Globalization has brought forth opportunities as well as challenges for companies. Many factors make companies engage in international trade.
To begin with, international trade provides companies with expanding sourcing opportunities. International trade creates opportunities for companies to reach out to a diverse pool of laborers, raw materials, and products. With this extended pool, companies can select higher-quality raw materials at low costs (Mangan, Lalwani, & Lalwani, 2016).
Secondly, international trade facilitates more room to grow making it easier for companies to produce more, offer more, and sell more. Venturing into international trade helps companies to improve their reputation and brand. By marketing their products in the global market, companies enjoy the prestige of being called an international brand. This enables the companies to attract more partners and makes the companies more rounded offering products and services that take into account different cultures. Besides, international trade increases the exposure to foreign investment opportunities, enabling companies to learn more about these opportunities and how to adapt to their advantage.
Lastly, international trade makes it possible for companies to reach out to new customers in new markets. Companies can expand their influence on overseas markets and offer their products as well as service to a bigger market thereby increasing their revenue base. Time Warner is an example of a company that is global. For Time Warner, exploration of the international market has lots of benefits as it fuels growth. By going global Time Warner has been able to attract new customers for its vast array of products and services. This aspect has made Timer Wanner have a broad revenue base.
Cultural and Legal Differences in Global Business Environment
Venturing into international trade is not always an easy task. Time Warner has encountered many challenges in its bid to take its operations internationally. Legal and regulatory policies and consumers’ culture are the primary external challenges that have been faced by Time Warner. Marketing overseas means the company is exposing itself to different cultures. The company is always expected to use marketing that appeals to various cultural and ethnic identities. The cultural difference is mostly the determinant of the success of a business in other countries.
Linguistic differences, an aspect of cultural differences have been the biggest challenge for Timer Wanner. A name or a word can have different meanings in other countries. For these reasons the company before venturing into market overseas does some background on peoples’ culture to have an understanding meaning of words and names. Besides, by the fact that the company operates in the mass media and entertainment industry, it faces the challenge of determining whether imagery used by companies need not be offensive.
Besides the cultural differences, Time Wanner has also faced substantial challenges dealing with legal and regulatory difference. Some of the legal and regulatory difference that Time Warner has had to face include labor and employment laws, duties and treaties, import and exports laws, and trademark requirements. Others include Limitations on currency repatriation tax laws on products, services and conducting business, and customs laws and regulatory requirements.
Time Warner International Business Activity
Time Warner operates in international trade to create and distribute premium and popular content to global audiences. Through its business segments (cable, filmed entertainment, network, and internet access subscription services) the company has been a success in the international market. Through the cable business segment, Time Warner offers its global audience with video services, analog, and digital services as well as interactive services. The filmed entertainment business segment focuses on distributing theatrical motion pictures and television shows. Other products offered to international customers are the distribution of home video products as well as animation. The company is also involved in licensing of programs and characters. Television programming is also part of the filmed entertainment business segment. The network business segment involves pay television, broadcast television network and sports franchise cable networks. Time Warner is also engaged in the production of books and magazines.
For Time Warner to enter and survive in international marketing, the company uses the strategic licensing approach The approach entails licensing the company’s content to pay-TV operators in the overseas markets. Through the Licensing strategy, Timer Wanner permits other established company’s in the foreign market to produce and offer its services at a specified payment. It is observed that in its bid to gain popularity in western Europe, it has licensed its content with pay-TV services. Through this strategy, Timer Wanner has been able to achieve a “reverse flow” of technology. Besides, it has enabled it to have a quick, easy entry into foreign markets.
Critique of the selected strategy
It is without doubts that Time Warner has been a success in the international market primarily due to its licensing strategy. This strategy has not only allowed the company a quick, easy entry into foreign markets but has also allowed it to jump border and tariff barriers. However, depending solely on this strategy have some drawbacks. The primary downfalls of the strategy are the fact that it may cause the company to lose intellectual property and have a low level of control. In this regard, I believe incorporating joint ventures. Although it has been able to establish new child companies within the United States, it would be imperative for Time Warner to establish some joint ventures in other countries too. This will enable the company to improve its current operations overseas and have a competitive edge.