Part 1
According to Autio, Sapienza, and Almeida (2000), expanding business globally has both positive and negative consequences. The major benefits of the expansion are increased sales due to market expansion. The expansion of business internationally is a desirable objective for any company in the United States of America. The international expansion gives a company an international appeal and a better image at the local level. Therefore, such a company may even access a higher financial support from the local banks.
However, expanding globally exposes a company to a variety of risks in the international market. Some of the risks include political risks, economic risks as well as cultural and communication barriers, legal challenges, competition, logistics, and supply chain challenges (Autio, Sapienza, & Almeida, 2000). The risks would affect your business negatively depending on their magnitude. For example, the cost of expansion is so big, and the parent company may finance the expansion in the early years of the project before the international investment starts making profits. This implies that the overall profitability of a company is reduced and such a case may affect the share price of a company in case it is listed in a capital market. The reduced profitability lowers its appeal to investors who make take it as a poor strategy. However, in the end, international expansion may be profitable to a company. This is because it presents a huge market and lowers the risks that may hit a company in cases where it is based on one locality. This is the greatest advantage of global expansion and it is worth the risk. However, a company is required to make worthwhile calculation during the expansion. It should consider the various risks that the targeted market may portend to a company. For example, it should avoid investing in political and economic unstable territories.
Part 2
The international automobile market is oligopolistic. It is made of few big firms that dominate the global market even though there are other small firms that are trying to gain a foothold in the automobile market. The Ford, General Motors, and the Chrysler are the key players in the United States automobile market. Other major players in the international market are Renault, PSA, Volkswagen Group, Fiat, Toyota, Nissan, and Honda. These companies are from three countries, which are the USA, Japan, and Germany (Sturgeon et al., 2008).
Relatively, this presents a case of oligopoly market from a global perspective. The market is made up of few large firms producing similar but differentiated products. In the case of the automobiles, the various firms’ manufactures vehicles but each has distinct features that differentiate it from the others. The giant firms have immense pressure on smaller firms and dominate the main automobile market.
If I were a major retailer in the United States, I would only be cautious of stiff competition from the other players. However, constant product research, development, and differentiation would be a key strategy to keep me in operation in the market. I would offer the products that have the greatest appeal from the clients.
References
Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of management journal, 43(5), 909-924.
Sturgeon, T. J., Memedovic, O., Van Biesebroeck, J., & Gereffi, G. (2008). Globalisation of the automotive industry: main features and trends. International Journal of Technological Learning, Innovation and Development, 2(1-2), 7-24.
