The International Expansion- New Venture Paper
Background
The fictitious company selected for the assignment is XYZ. The company is in the textile industry, and they are responsible for creating clothes that they sell to various consumers. The company is a Small and Medium-Sized Enterprise (SME). The main goal is to expand into the international market. The organizational style used in the company is vertical. There are several levels of management, with the head being the CEO. The division is done based on departments that play different roles in the company. The structure style influences the leadership, which is hierarchical. There are chains of command where the subordinates need to report to the executive team.
Selected Host Countries
Three countries selected for international expansion include Spain, Germany, and Italy. The selection of the countries is made based on the suitability of the needs of the company. The main aim is to venture into a market with advanced technology and a needed target audience. Millennials will provide a suitable consumption audience as they are more into fashion than the old-age population. The strategy to be used involves using a marketing plan where there is studying of the markets before venturing (Campbell, 2011). The allocation of funds will be as follows
Spain – $20,000
Germany – $56,000
Italy – $24,000
Figure 1: Allocation of Funds
Note: The allocation of funds in the various countries is in dollars. Also, the allocation is done base on a market analysis that will have to be conducted to determine the level of effectiveness before the investment is done.
Analysis of the Host Countries
Spain
Spain is one of the host countries for international expansion. The country creates a good host country due to the readily available customers. Millennials are the target audience for the business. Spain provides a readily available market as the number of individuals between 10 and 25 years is higher than that of older people.
Germany
Germany forms a strategic position for the expansion. The country is developed and is among the best in technology. Expanding into the government will allow the company to venture into modern production technology.
Italy
Milan is considered to be the city of fashion. Venturing into Milan will grand the company the needed target audience that is readily available.
Mode of Entry
Franchising is the mode of entry into the Spanish market. The method entails the payment of royalties to the parent company to gain the right to be independent. Licensing is the mode of entry into the German market. The way entails acquiring a trade business certificate that will allow the foreign company to operate in the country (Campbell, 2011). Entry into the Italian market will be done through partnership. The strategy entails partnering with a local company. The main aim is to establish an understanding of the market as the priority before being fully independent (Tima and Ak, 2011). The mode will be effective as it will be a way of studying the international market culture.
Challenges
Culture is the main challenge that might arise while venturing into the Spanish market. The issue of culture pertains to not knowing the consumers’ change in behavior since the company is new. Also, there is a variation in the mode of business operations in various countries. That will affect the level of performance in the market. In Germany, the key challenge will be on taxes and other legal business operations. High taxes impact the success level as it is hard to carry out operations to a maximum rate (Maon, Lindgreen, and Swaen, 2010). In Italy, the company is likely to face challenges with employee turnover. Most of the employees are require higher pay, and that will increase the cost of operation. A high turnover will limit the availability of labor (Tinaikar, 2017). There will be an issue with creating a management structure that will incorporate the needs of the employees in the decision-making process.
References
Tinaikar, S. (2017). Executive compensation disclosure and private control benefits: A comparison of US and Canadian dual-class firms. Journal of International Accounting, Auditing and Taxation, 29, 32-51.
Tima, H. H., & Ak, U. M. S. W. (2011). Relationship between compensation systems and job performance among employees. Bachelor thesis, University Malaysia Sarawak.
Maon, F., Lindgreen, A., & Swaen, V. (2010). Organizational stages and cultural phases: A critical review and a consolidative model of corporate social responsibility development. International Journal of Management Reviews, 12(1), 20-38.
Campbell, J. L. (2011). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946-967.
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Question 
Before beginning work on this assignment, read Chapters 8, 9, and 10 in the course textbook.
As companies expand abroad and decide to enter foreign markets, many items need to be considered. Please complete the following scenario:
The International Expansion- New Venture Paper
You are hired as a consultant to help a midsize U.S.-based company expand into new regions. The company is currently only in the U.S. domestic market. You are tasked with selecting three host countries for the company to expand into within the next five years. For this assignment, you may choose the company’s industry and the three host countries. Prepare a persuasive report on why you have selected these specific host countries. In addition, state the mode of entry for each country and any challenges that must be addressed. (This should not be a narrative but a business report. Please do not use “I”).
In your paper,
• Create a fictitious company with a brief background (size, industry, organizational style, etc.).
• Select three host countries for the company’s international expansion.
• Analyze three host countries regarding the viability of the company expanding into each one.
• Explain the mode of entry into each country.
• Address any challenges that may arise for entering each host country.
• Include at least one chart, table, or graph. Please review Tables, Images, & Appendices (Links to an external site.) from the Ashford Writing Center for assistance.
The International Expansion: New Venture paper
• Must be 500 to 600 words in length (not including title and references pages) and formatted according to APA Style as outlined in the Ashford Writing Center’s APA Style (Links to an external site.).