International Success – How Shifting To A Global Strategy Requires The Right Entry To Succeed by Kane Minks

Shangai by night. Business in China. Kane Minksby Kane Minks

Many investors have turned to foreign markets with the view of doing better business and reaping large rewards. Though markets abroad offer the opportunity to flourish, practical experience has revealed they are not as easy to dominate as thought. This is due to different customs, business procedures, as well as different regulations that leave foreign investors in a disadvantaged position. Though foreign businesspeople may try and do good business, the local entrepreneurs always enjoy a remarkable advantage. Understanding the best market entry strategies for international business will make it easy for companies to enter foreign markets and succeed.

Go It Alone

There are many strategies available for those who plan to venture into foreign markets. One of the options is entering international markets alone. This means a business unilaterally enters a foreign market without the aid of other people or organizations. This is a very risky endeavor and a company should ensure that they have all the necessary resources before testing the waters. It has an advantage in the fact that if a company excels, it is going to enjoy great profits alone. On the other hand, it is going to suffer great losses if the business project does not succeed.

Owing to the perils involved, few companies are willing to venture into international markets alone. The resources required for a company to successfully venture into foreign markets depend upon a variety of factors. They include the nature of the company and the country in which the foreign market is found.

Partnerships

Many companies that delve into foreign markets they know little about enter in a partnership. This has a lot of advantages because the risks involved are shared by many companies and their strengths are shared. As such, the loss incurred by each company is greatly reduced. This is unlike the case where a particular company ventures into a foreign market alone.

For example, the Chinese government requires foreign businesses partner with Chinese companies for them to do business within China in most cases. This is greatly advantageous because the local company understands the local market better. Chances of the partnership excelling are higher as a result. This will help foreign companies, so they don’t waste time and money making mistakes as they try to familiarize with the local market.

Subsidiaries

Companies may also venture into foreign markets as subsidiaries. This is an international business market entry technique in which a company ventures into a local market as a subsidiary of a bigger parent company. Setting up a subsidiary company in a foreign country helps the subsidiary recruit local staff that is familiar with prevailing business procedures. It is therefore easier for the subsidiary to excel. Though a subsidiary operates almost independently, it receives guidance from the parent company. A subsidiary is treated like a local company and therefore enjoys any benefits offered by the foreign governments in which they are based.

Kane Minks

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European Union Carbon Tax To Face A Mounting Battle From Countries And Airlines Around The World by Kane Minks

European Union on World Map. Kane Minks

by Kane Minks

The EU airline carbon tax may soon crash to the ground as a coalition of powerful nations threatens to launch a trade war against the European Union. Russia, China, America and India have formed an anti-carbon tax coalition to oppose the EU carbon tax and are planning retaliation against the EU if it doesn’t back down.

The EU’s Emission Trading Scheme (ETS) demands that carriers flying into European airspace pay a tax on carbon emissions. The law came into effect at the beginning of the year. The ETS requires all airlines to give the EU emission data so that a tax can be calculated and collected. Many airlines have told the EU to go fly a kite.

The airlines in the U.S. have requested that President Obama stop the EU action by filing an Article 84 complaint at the UN’s civil aviation governing board, which is called the International Civil Aviation Organization (ICAO). The U.S. airlines, which are represented by Airlines for America, said that an Article 84 action would create a global framework for dealing with carbon emissions. This UN mechanism allows nations to settle disputes.

Eco-fascists and the head of the ICAO oppose the Article 84 action, claiming that the process would gum up the effort to charge passengers and the airlines a tax as soon as possible. The UN and the EU could realize tens of billions of dollars from this carbon scam. The Eurozone, with a number of countries facing imminent economic collapse, is engaged in desperate schemes to prop up their falling house of cards.

Meanwhile, the U.S. Congress is getting into the act by writing a bill that would shield U.S. airlines from the EU carbon scheme. Senator John Thune, a republican from South Dakota, and Senator Claire McCaskill, a democrat from Missouri, have co-sponsored the bill.

Internationally, the EU is standing alone on this carbon scheme and facing severe consequences if it goes ahead with this tax. The U.S. has called this carbon scheme an attack against its sovereignty. The government of India has formally backed its airlines and their decision not to give the EU any carbon data. China has threatened the EU with a trade war. Punishment against the EU could include limiting flights from Europe and refusing to buy aircraft from European manufacturers.

Under the EU carbon tax scheme, passengers will be expected to pay a punitive tax on every ticket they buy. This will increase airline travel expenses and make Europe a less desirable destination for tourism and business. The world is trying to save the EU from its’ big mistake.

Kane Minks

Airline Industry in a Quandary Over Fuel Surcharges and the Search for More Efficient Planes by Kane Minks

Aircraft leaves a contrail in sky. Kane Minks

by Kane Minks

The airline industry has been adding fuel surcharges to the tickets of passengers for some years, and increasing them as fuel costs jump. Yet, there have been no reduction in charges since 2009 despite decreases in fuel costs.

A study by Carlson Wagonlit Travel found these facts and more, demonstrating that the airline industry has been profiting off their customers through unreasonable fuel surcharge fees. The study found that fuel surcharges have risen 53 percent since 2011, a stark contrast to the 24 percent increase in airline fuel costs in the same study time frame. Clearly the airlines are using the fuel fees as a way to increase profits. They may find it more difficult to justify the exorbitant charges going forward.

A new law requires all airlines based in the U.S. advertise the full fare, which includes all of the components that make up the ticket price. The fuel surcharges must be disclosed, making it more difficult for airlines to justify the exorbitant charges. The new transparency rules may turn passengers off to the idea of taking vacations that require air travel.

Airlines are using hidden fuel fees as a way to stay competitive in tighter markets, and lowering fares in order to lure in more passengers. However, the fuel fees can make up to half of a ticket price for international flights, which may lead to a reduction in the amount of passengers for those flights.

The airline industry is also facing pressure in areas related to the use of jet fuel in the form of carbon taxes from the European Union. The European Union is requiring all flights taking off or landing in Europe pay for carbon dioxide (CO2) generated by aircraft. The program begins next year, and initially provides 85 percent of the cost of required permits for free. The rest can be traded off with less polluting airliners. Countries around the world are balking at the requirement by the EU, and the issue is still not settled. It’s a sure bet the extra charges are going to be passed onto passengers.

Volatility in the cost of fuel and threats of carbon taxes is causing the airline industry to purchase new, more fuel efficient planes. The goal is to reduce the amount of inefficient, older planes that are in the current fleets, and move to planes that get better fuel mileage. Some of the redesigns are expected to get anywhere between 13 to 15 percent improvement in efficiency, reducing the amount of fuel used.

The current state of the airline industry is a tenuous one; especially with the cost of fuel cutting sharply into already low profit margins. The amount of flights initiated around the world is increasing on an annual basis, but it only takes a small action to dramatically affect success and passenger satisfaction.

Article By: Kane Minks

The Foundation of Low-Cost Air Carrier Price Structures prior to Airline Deregulation in the United States by Kane Minks

by Kane Minks

The U.S airline industry has come a long way from the days of government regulation and oversight.  In the November 1964 Air Transport World article “Let’s not give the store away!” many of the top minds in aviation at that time shared ideas and viewpoints on what the future may hold for aviation.  They may have speculated, but really had no idea what was to come.

Before U.S. airline deregulation, those in the aviation world continued to wonder what might become of their ever-changing industry, in the age of airline regulation.  Many domestic and international airline fare structure strategies were considered, including the implications of price elasticity.  The thought of overzealous marketers moving toward low-cost structures had many in the U.S. fearing the industry would head in the wrong direction.

The domestic and international markets were headed in two totally different directions.  The low-cost fares of the international airline market made sense since these fares provided greater load factor by increasing passenger volume.  At the same time, the U.S. domestic market was not yet convinced since they could not find the optimal point of price elasticity; whether or not fares should be increased or lowered and the point where passenger traffic would be reduced.

Many airlines grew frustrated with dull and unproductive fare structures in a regulated environment.  Low-cost and special advanced fares seemed to be the rational direction for airlines.  Passengers may have been paying different fares, but airlines could expand the market to price-sensitive passengers and others not flying.

The fears of discounted fares were largely based on what happened after the U.S. World Wars in the electronic housewares industry.  Americans were war-weary and found a new ability to buy.  There was a huge demand for goods.  Companies sought to beat out competitors by expanding production.  Supply outgrew demand and sales began to drop.  Conventional and discount retailers alike began to suffer.  Price wars erupted to capture as much of the remaining demand as possible, which slashed company profits.  Similarly, airlines had an over-supply of seats to fill, but adjusting fare structures set to reshape the airline industry for good.

The low cost fares and price wars of today are making flying increasingly accessible to people around the world.  Airlines that cannot afford to wage price-wars have to find new and unique ways of attracting business.  Customer-service, incentives, technology, and the overall travel experience are ways some airlines are gaining steam to retake market share from low-cost airlines. Some of these strategies have proven successful in regaining market shares.  Many things will continue to change.  The highly dynamic world of aviation around the globe will further shift and evolve as new strategies and factors appear. What the future holds for airline price structures may rely more on fees and less on volume.  Only time will tell.

delta dc aircraft regulation structures Kane Minks

Delta DC-6

A retrospective from Air Transport World’s “Let’s not give the store away!” November 1964

Kane Minks