Fundamentals of Business Analysis
- Miguel Virgen, PhD Student in Business
- Nov 9, 2023
- 4 min read
Updated: Mar 10
When evaluating the feasibility of investing in a new product line overseas or keeping it in the US, the company must consider various factors to make informed decisions. These factors include market conditions, economic stability, political climate, and regulatory frameworks. In the case of investing in a new product line overseas, the company needs to assess economic stability, regulatory frameworks, market trends, market size, cultural factors, and potential language barriers. These considerations are crucial in understanding the potential risks and opportunities associated with expanding into foreign markets. On the other hand, keeping the product line in the US offers the advantage of maintaining investment opportunities in one of the largest and most developed economies globally.
Qualitative factors are elements that cannot be expressed in numerical form (Bingham, 2023). The qualitative elements that the organization should consider include culture, regulatory environment, and supply chain resilience. Understanding the challenges associated with investing in each location is essential. Lastly, the organization should evaluate supply chain resilience in the American and international markets. The significance of the above factors centers on avoiding disruptions that can affect an organization's production and distribution.
Qualitative analysis of the supply chain can allow the team to develop contingency plans for identified risks. Qualitative factors provide a holistic view of the investment decision. They complement quantitative data and promote the understanding of opportunities associated with the new product line. In addition, the company can capture some risks in non-numerical form. The information collected can promote the company’s risk mitigation efforts and strategic alignment.
Quantitative factors are numerical variables that can be analyzed to support decision-making (Pilcher & Cortazzi, 2023). The company can use quantitative elements to understand the financial viability of the product. For instance, the team should consider return on investment (ROI), demand forecast, and cost-benefit analysis (CBA). ROI offers information on the profitability of the business. Computing the ROI for the U.S.-based market and the overseas region allows for a direct comparison of financial returns. In addition, the company may adjust its resource allocation plans based on the ROI. The second aspect that the company should consider is market potential and demand forecast. The company should analyze the market growth rate and potential sales volume in the new area. Accurate demand forecasts can help the management understand the revenue and scalability of the new product. Lastly, conducting a CBA involves quantifying the costs and benefits associated with the business venture (Boardman et al., 2022).
Using quantitative measures provides an objective basis for decision-making. The methods enhance the systematic evaluation of elements and reduce subjective bias associated with qualitative data (Pilcher & Cortazzi, 2023). The factors mentioned in this document can help the company outline the returns and expenditures in an unambiguous manner. Blending quantitative and qualitative factors can allow a comprehensive review of the company's performance and the investment feasibility.
It is important to note that investing in the US and foreign countries have similarities in terms of risk and diversification. Hence, The company should consider the product, distribution, and marketing expenses, regardless if it stays in the US or goes overseas. In addition, revenue streams will be essential elements in conducting a cost benefits analysis. Ensuring the company has transparency is crucial for the efficient allocation of a company's resources.
Differences arise in market size, regulatory factors, legal factors, currency risks, and cultural environments, and supply chain resilience. Analyzing the cultural aspects of the target overseas market is essential to understand how the product aligns with local customs and values. The norms of a particular region can affect consumer behavior, brand perception, and market penetration. Disregarding the above aspects can lead to product-market in-congruence and negatively impact long-term success. The company should assess the regulatory environment in the international market. Policy differences between the U.S. and other countries could increase compliance costs and operational efficiency. The company should understand all labor and privacy laws to operate in a socially responsible manner. Factors such as transportation infrastructure and availability of skilled labor can impact the efficiency of the supply chain. Different countries have different management styles and their culture also effects how employees work and it is essential that the company also understands the difference in the culture of the employees since it is as important as the culture of the consumers.
To make an informed decision and navigate the complexities of investing overseas, it is essential for the company to understand these distinctions. By carefully evaluating the market conditions, economic stability, regulatory frameworks, and cultural factors, the company can assess the potential benefits and risks associated with investing in a new product line overseas or keeping it in the US. This analysis will enable the company to make strategic investment decisions aligned with its financial goals and objectives.
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Bingham, A. J. (2023). From data management to actionable findings: a five-phase process of qualitative data analysis. International Journal of Qualitative Methods. https://doi.org/10.1177/16094069231183620
Boardman, A. E., Greenberg, D. H., Vining, A. R., & Weimer, D. L. (2022). Standing in cost‐benefit analysis: Where, who, what (counts)? Journal of Policy Analysis and Management.
Pilcher, N., & Cortazzi, M. (2023). 'Qualitative' and' quantitative' methods and approaches across subject fields: Implications for research values, assumptions, and practices. Quality & Quantity, 1-31. https://doi.org/10.1007/s11135-023-01734-4
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