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Students will submit the results of their independent research into economic principles and events to a ranking site in order to determine which principles and events are most influential to consider in framing an international business model. Working in groups and using results from the ranking site, students will then describe the general framework for a business model and select a country into which they will propose business entry. The framework should be described in a paper of not more than 2000 words, presenting a company’s proposed operations and strategic approach. The following elements are to be addressed in the paper:

Critically evaluate the key modern economic theories and key events in recent global economic history as they relate to international business.

• Discuss the strengths and weaknesses of the proposed business model and consider strategies for improvements;

• Examine how the business model would be impacted upon by global competition;

• Describe characteristics of the country to be entered, describing risks and mitigations required within the business model.

Economic Theories and Global Economic History in International Business

International business strategy refers to a plan that deals with commercial transaction take place between different countries. It is a set of actions or plans that are taken by government rather than some business with the motive to increase the profit. The companies think of expanding their business by making place in the international market. There are various barriers faced by the company while establishing the business in the international market due to different method of doing the business. The complexity in eth international trade is related to the linguistic factor, political as well as legal system.  The firm that have business interests that cut across national boundaries, often focuses on importing and exporting goods or services, and operates production and marketing units in other countries. They also face various political risks like probability of making decisions regarding the events in other country. There are chances of foreign conflicts as they are dependent on the degree of hostility that one nation expresses to other (Tisdell, 2014). The company that is considered from this for this Samsung, the group is diversified into many areas from food processing, textiles, insurance, securities and retail. The company was found in South Korea in 1969 and is a low cost manufacturer but now it is a largest IT company with many market share and around 2 billion sales. The company has more than 17.2% and 14.7% of the global market share in terms of value and unit. It performed well in the emerging market by occupying the market place; the reason of success is innovative corporate culture so that products can be created with new concepts. They bet the competitors by keeping the products price low as compared to other companies (Burt, Johansson & Dawson, 2015). The pricing strategy is a useful tool as it helps the company to make the place in the global market.

There are various economies theories used in international business. These theories offer wide advantage in terms of cost and market expansion. It increases the trade and offer special benefits to the foreign brands. Some of the modern economic theory that is used is:

  • Mercantilismis one of the economy theories that hold the prosperity of the nation and it is dependent on the supply of capital and volume of international trade.  It suggests that government should make advance goals so that exports increases and imports decrease (Liang, Varma, Brown, & Park, 2018).
  • The other economy theory is absolute advantage theorythat is the ability of an individual to produce goods and services with the limited resources. It is very useful as it produces goods at very low cost.
  • In economics, comparative advantage theoryis refers to the ability of a country to sell the product at a lower cost than other countries. It offer value to both the parties and also helps in gaining profit from the trade (Liang, Varma, Brown, & Park, 2018). This strategy support in gaining customers by offering services at low price.
  • The theoryof factor endowment is basically used in cases where large production is required. It is used by countries to export their services in abundant amount and importing the products also in large amount (Shukla, Carney & Gedajlovic, 2014).

In the economic theories they consider four variables, demand condition, factors conditions, supporting industries and firm strategy and the rivalries. In case of Samsung, the Uppsala model is used for internationalization process. It increases the foreign market commitments as it requires n regular export activities as it is done by independent individual. It increased the contribution of Samsung in the international market (Metcalfe, 2018). By using this theory, Samsung selected the target market that they want to capture and then started with the country that have the lowest distance with the home County then slowly moved towards the countries that are at higher level. In the combination of this they also make use of mercantilism and theory of comparative advantage. They produce services and offers at a lower cost as compared to other firms (La Rocca & Snehota, 2014). They expanded the market in international market by offering special services at lower price so that customers could be captured. Using economic model increases the relationship and brand image of the company in the international market (Radlo, 2016). There are some issues associated with these economic models as they make assumptions that are not realistic.

Proposed International Business Model Framework

Samsung make use of various business models as the company has various divisions that are operating widely in many different areas. There are various business models like direct sales, advertising, franchising and brick and motors. Samsung make use of click and mortar model that combined physical presence with online presence (Verbeke & Kano, 2015). In case of Samsung, they offer their product and services offline as well as online. This model is used to fulfil the need of clients by offering services at the competitive price and sustainable cost. The model is made in such a way that it can reflect to business environment and make changes according to the market demand (Hacklin,  Björkdahl & Wallin, 2018). Click and motar is business models that allow customers to shop online through retail website. It provides a shopping experience to the customer by increasing their online transactions as well as face to face interaction. It also allows customers to check the retail store and then buy accordingly. The business model that is used by Samsung is click and mortar that offers benefits to customers by allowing them to make fast transactions and also get face to face service (Hacklin,  Björkdahl & Wallin, 2018).

It offers sense of trust and reliability to the customers by allowing them to increase their brand retail stores (Saeed, Nematiyan & Albonaiemi, 2016). This model allows customers to improve their shopping experience by offering them many choice and greater flexibility. It improves the customer relation with the company and also allows Samsung to expand in the global market (Steinberg, Horwitz & Zohar, 2015). In the electronic field, customers look at many options then compare with other products before purchasing it. They offer benefits to customers by allowing them to buy services from online store.

                            Strength

                              Weakness

Brick and mortar channels also offer various benefits to the company by creating channels through which products could be distributed:

· It offers access to wider market by making the services available to customer 24/7.

· It also helps in improving the trust.

· Click and mortar enables companies to expand their market by reaching to larger audience and removing restriction and limitation regarding location (Steinberg, Horwitz & Zohar, 2015).

· It also saves the overall time by enhancing the speed of process.

· Better services after sale are offered.

The companies using brick and mortar model also faces various challenges.

· The rent of maintain the offline stores are high sometimes (Yun, Won,  Jeong,  Park,  Yang & Park, 2016).

· The employee cost for maintain the offline business is quiet high.

· Click and mortar businesses can reach to many customers only when they are major player in their industry.

· There is no such negotiation process

Recommendation

It is suggested that in instead of dealing eth channel conflicts, one platform need to be selected. It is suggested that if online stores are working pretty well the focus of attention should be on online business by neglecting the physical stores. In this case, the company might loss some of the loyal customers that are comfortable with offline shopping. It is also suggested that company should make the online business successful by making it technological efficient (Yun, Won,  Jeong,  Park,  Yang & Park, 2016). It is recommended that Samsung should make their own market place by concerning product innovation and dividing market segment.

Strengths and Weaknesses of Samsung’s Click-and-Mortar Business Model

Samsung has various competitors like apple, Huawei, xiaomi, vivo, Sony and many more. Samsung is one of the leading competitors in the market. They follow few approaches through which they can overcome the competitiveness in the global market. They build layers of advantage so that continuous expansion takes place (Cao, 2014). They acquire advanced technology so that market area could be captured and invest in making production system. The product readiness fills up the gap between the expectation of customer and actual product (Lo’ai,  Mehmood,  Benkhlifa & Song, 2016). While using click and mortar model, the company might face various issues as there are various competitors that are offering the same service online. Thus, for this go to market strategy should be used, it helps in in differentiating the propel market so that growth and revenue market could be accepted. The sale should be determined by checking all the constraints may be direct, indirect or hybrid (Angeli & Jaiswal, 2016). The business model might get impacted as the competitors also offer the same service on the online platform. This would create options for the customers to choose one company. Thus, for this Samsung should come up with additional offers so that customers choose it rather than other companies (Shvetsova, 2018). The other competitors will definitely impact the sale and profit margins of the company. Thus, it is suggested that business model should be modified according to the market demand (Chae & Hedman, 2015).

There are some countries that offer special benefits and there are risks associated within the business model. One such country is United Kingdom, the GDP growth is around 1.8% and population is also 66M. It offers tax benefits as employees make the country attractive from financial point of view. The other country is Singapore that has strong labour force so it will be beneficial to open up offline store (Chae & Hedman, 2015). It is also easy to register and start up business online (Campbell-Kelly, Garcia-Swartz, Lam & Yang, 2015). The online store will be difficult as the labour is not skilled. While entering in the country like Hong Kong, new work it would be profitable as the workforce is skilled and will understand the new trend. There will be various risks that would be faced by the company as there are other competitors (Yang, Trimi & Lee, 2016). To make the place in the market by beating the already present companies would be a tough task.

Impact of Global Competition on Click-and-Mortar Business Model

From the research, it was found that it is very easy to start a business in Mexico as they have very easy and legal running policies that allow company to run their business. They also offer free trade agreement with many countries by allowing them to open enormous market in the country. Switzerland is undoubted one of the best countries in the world that have a highly skilled workplace and they are ready to work and help the business to occupy the market (da Cruz,  Rodrigues,  Al-Muhtadi, Korotaev & de Albuquerque, 2018). There are various challenges and risk that are faced while stepping in the new market. The size of market plays an important role as it becomes difficult to estimate the sale or failure, if market is analysed properly (Basole, Russell, Huhtamäki, Rubens, Still, & Park, 2015). There are various fluctuations thus, it is important to deal with such situations and make sure that organisation have hedge towards risk (Bärenfänger & Otto, 2015).

Conclusion

It can be concluded from this report; there are various economic theories like mercantilism, absolute advantage theory, comparative advantage theory, factor endowment and various other models. It makes use of click and mortar business model and also make use of Uppsala model. The ways in which business model would be impacted upon the global competition is discussed, the characteristics and risk faced by the company when they encounter in international market is discussed. Thus, from this report the difficulties and barriers that are faced by the Samsung is listed and various models are strategies are listed. The business model that is used by Samsung is click and mortar that offers benefits to customers by allowing them to make fast transactions and also get face to face service. It improves the customer relation with the company and also allows Samsung to expand in the global market.

References

Angeli, F., & Jaiswal, A. K. (2016). Business model innovation for inclusive health care delivery at the bottom of the pyramid. Organization & Environment, 29(4), 486-507.

Bärenfänger, R., & Otto, B. (2015, July). Proposing a capability perspective on digital business models. In Business Informatics (CBI), 2015 IEEE 17th Conference on (Vol. 1, pp. 17-25). IEEE.

Basole, R. C., Russell, M. G., Huhtamäki, J., Rubens, N., Still, K., & Park, H. (2015). Understanding business ecosystem dynamics: A data-driven approach. ACM Transactions on Management Information Systems (TMIS), 6(2), 6.

Burt, S., Johansson, U., & Dawson, J. (2015). International retailing as embedded business models. Journal of Economic Geography, 16(3), 715-747.

Characteristics of Targeted Country for Business Entry

Campbell-Kelly, M., Garcia-Swartz, D., Lam, R., & Yang, Y. (2015). Economic and business perspectives on smartphones as multi-sided platforms. Telecommunications Policy, 39(8), 717-734.

Cao, L. (2014). Business model transformation in moving to a cross-channel retail strategy: A case study. International Journal of Electronic Commerce, 18(4), 69-96.

Chae, J. S. U., & Hedman, J. (2015). Business Models for NFC based mobile payments. Journal of Business Models, 3(1).

da Cruz, M. A., Rodrigues, J. J. P., Al-Muhtadi, J., Korotaev, V. V., & de Albuquerque, V. H. C. (2018). A reference model for internet of things middleware. IEEE Internet of Things Journal, 5(2), 871-883.

Hacklin, F., Björkdahl, J., & Wallin, M. W. (2018). Strategies for business model innovation: How firms reel in migrating value. Long range planning, 51(1), 82-110.

La Rocca, A., & Snehota, I. (2014). Relating in business networks: Innovation in practice. Industrial Marketing Management, 43(3), 441-447.

Liang, H., Varma, K., Brown, J., & Park, J. (2018). Learn More & Achieve More-An Innovative Teaching Method Applying Economic Theories to Secondary Science Education.

Lo’ai, A. T., Mehmood, R., Benkhlifa, E., & Song, H. (2016). Mobile cloud computing model and big data analysis for healthcare applications. IEEE Access, 4, 6171-6180.

Metcalfe, S. (Ed.). (2018). Evolutionary theories of economic and technological change: present status and future prospects(Vol. 44). Routledge.

Radlo, M. J. (2016). Offshoring and Outsourcing in Economic Theories. In Offshoring, Outsourcing and Production Fragmentation (pp. 41-97). Palgrave Macmillan, London.

Saeed, N. B., Nematiyan, M., & Albonaiemi, E. (2016). Effective factors on the value of international brands in Iranian consumers (Case Study of Samsung brand in Khuzestan market). International Journal of Humanities and Cultural Studies (IJHCS)? ISSN 2356-5926, 2(3), 974-984.

Shukla, P. P., Carney, M., & Gedajlovic, E. (2014). Economic theories of family firms. The Sage handbook of family business, 100-118.

Shvetsova, O. A. (2018, July). The Model of Professional Competences' Development in South Korea. In 2018 Third International Conference on Human Factors in Complex Technical Systems and Environments (ERGO) s and Environments (ERGO) (pp. 49-52). IEEE.

Steinberg, D., Horwitz, G., & Zohar, D. (2015). Building a business model in digital medicine. Nature biotechnology, 33(9), 910.

Tisdell, C. A. (2014). Rational Behaviour as a Basis for Economic Theories'. Rationality and the Social Sciences (RLE Social Theory): Contributions to the Philosophy and Methodology of the Social Sciences, 196.

Verbeke, A., & Kano, L. (2015). The new internalization theory and multinational enterprises from emerging economies: A business history perspective. Business History Review, 89(3), 415-445.

Yang, C. G., Trimi, S., & Lee, S. G. (2016). Effects of telecom service providers’ strategic investments on business performance: a comparative study of US-Korea. Industrial Management & Data Systems, 116(5), 960-977.

Yun, J. J., Won, D., Jeong, E., Park, K., Yang, J., & Park, J. (2016). The relationship between technology, business model, and market in autonomous car and intelligent robot industries. Technological Forecasting and Social Change, 103, 142-155

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