Running Your Own MNC – Penetration into the Canadian Market
My idea is a technological service-based organization that will virtually target all markets across the globe. I intend to develop an e-commerce site that will specialize in the exclusive sale of artistic products that exhibit cultural meanings. The business model lies in marketing small-scale products handcrafted mostly by local communities. In doing so, the site will not trade in manufactured items since they lack the social-cultural aspect. The site will be designed so that traders can not only transact but also interact with the handcrafters. The items will be posted on the site alongside a description of the creator, materials used, and cultural significance. These products will be categorized into paintings, sculptures, and beadwork. With time, the site will include other categories depending on the client base and market demand. This site will target the American market, while the clients will be sourced from Asian communities and, later on, Africa since they are involved in the intensive production of artistic works. In doing so, the site will improve the accessibility of artwork to western customers and, at the same time, it will enhance revenue earned by the handcrafters in improving their standards of living.
The Western market, particularly Northern American states, e.g., Canada, demands for such products due to the absence of culture in these regions. On the other hand, some of the customers use the items as part of their interior décor. Given that the products would be retailed by customers ordering the items directly from the website, the main expenses to be incurred by the business is web development and hosting, market promotion, and ordering costs. The site would be promoted on various social media sites, e.g., YouTube, Facebook, Instagram, and even Twitter. Equally important, the firm will also conduct extensive SEO to enhance the website’s visibility. The ordering costs entail logistics and customs duties when sourcing items from China. The business will use the Canadian dollar in the valuation of its commodities since this would be the first country to penetrate.
The balance of trade is directly affected by the enacted free trade agreement between the two nations. Presently, the US is part of the North American Free Trade Agreement (NAFTA), which is aimed at eliminating barriers to entry and customs duty for goods transacted between the two states (Ansari and Babu). Therefore, exporting the products to Canada will be made easier by this agreement. It is important to note this business is double-edged in that it imports from China and exports to Canada. Therefore, it is essential to note the free trade agreements (FTA) between China and the US. Initially, the FTA between China and the US made it easier for transactions to be conducted between the two states (Ansari and Babu). Trump’s regime oversaw the abolishing of some FTAs, which were eventually reinstated after conducting negotiations. Therefore, the present business environment is suitable for conducting operations in sourcing artistic items from China. Nonetheless, in the event of a conflict between the two nations, the quantity of imports from Asia would decline, and so would the cost of ordering due to the high customs. As a result, the business would raise the cost of its products due to increased expenses. Another key factor to consider is the legal environment of the Asian nations, particularly copyright and patenting. This legislation is quite vital in protecting the company’s business model from legislation by competitors.
Works Cited
Ansari, Salamah, and R. Rajesh Babu. “5. North American Free Trade Agreement (NAFTA).” Yearbook of International Environmental Law (2020).
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Question 
Developing Your Idea
Create an idea for your own MNC to conduct international business. Your idea should be simplified to the degree that you could possibly implement it someday. However, your idea should also be sufficiently creative to be successful if done properly. Your idea should focus on one country and one foreign currency since many MNCs are focused in this manner when they are first created. So that you can recognize the issues regarding exchange rate risk that are discussed throughout this text, you should assume that you will receive foreign currency when selling your product. Your idea should be for a small MNC instead of a large MNC because even most large MNCs began as small firms. The following questions will help you define your MNC idea:
Penetration into the Canadian Market
- What is the product that you plan to sell?
- What foreign country do you plan to target?
- How will you sell the product in that country? (i.e., through a distributor? by mail?)
- Is there some evidence that consumers in that country would buy this type of product?
- Do you need to purchase supplies or to hire labor?
- Will any expenses you incur from producing the product be in dollars or some other currency?
Assessing Country Factors That Will Affect the Demand for Your Product
- Identify the factors that can affect the balance of trade between the United States and the country that you targeted for your business. Explain how each of these factors may affect the demand for your product.
- Which of these factors is likely to be most important in affecting the demand for your product?
Accessing Trade Data
Determine whether the product you plan to sell is already one of the main exports to that country.
Accessing Import Controls
Review the import controls set by that country’s government. Determine whether your business would be affected by trade regulations.