services. The promotion should use varying media mix in different

markets e.g. social media is more effective in some markets while newspaper, radio, TV and

online advertising are more effective in other markets. Promotion will help put the name of the

company out into the market thus giving the customers knowledge about the company.

In addition, the company should educate the consumers on how to use the technology that

they apply during transactions. Some consumers may fail to use the platform due to lack of

knowledge on how to use the site. Educating the consumers on the use of the features of the

technology, the payment modes, and the available applications may help increase the sales.

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The company should offer its product s and services at affordable prices in the different

markets to increase its sales. Taoboa should also use discounts to stimulate sales and maintain its

customers. Additionally, the company should offer value-added services to its customers at

relatively low prices. Furthermore, after sale services go a long way in increasing and

maintaining sales.

Financial Impact of International Expansion

Expanding into new markets will demand a huge investment of finances. The company

needs infrastructure for use in the respective markets and the cost of setting up the required

technology is considerably high. Funds to do market research, hire staff members and promote

its products will also be required to aid the execution of the marketing strategy. The company

will also be faced with exchange rate uncertainties owing to the dynamism of foreign exchange

rates. Furthermore, financial management on a global platform is tasking due to the different

banking regulations. Addressing the various legal concerns in the various markets will also

demand the use of company finances. In addition, the company will realize increased revenue

due to the increase in sales after tapping into new markets. It is likely to realize more profits

from the venture in international business once it penetrates the markets.

Legal Concerns

There are several legal concerns that arise with a business expansion into the

international market. Labor and employment laws differ from one country to another. It is,

therefore, necessary for the company to familiarize itself with the different labor and

employment laws of the various markets. There are also different investment and business

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procedures in different markets. Furthermore, tax laws on products, services and conducting

business are different in each country (Abner, 2015). Export and import laws plus other trade

restrictions differ from region to region. In addition, customs law and regulatory requirements

are different in different regions of the world. Trademark requirements, dispute resolution and

limitations on currency repatriation are also major legal concerns from a business that is

expanding into international business. Taoboa needs to be flexible enough to work with the

various local laws and regulatory guidelines. The only way to address legal concerns is to adhere

to the given laws and regulation of each market.

Closing Remarks

In conclusion, expanding into the global market requires proper strategizing. It is

important from the business expanding its operations to know its position in the industry. The

company should clearly identify the niche to serve and focus on being the best service or product

provider. Legal concerns should be given proper attention to ensure that the business adheres to

the required regulations in the different markets. Quality is key in international business; the

company should strive to remain effective and efficient in serving its market. International

business is highly competitive and so expanding companies should brace themselves for

incessant and stiff competition and strife to remain relevant in the industry. Expansion to

international business is not for all companies but only for those with the will to rise after falling.

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References

Abner. (2015). 4 considerations before taking your business international. Retrieved from

https://www.bizjournals.com/bizjournals/how-to/growth-

strategies/2015/02/considerations-for-taking-your-business-global.html

Czinkota et al. (n.d.). International Business (7th Ed.). Asia: Cengage Learning.

Hill. (2015). International business. New York, NY: McGraw Hill Education.

Linklaw.com. (2016). Legal Issues to Be Aware Of When Running an International Business.

Retrieved from http://linkilaw.com/running-an-international-business/

Overview of Taoboa. (2017). Retrieved October 17, 2017, from

https://www.crunchbase.com/organization/taobao

Zong-Liscum. (2013). 5 Reasons To Expand Your Business Internationally. Retrieved from

https://portofmerchants.wordpress.com/2013/04/25/5-reasons-why-you-need-to-

expand-your-business-internationally/

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