VP's False Premise: Critical Considerations Overlooked - Essay Sample

Introduction

The Vice President's premise is entirely false and integrates many flaws. A keen observation at this premise shows that he overlooks some of the critical considerations in the company's mission to expand internationally. The company may have to incur other additional costs such as those related to training of the overseas labourers. In the same way, the company will incur other costs when obtaining the raw materials, which for this case, must be cheap. The more substantial inventory at the offshores regions will translate to considerably higher costs of administration. The local specifications and regulations also make it difficult for new companies to establish effectively in the new areas (Brigham & Ehrhardt, 2019). Ideally, the presence of different government regulations, as well as the clearance requirements, may prove a serious challenge. As such, the companies will be required to undergo several regulations and checks to comply with them. As such, the VP must not overlook all these costs because they influence the entire activities and operations.

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Types of Risks

Investing overseas for establishing the call centers of the company may or may not generate profit. The profitability, in this case, is determined by several factors and depends on several external factors which the company cannot control. This means that several risks are involved when a company is going international. One of the risks involved in the geopolitical environment and affects overall business operations. Companies must consider political stability within the locations they want to operate (Brigham & Ehrhardt, 2019). The local government must, therefore, be able to demonstrate adequate stability to allow and encourage the residents to work hard to achieve their full potential. For example, a nation such as North Korea does not present the required political stability and therefore, companies that wish to go international should least prefer this nation and instead consider other opportunities in other countries.

The Risk of the Limited Skillset of Overseas Employees

Ideally, companies should check on the education level of the overseas people and whether the amount of knowledge they possess matches the requirements of those companies. For instance, the establishment of companies in nations such as the U.S, UK, or Canada needs English language speakers. This means that the company should check if the employees can learn the language quickly or if they are well learned.

The risks of the local culture is another thing that must be taken into consideration. Fundamentally, the lifestyle of the local people, their beliefs and practices must be well determined by the company before going international (Brigham & Ehrhardt, 2019). A study by the International Labour Organization (ILO) showed that the Middle East people are used to luxurious lifestyle while their counterparts from the Asian Nations such as the Chinese, Philippines, and India demonstrate hard work. This variation, therefore, means that setting up a call center in Asian nations will be a good idea. As such, it is undeniable that local culture plays a significant role during the process of assessing the viability of expanding overseas.

Foreign projects need to generate higher returns when compared with equivalent projects in the U.S.?

Foreign projects may not necessarily generate higher revenue as expected. A nation where one operates considerably determines the higher returns in this case (Brigham & Ehrhardt, 2019). Countries such as the Singapore and EU demonstrate a higher cost of living standard and operations. In this sense, therefore, it is entirely unfair to anticipate higher returns. Expectations of higher returns in countries such as China and India is justifiable because of the low living standards in those nations. The currency fluctuations must be considered to account before anticipation of higher returns.

References

Brigham, E. F., & Ehrhardt, M. C. (2019). Financial management: Theory and practice. Mason, Ohio: South-Western