International Business - Unit 1 IP

INTERNATIONAL BUSINESS - UNIT 1 1P

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Amazon International Inc . is a company that was established in the USA by John Smith in 1998 . It deals with beauty care products ranging from body moisturizers , skin toners , cleansers , scrubs and crimes of all genders . It has branches or establishments in 10 states across the US and in 5 other countries across the globe . With an intensive expansion program underway various considerations must be made in the selection of the most potentially profitable regions to invest . Amazon

International Inc can increase her profit margins by introducing a branch in China

China has in the past decades been recording a significant growth in as far as economy is concerned . There are fears that she might outdo the US and become a world superpower which will be very influential in making important global decisions . The large population can be exploited both as a source of market for the manufactured products as well as a source of readily available labor (WTO , 2006 . With surplus flow or supply of labor the wages will definitely be lower and this is a plus for the company as it translates to lower costs of production . With the reduced costs of production the profit margin levels will be higher Continued economic growth is an indication that households ' incomes are higher and they therefore have the financial ability to purchase the products

The Chinese government advocates for or rather encourages foreign companies especially those in the manufacturing sector to invest to a high magnitude that fears are raised that the foreign companies might be a threat to the domestic ones . Using the locals in the marketing process can make the `foreign products ' have a domestic or local touch thus attracting many customers . Since China is a member of WTO , Amazon International can easily import her products without barriers (WTO 2006

The major hindrance to foreign investment in China that will definitely affect Amazon International Inc decision to invest will be the unclear laws and regulations as well as the ineffective legal system . When laws are unclear , chances of misuse of power by the criminal justice system can easily arise leading to arrests of foreigners on account of violating laws and regulations that were unclear in the first place . The type of political system of China is communism . There are minimal opposition forces from other political parties . The most significant political party is the Chinese Communist Party which overseas other minor parties in existence . The Chinese legislature is made of deputies from its various provinces as well as some municipalities and special regions and special regions and it has the power to appoint judges . The legal system in China according to Amnesty International has not changed to match with times . Property laws are not well respected to ensure that investors operate with confidence . According to the US Department of State , Bureau of East Asia and Pacific Affair , the Chinese Communist Party is not only dominant but also authoritative in...