1. Which Countries to Expand into
2. Ensure Expatriate Satisfaction
3. Overall cost reduction
Before jumping in, let’s discuss the benefits multinationals can get from sending expatriates to countries. First, international assignments help managers acquire the skills necessary to develop successful strategies in a global context. Essentially, this will help create more well-rounded valuable resources in a company. Next, expatriate assignments help a company coordinate and control operations that are dispersed geographically and culturally. If a company has operations throughout the globe, sending expatriates to help manage the operations can help ensure better processes and quality management. In additional, global assignments provide important strategic information and detail information about local markets. By having more knowledge on a local market, a multinational can truly optimize their business strategies to ensure success. These are all great reasons as to why multinationals would want to have an expatriate program. (Cullen 451 - 452)
Which Countries to Expand Into
In addressing which countries we may want to expand our business into, I analyzed and assessed 7 countries including Australia, Japan, Mexico, Malaysia, India, South Africa, and Chile.
My first analysis was to review the Market Potential Index (MPI). “Global marketing has become more and more important over the years with the increasing trend of internationalization. Faced with too many choices, marketers have the challenge of determining which international markets to enter and the appropriate marketing strategies for those countries. The purpose of this study is to rank, with a U.S. focus, the market potential of 87 identified countries and to provide guidance to the U.S. companies that plan to expand their markets internationally. While the U.S. is not included in the rankings, the insights provided by the index are still applicable to companies located in other international markets.”1
As you can see in the below chart, Japan and India had the best ranking on the Market Potential Index with Japan in 3rd place and India in 7th. 2 Based on this information, India and Japan make the most logical business sense to expand into.
I then researched both Japan and India in further detail. Japan has a high income economy and is considered a developed country. Also, Gross Domestic Product (GDP) has had continued growth year over year.3
Strengths of Japan include:4
Exclusive geographic position in a dynamic region
Very high national savings level (around 23% of GDP)
90% of public debt held by domestic investors
Favorable yen exchange rate (monetary easing by Bank of Japan)
Additionally, the Business Climate rating in Japan is A1. This means that corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transition run smoothly. 5 Also, the political and economic situation is very good. A quality business enivironment has positive influence on corporate payment behavior. Corporate default probability is very low. 6
India is considered to be a lower-middle income economy and is a developing country. Gross Domestic Product (GDP) is very healthy and continues to grow year over year.7 India is considered to be one of the 4 major emerging countries, including Brazil, Russia, and China.
Strengths of India include:8
Diversified growth drivers
Solid fundamentals: high levels of savings and investment
Effective private sector in services
Moderate external debt and satisfactory foreign exchange reserves
India is becoming easier and easier to do business with. According to the “Doing Business” report, starting a business in India is also becoming easier each year.9 This is a very good indicator that the company should expand into India.