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Globalization And Doing Business In Australia

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Globalisation and doing business globally are significant issues for contemporary organisations. Define what is meant by Global Business. Identify the stages in the phase model of globalisation and explain the strengths and weaknesses inherent in each. Approximately 60% of all small businesses in Australia will close in the first three years of opening, 33% of these traders will close due to trading loses. Ways businesses can stay financially stable is by competing globally. Global business is the buying and selling of goods in an international marketplace. Global business occurs only when trade is done between different countries. There are four phases which make up global business, they are exporting, …show more content…

This allows other companies to sell and produce the main goods under the licensee’s name. Under licensing agreements there are two types of licensing, there’s cooperating licensing and franchising. A cooperative license allows companies to license their products which allows other companies to produce the goods. This eliminates the need of having to set up warehouses and production equipment in other countries to expand. This can lead to greater brand recognition because the brand will be introduced to new countries and markets. Another positive of licensing products is that it can allow companies to bypass tax’s and tariffs. As the goods are being produced in the country for the given market there is no need to import. For example, Coca Cola is produced in Australia and sold only to the Australian market. While Coca Cola in America is made by the American licensee and only sold to the American market. The problem with allowing other companies to produce your good is that the quality may differ. Some people believe that coke in America tastes differently to Mexico. This is believed to be from the different sugars present in each recipe. Coca cola hasn’t been able to change the sugar as the products are locally produced. Another negative of using licensing can be that licensees may turn into competitors. This can occur when the license expires and hasn’t been renewed. Workers of the company will have insider knowledge of products and …show more content…

When buying into the company you sign a contract to firstly “buy” into the company, and then you have to pay royalties and a certain percentage of your earnings back to the head company. A positive of franchise agreements is that it allows companies to enter into the foreign market place with out having to put too much money into it. For example, 7- elevens in Australia are all franchises, the fist few franchises in Australia would have been set up as an experiment to see whether the Australian public would embrace the new chain store. The feedback would have been that Australia was pro 7-eleven and now you can walk through the city without seeing one on every corner. Another positive of selling your company as a franchise is that you can earn royalties. Different franchises have different royalty schemes, many expect you to pay a certain fee for the “name” each year and then pay them a percentage of the earnings. 7-eleven was taking 51 cents of every dollar made. This allows the head office to make money on the side while not having to invest more money into a situation where it could

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