International Business Economics

Paper Summary:

The paper discusses the factors that an aerospace company should consider when seeking to expand its operations. Specifically referring to Affiliated Aerospace Enterprises (AAE), the paper suggests that
a comparison be made with France and the United States as potential locations for AAE's new production facility and discusses the advantages and disadvantages of each. The paper follows with an analysis of the impact of a decline in the exchange rate and appropriate responses for AAE.

Outline:
Executive Summary
Factors to Consider in Entering New Foreign Markets
Comparison of France and the United States for Expansion Purposes
Impact of a Decline of the Sterling Exchange Rate and Appropriate Responses
Multiplier Effects of Investments in Research and Development

From the Paper:

"Companies seeking to expand their operations into foreign markets have much to consider because there is a lot at stake. According to Stanat and West (1999), "Entry into the global marketplace is a form of diversification and needs to be treated just as carefully as consideration of a new product or a new market sector. The biggest limitation to globalization is the lack of will to engage in and drive a global marketing program" (p. 35). Two of the biggest challenges involved in such foreign market expansion efforts are acquiring the resources needed for such initiatives and developing a keen understanding of the differences represented by the target country. In this regard, one authority advises, "Regardless of whether the new venture always intended international expansion or whether it pursues expansion after it becomes established, the firm faces many difficulties (e.g., acquiring needed resources, understanding target market differences, etc.) in its international expansion efforts."

Sample of Sources Used:

• Arize, A. C. et al. (2002). Balance of payments adjustment: Macro facets of international finance revisited. Westport, CT: Greenwood Press.
• Fingleton, E. (2000, August 14). Unsustainable. The American Prospect, 11(18), 18.
• Hall, P. A. & Soskice, D. (2001). Varieties of capitalism: The institutional foundations of comparative advantage. Oxford, England: Oxford University Press.
• Jones, G. (2005). Multinationals and global capitalism: From the nineteenth to the twenty-first century. Oxford: Oxford University Press.
• Kofele-Kale, N. (1992). The political economy of foreign direct investment: A framework for analyzing investment laws and regulations in developing countries. Law and Policy in International Business, 23(2-3), 619-671.

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