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Global Business Expansion Paper Example

Date:  2021-05-20 10:27:38
7 pages  (1734 words)
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Global business expansion is gradually gaining significance to numerous growing business organizations. International companies enjoy many privileges that growing businesses strive to achieve (Motohashi, 2015). The primary purpose of the global expansion is that the global businesses generate new markets for their products through internationalization. A global business has an increased market base and therefore sells its products all through. This, in turn, increases their competitive advantage over the current competitors. Besides, internationalization increases the profits margin of the parties involved. The companys economies of scale increase thereby increasing the output of the business. In addition to that, companies seek to go global as a strategy for expansion. Internationalization reduces the markets associated with specializing in one market.

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For a company to enter into a global market, it must exceed certain thresholds based on the market analysis research (Marschan-Piekkari & Welch, 2015). This is to weigh the business`s preparedness for global expansion. This paper discusses Bank Windhoek with regards to its market analysis, business strategy and method of entry into new global markets.

Introduction

Bank Windhoek Ltd is a Namibian financial institution formed in 1982 by a group of entrepreneurs. The bank is a registered commercial facility which offers banking services to the Namibian citizens (Robles, Wiese & Torres-Baumgarten, 2015). The bank also offers international financial assistance through cooperation with other commercial institutions globally. Bank Windhoek is a licensed commercial bank that is regulated by the Bank of Namibia which governs all banks nationally.

The sole purpose for the formation of the Bank Windhoek was to establish an independent financial institution for the Namibians. Bank Windhoek is steadfast in observing business governance principles characterized by fairness, independence, social responsibility, transparency, accountability, responsibility, and discipline. Through these principles, the clients, stakeholders, and government interests are achieved thereby strengthening the relationship with the business environment. The company`s board of directors are committed to ensuring proper adherence to governance principles and practices enshrined in the Corporate Governance Code for Namibia (NamCode).

Based on Global Credit Rating (GCR), the bank has achieved a strong financial position and economic growth ever since its creation. This relies on the bank's financial documents analyzed by the GCR. Bank Windhoek also attained A1+ in a short-term credit rating with AA as long-term rating. This meant that the bank was competing favorably with the good banks in the southern Africa. Bank Windhoek is a leading bank in the financial services industry with total assets of N$ 14 as at 2011. The bank is the central entity under Bank Windhoek Holdings which is financial services institution in Namibia. Moreover, Capricorn Investment Holding (CIH) is the preferred shareholders in the umbrella of Bank Windhoek Holdings Ltd.

Reasons for Global Expansion

Like any other business worldwide, Bank Windhoek craves for global expansion. Global expansion will help the company increase the market base for its financial services thereby increasing competitive advantage and economies of scale. Therefore Bank Windhoek dedication for service delivery and overall success will position it for global expansion.

The bank needs to expand so that it enhances its domestic competitive characteristics (Goodman & Hirsch, 2015). Having competitive advantage means that the company will have the edge over its competitors regarding market share and profit making. This will make the company compete favorably in the market.

Additionally, expansion will help the company to sell its financial service and make huge profits from the increased global market share (Buckley & Ghauri, 2015). Because of the concentration of banks in Namibia, the company will seek for global expansion so that it reduces its dependence on the ever diminishing existing market base. By doing this, the company will be extending the sales potential of its financial products, and this is a kind of a marketing strategy. Finally, Bank Windhoek needs to expand so that it exploits the available international trade technology.

However, despite the numerous reasons for Bank Windhoeks need for internationalization, it has to consider other factors that come as a result of internationalization. For instance, internationalization will lead to high administrative costs regarding communication, mobility and financing. In addition to that, internationalization is time-consuming and needs the bank to familiarize with the market regulations in different entities before opting for it. On the other hand, the various entities have varying interest rates and therefore the bank has to adjust accordingly.

Market Analysis

The market analysis for Bank Windhoek discussed below is a precursor for the state of the company in regards to the domestic market. Businesses do research on the available market and market dynamics the business has regarding the market. This research outlines the; strength, weaknesses, opportunities, and threats (SWOT) in the new market. Additionally, the study will help to gauge the company on whether it is fit for global expansion thereby facilitating the planning team in making appropriate changes in the company policies and strategies. The market analysis will be based on financial factors, political factors, economic factors, cultural factors and finally legal factors.

Financial factors

Bank Windhoek generates a good net income every year. The company`s profit to sales ratio is positive, and this means that the firm is making a good profit margin. The net income of the company after taxation as at 30th June 2016 was 796,369,000 N$. This means that the business is generating a high profit from providing its financial services. The bank also recorded 485,000,000 N$ working capital that enables it to function properly. In addition to that, the company is also experiencing a high growth rate due to the sales of its financial services in term of loans at lower interest rates. Finally, the company has an adequate amount fixed assets. As at 30th June 2016, the company recorded 31,768,140,000 that assist in the operations of the business.

Political factors

The political environment is paramount for the prosperity of any business. Firms are supposed to monitor their political environments in which they operate. Political factors affect the operations of the businesses and therefore the business strategies. Bank Windhoek has had its successful business because of the favorable political environment in Namibia.

Namibia is a politically stable nation governed by the law of supply and demand. The government's favor businesses and view them as drivers of the economy (Kotler and Kotler, 2014). Therefore the government supports legislations that will enhance the success of the businesses. The government provides support to the firm through the enactment of regulations that promote financial aid by the government to the local businesses. Additionally, the government supports the business by being consumers for the company's financial services.

Bank Windhoek is well equipped regarding political goodwill. Concerning the services, the company exhibits values that are enshrined in its service charter for customers (Pedersen, 2014). The belief in professionalism facilitates the company to give the quality financial services to clients. The qualified workers can provide services that are valuable to customers and are a source of competitive advantage over the competitors. Moreover, the company`s belief in friendliness increases the chances of adequate and customer-centered service provision. This increases customer satisfaction, and the interactions can help improve service delivery through complaints received. The company also values efficiency and empathy. For efficiency, the company has developed Internet banking facility that enhances service delivery whereby the clients can access the financial services anytime.

Economic Factors

Bank Windhoek operates in an economy where the Interests rates for loans are high. However, Bank Windhoek charges a slightly lower interest rate of 9.5 % per annum. The interest rates charged enables the company to enjoy the large base of clients who are tired of being exploited by other financial institutions charging higher interest rates. Large amounts given to customers in the form of loans will generate profits for the company regarding loan repayments. Moreover, the Namibian shilling compares favorably to the South African rand which is the standard currency. Though the exchange rate varies occasionally, Bank Windhoek can adjust and do its businesses with the prevailing rates.

The inflation rate in Namibia is gradually reducing. With the reducing inflation rate, the country will be experiencing significant external investments in future thereby leading to economic growth. Bank Windhoek will be providing the financial services to the investors based on the low-interest rates offered by the bank.

Furthermore, due to the capital base of Bank Windhoek, the institution enjoys several necessary government privileges. This includes tax exceptions on certain businesses, government donations, and support. The bank`s capital base increases its competitive advantage concerning the provision of financial service. Additionally, the growing need for financial assistance worldwide will facilitate the company to improve services.

Bank Windhoek has a sales and marketing team that sales and looks for the market for the products of the enterprise (Chirico, 2014). The company also dedicated to giving the clients the best advice on operating their bank accounts as efficiently and effectively as possible (Hill 2014). As the financial partner for the customers, the range of consumer education initiatives is purposed to educate the clients on matters of finances and general knowledge. This enables the customers to make informed choices concerning their finances and economic literacy. The sales team also provides consultancy services, creates new models of marketing, and engages in corporate social responsibility.

Research indicates that the Namibian financial market is increasing. There is growing the need for the provision of financial services in the country. Therefore there is no doubt that Bank Windhoek is already established regarding a large and still growing market base.

The human resource personnel working for Bank Windhoek are skilled in their line of work. Research shows that trained staff provides quality service thereby leading to increased customer satisfaction. The company has a large human resource base that cuts across the nation and beyond. The belief in equity in employment has done well to the enterprise.

Cultural factors

The Namibian citizens are nowadays focused on investments. Most of the citizens have a craving to enter into business. However, some of them do not have the required capital to enter into business. Therefore Bank Windhoek taps into that fact to offer loans at lower interest rates to the willing entrepreneurs (Jephson & Morgen, 2014). Additionally, the society belief in success through financial success is an advantage for Bank Windhoek. The company provides specialized training on wealth creation and motivates the youth to be creative. Therefore, when the people are trained, they take loans so that they can venture into businesses hence creating a market for the bank through subsequent loans.

The Namibian economy is divided into three social class categories: upper class, middle class, and t...

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