Some foreign markets may appear attractive with good incentives and tax holidays, when the true condition on the ground is poor consumer behavior towards newly arriving products or businesses. Some may also depict law costs of production characterized by cheap power, raw materials, labor and transport, but with very high tax rates and strict laws for involvement in social corporate responsibilities. Since Abercrombie and Fitch is one of the multinational companies forecasting to open and expand new market in the rapidly growing and stabilizing Brazilian economy, it must first consider understanding various risks likely to occur in its foreign mission in Brazil. Risk of Foreign Currency on Operations of Abercrombie & Fitch Foreign currency risks involve risks accruing from the periodical fluctuations in the value of the foreign currencies. One type of financial risk accruing from fluctuation in foreign currencies, and likely faced by Abercrombie and Fitch is the transaction risk (Mullineux, 1987). Exporters and importers are the likely business people to experience such risks, as they need to deal with different currencies to stamp their trading. The risks likely faced by exporters involves fall in the value of the local currency in the foreign market as at the time of product arrival and making of payment by the foreign importer. When this happens, the foreign importer will have to convert the payment in consistence with the prevailing transaction and not with initial value as at the time ordering for the product. This then translates into substantial profit for the importer and loss on the side of the exporter. To the importer, foreign exchange risk may occur when the foreign currency of the exporter gain value over the local currency as at the time of receiving goods and making payment. In this situation, the importer will have to more monetary value of the local currency to pay for the goods received (Mullineux &Murinde, 2003). Under this situation, exporters tend to benefit from the extra payment resulted by flux in the value of currency as importer the individual importer make losses. However, importers may have other avenues to service such losses by passing the loss to the final consumer in the final pricing. This may only be possible if the importer has no competitors who also deal with same product, or when all the importers experienced similar impacts of currency fluctuations as at the time of importation. Another foreign currency risk likely faced by Abercrombie and Fitch in the course of doing business in a foreign country is the translation risks (Mullineux & Murinde, 2003). A foreign company running its operations in another country usually records and recognizes its revenues in terms of its home currency. Challenge occurs during preparation and development of the company’s balance sheet that deliberates liabilities, capital and assets. In this process of balance sheet, the foreign company needs to express its financial values in terms of the local currency and not in its home currency. This result to unreal expressions in the financial report presented to the government of the host country for determination of tax margins. For example, Abercrombie and Fitch is an American multinational company that will denominate its proceeds in US dollars and not in Brazilian currency. When reporting its financial
International Market Expansion: A Case Study of Abercrombie & Fitch Entry into the Brazilian Market Name Institution International Market Expansion International Market Expansion: A Case Study of Abercrombie & Fitch Entry into the Brazilian Market Introduction Getting into the international market or expanding to other markets in the global economic spectrum is never an easy task for businesses…
The majority of Brazilians are descendants from the indigenous people of the country, Portuguese settlers and African slaves; there are also sixty-seven uncontacted tribes throughout Brazil, making up the largest number of uncontacted people in the world.
The phenomenon of globalization is unquestionably taking place in wide shapes throughout the globe. Those organizations, commonly in the field of international business, mostly discover themselves to be completely ill-equipped for the surroundings they plan to enter into and uninformed regarding the probable hazards that are concerned in the course of action.
Currently, A&F maintains over 1000 retail centers in North America, Asia, and Europe, earning approximately 3.5 billion dollars in revenue in 2010. Sales are currently declining for Abercrombie and Fitch after nearly a decade of strong brand loyalty and positive consumer sentiment in key profitable markets.
However the general concept is that entry into an international market is for extending the existing business line which will then result in increased revenues for the products which are already available. It is important to also see the reason why market expansion is beneficial; one important reason is the unfulfilled needs and wants.
This study intends to apply PESTEL analysis to examine the expected feasibility outcome in the United Arab Emirates (UAE). The company under consideration is the Starwood Hotels and Resorts Worldwide, Inc. The Starwood Hotels and Resorts Worldwide, Inc. is one of the world’s largest hotel companies.
Marketing mix refers to factors and conditions that a business has control over, and which are great contributors to success of failure of the business. Positioning strategy for a brand is very important and any company that is well and able to do it has great chances of registering success (Powers and Loyka, 2010).
appears as if the Chinese government is in support of more commercial expansion into western China, which is of benefit to companies in terms of future regulations and the expenses of doing business.
Western China also has a supply of willing workers. They may be uneducated,
The author of the paper states that foreign currency risks involve risks accruing from the periodical fluctuations in the value of the foreign currencies. One type of financial risk accruing from fluctuation in foreign currencies, and likely faced by Abercrombie and Fitch is the transaction risk.
The company under consideration is the Starwood Hotels and Resorts Worldwide, Inc.
The Starwood Hotels and Resorts Worldwide, inc. is one of the globe’s largest hotel companies. It is an American company with its headquarters
8 pages (2000 words)Research Paper
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