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Introduction: International Expansion
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Victoria Medical Suppliers Ltd (VMSL)” is considered to be an ISO-registered company that is famous for providing reliable, quality, as well as affordable medical suppliers in Australia. This company focuses on the quality of service as well as complications related to invoicing policy. The recent research is based on the complications that have arisen within the company due to the covid pandemic situation.
Objectives of VMSL
VMSL or Victoria Medical Suppliers Ltd is considered to be an international company that has a huge supply of medicines. It has been called the leading medical supplier in the field of Australia (Riley, 2021). The recent pandemic condition increases the demand for medicines worldwide and therefore the demand in the present company for medicines also increased. However, the issue regarding this factor is the fluctuating rate in foreign exchange and it is a fact of considerable. Therefore, the company need an advisor for matching the recent global market trends (Case Study). The management team of the company has faced these issues and there they seek advice from an advisor for adjusting the international business as well as financial activities of the company.
The foreign exchange markets play an important role to facilitate cross-border trade, financial traditions, as well as investment. The markets are important for allowing the firms in making transactions in the currencies that are foreign. They also help to convert the currencies into their desired deposits. “The Foreign Exchange or FX market” is an important factor here that gives the scope for exchanging the currency of a country with another country (Gaubert & Itskhoki, 2021). FX has importance because it helps in trading between different markets. On the other hand, an “International Financial Market” is a valuable place where financial wealth is traded between many countries. Therefore, it can be said that VMSL will have to apply all those strategies for adjusting its financial activities as well as international business.
Advantages and disadvantages of VMSL’s current international trading strategy
VMSL has recently engaged in import as well as export activities and the international agents helped it in this matter. Various countries like China, Japan, as well as Europe have got the opportunity to deal with the company (Case study). They deal with their own subsidiaries whereas the other countries from southeastern Asia used the agents that are nominated. Various advantages, as well as disadvantages, are described below:
Advantages: VMSL has both advantages as well as disadvantages in the recent international business strategy. The most important advantage of this company is that it has increased its business area through this recent export and import activities (expatsmagazine, 2022). The distributing network has become larger as well as communication with outside countries developed. The firm has become able to manage its cash flow due to the local currencies’ high volatility. This step can bring an advantage in cost in both the field of material as well as labour.
Disadvantages: VMSL also faced some disadvantages with the recent international trading strategy. The crisis of the pandemic situation is itself a disadvantage of this strategy. The cash-flow position becomes lower as the FX market creates problems. The invoicing policy is another disadvantage because most of the suppliers invoicing their products in USD "(United States dollar)".
Application of international theories
“Comparative advantage theory” is considered to be an important theory related to the economy as well as its ability in producing a specific good. Here, the opportunity remains low and the cost is low also than the partners in the trading field (Gaubert & Itskhoki, 2021). This theory can help in explaining why countries, companies, or individuals get benefit from trade. In the case of international trading, this theory refers to the products produced by a country at a cheap rate and therefore it can help VMSL to be better in international operations.
Product life cycle
“Product life cycle” is considered to be a strategy that has five stages such as "product development, market introduction, growth, maturity, and decline". This theory determines the time length from the introduction of the product to reach the products to customers therefore these stages are important and they can help in examining the banking operations.
“Imperfect market theory” is characterised by having competition in the share of the market, barriers in entry, product service, and buyers and sellers. It gives focuses on the matter that a perfect market does not exist and the world is filled with “imperfect markets” (Pomini, 2022). This theory can help in examining the behaviour of international finance as well as the operations of banking.
Establishment of a foreign subsidiary for internationalisation
I think a foreign subsidiary is an important strategy or mode of internationalisation. It is considered to be a separate as well as a legal entity and the local jurisdiction law is most important for this strategy. It is referred to as the control over the new activities of the company and as the president company, VMSL focuses on extending their import and export activities therefore, this strategy can be grateful (Mitchell & Clark, 2019). I think VMSL can achieve its desired position as well as desired cost for this new activity through the application of this new strategy. Therefore, it is my suggestion as an advisor of the company to apply this strategy. “Foreign Subsidiary” can help in decision-making as well as business strategies that are aligned with the plan and goal of the company for managing the FX exposure (Guo & Wang, 2021). It can be implemented with the application of proper technical knowledge in this factor of foreign subsidiaries.
This study is mainly based on the banking and financial decisions of the company VMSL for the global operated business. The matter is related to the FX market as well as the international market. The application of various theories makes the study justified as well as they gives focus on the baking and finance operations. It also evaluates the application of foreign subsidiaries in internationalisation as well as possible advantages of VMSL from this subsidiary.
Gaubert, C., & Itskhoki, O. (2021). Granular comparative advantage. Journal of Political Economy, 129(3), 871-939. Retrieved from: https://www.journals.uchicago.edu/doi/abs/10.1086/712444
Guo, B., & Wang, Z. (2021). Internationalisation path heterogeneity and growth for international new ventures. International Small Business Journal, 39(6), 554-575. Retrieved from: https://www.researchgate.net/profile/Henrik-Arvidsson-3/publication/340756944_The_Uppsala_Model_of_internationalisation_and_beyond/links/5e9c384f299bf13079a63362/The-Uppsala-Model-of-internationalisation-and-beyond.pdf
Mitchell, S. L., & Clark, M. (2019). Reconceptualising product life-cycle theory as stakeholder engagement with non-profit organisations. Journal of Marketing Management, 35(1-2), 13-39. Retrieved from: https://www.tandfonline.com/doi/abs/10.1080/0267257X.2018.1562487
Pomini, M. (2022). Amoroso and the First Revolution of Imperfect Competition. In Luigi Amoroso (pp. 99-116). Palgrave Macmillan, Cham. Retrieved from: https://link.springer.com/chapter/10.1007/978-3-031-10339-1_5
Riley, H. B. (2021, July). Design and Manufacturability of Medical Ventilators from the Perspective of a Global Automotive Footprint. In 2021 ASEE Virtual Annual Conference Content Access. Retrieved from: https://search.ebscohost.com/login.aspx?direct=true&profile=ehost&scope=site&authtype=crawler&jrnl=13359150&AN=151811204&h=Wn3cqKFLXvbLHreuVYr8qBIAICX4NV86Snn0fPAmcPnUWiXIzaHDRQNDVvFxUpRpcyQ1fPf7GwF1CK3kE8kZUg%3D%3D&crl=c
expatsmagazine, (2022), Investment abroad: Subsidary or Branch?, Retrieved from: https://expatsmagazine.org/investment-aboard-subsidary-or-branch/. [Retrieved on: 20th October, 2022]
Victoriahcl, (2022), Overview of the company, Retrieved from: https://victoriahcl.com/products/medical-supplies-equipment/. [Retrieved on: 20th October, 2022]