Good Essay On EFTA

International Business

Abstract:
The capacity of organization in international business expansion is a strong indicator of effective market progress and new market development. Organizations with international business strategy have been able to overcome lagging aspects to achieve record heights in business expansion and profits. The scale and economies of scope are limited to utilization of resources, new vistas, local conditions, diversification and marketing integration. Two examples of organizations show the analysis for developing international business strategy wise, Red Bull and Lufthansa.
Keywords: marketing, business, international, organization
International Business
Red bull is an organization from Austria. It is an energy drink manufacturer with 70% to 90% market share in more than 100 countries worldwide. According to Nitin, Mohit (2013), it was first introduced into the market in April, 1987, when it was launched in Austria. By 2014, over 4 billion cans of the energy drink had been sold in more than 166 countries worldwide. Red Bull uses business strategy by organizing many events around the world to support its buzz marketing. The international business strategy for Red Bull is strong in generating sales, with a broad geographical presence specializing in sports event marketing. The product is weak from high sugar content and market share has shrunk in past five years. Advertising and feedback mechanisms could be integrated into the marketing campaign. Understanding local conditions and including in strategic insight is part of the strategy. The Germany based organization Lufthansa is one of the three airline firms globally, which has a strong investment grade debt. The firm has adhered to an international business strategy of forming alliances for new market development and growth. According to Chris (2003), it joined Star Alliance and is the leading member of the alliance. The international business strategy for the airline carrier Lufthansa is not economically viable even when it is competitive. With the high costs of fixed assets, the industry carrier has given the competitive scale of operation to market dominated by few key players. The strategic pursuit of economies of scale and the benefit of “network effect”, development of deregulation has led to new competition, and international sustenance of market competitiveness difficult for new market development. The recent decisions of low budget services would advance the diversification strategies for product services.

According to Daniel (2005), European Free Trade Association (EFTA) was founded in 1960 by the Stockholm Convention with members Austria, Norway, Portugal, Denmark, Switzerland, Sweden and the United Kingdom.

Advantages:

EFTA or the European Free Trade agreement countries are at best in a free trade area while EU operates as a custom union. These countries are twice as rich from the countries in the European Union. They have a healthy budget surplus with low inflation, low real interest rates. They export more per capita than European union countries for e.g., $16,498 per capita sale of export to overseas markets, amongst the highest in the world.
More economic freedom as the countries fast economic progress in the European area is possible from free trade agreement leading to high competitiveness. The growth competitiveness index is based on the macroeconomic environment, country’s public institutions and technology readiness. The GCI for EFTA countries is higher than EU and is 5.5, whereas in EU countries the GCI is 5.0. Looking from a medium to long term period,GCI index is significantly higher for EFTA based countries. Thus EFTA achieves a dual purpose – one where it substantiates the need for free trade – higher production, benefit to consumers, economic efficiency in resource allocation and gains from foreign exchange leading to rising living standards, higher real growth and experiencing real incomes as well.
The job significance is partly outcome of free trade and the opportunity to render lesser corruption in the region. Unemployment rates for the EFTA region economies is 3.7 % , for European Union it is 8.00 % and that for the United kingdom is 4.00%. There is stability of corporate development, technology readiness, and employer terms for the employment job. Better employee security, long term nature of jobs stability and security, better technology utility, use of significant employer contributions can be attributed to the demand of labor and work with the organization environment better both external and internal way.
Index of corruption is about the degree of corruption as observed by academics, risk analysts and business people. This includes corruption in business, police, politics etc. The index for EFTA and United Kingdom is 1.0 while for EU is 2.5.
More economic growth from exports. Exports of commodities like goods or services represents value of final commodities provided to rest of world. These include merchandise, transport, freight, travel, construction, information, business etc. These exclude labor income, property income and transfer payment. Exports as a percentage of gross domestic products for EFTA countries is 44% while for the European Union is 33%.
The terms of trade for member countries are versatile, agile, complete and simpler than EU or other agreements. Although half of EFTA’s trade is with the EU, there is surplus trade with rest of the world except in Europe. From past 32 years there has been average trade deficit with other member states of almost £30 million everyday. This is certainly indicating the ability of the agreement to have had better terms of trade parity than otherwise possible for assuring customer (member countries) from possible fallout.

Disadvantages

Need to assimilate thousands of EU laws under the measure of single market. These regulations are technical in nature with 3000 legislative acts provided by the European Union. Over the period from 1972, Britain had to accept almost about 18000 such laws. There is no provision for imposing extensions of the EU power notably for employment, social policy, justice etc.
Higher dependence on European Union for provision of millions of jobs as the trade parity within this structure observes. There is also the necessity of provision of the European Union trade terms as outside the agreement the EFTA is a small bloc while representing a small group of member countries indicating small vote, smaller market size and financial strength.
Higher need on being part of world bloc for the trade terms and talks. This is indicated from the need of the EFTA member countries to offer the best service for deploying terms of trade with countries in Asia and South America in an agreement. This is possible only when the countries in EFTA are part of world bloc or organization like WTO, World Bank or international monetary fund.
There are more disadvantages for the free trade measure in short term and the instability is prominent in terms of high environmental pollution, high structural unemployment, and low protectionist measures in competitive policy.
The international business strategy for a developing organization is relevant or based on the competitiveness, product portfolio, local conditions as well as strong marketing presence in international business strategy. Strategic sustainability with strong financial benefits in the face of difficulties like economic value generation from outsourcing, sustaining competitiveness in cost and scale from diversification, leveraging marketing benefits and comparative advantage is strongly advised and which is not so easy for every industry player.

Bibliography

Hannan Daniel. (2005, Nov 16). The Case for EFTA. Retrieved from http://www.brugesgroup.com/eu/the-case-for-efta.html?keyword=15
Kjelgaard chris. (2003, Dec 5). Lufthansa’s fleet strategy. Retrieved from http://www.afm.aero/magazine/focus/item/1147-lufthansa-s-fleet-strategy
Pangankar Nitin, Agarwal Mohit ( 2013, June 24). The Wind Behind Red Bull's Wings. Retrieved from http://www.forbes.com/sites/forbesasia/2013/06/24/the-wind-behind-red-bulls-wings/
Gschwandtner Gerhard. (2015). The Powerful Sales Strategy behind Red Bull. Retrieved from http://www.sellingpower.com/content/article/index.php?a=9437/the-powerful-sales-strategy-behind-red-bull&page=7