As Flyboy incorporated is entering to Pamonian market for sell of their aircrafts. They will face many legal obstacles that they need to overcome before succeeding. First is compliance with statutory requirements of that country. Like many companies, they will run into problems in complying with laws and regulation of the country. “If a company does not have an internal resource skilled in international tax laws, experts say the next best step is to retain a business services provider that can handle payroll, bookkeeping, compliance and regulatory issues”(RMS,2006). This can be very costly in the long run for the company.
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Other risks they may experience include political instability being a kingdom the country legal system may be resting in the hands of the king. This will mean the king can pass a law at will, which can affect any business. Some of the laws that are likely to affect the business of Flyboy include exchange transfer blockages law, nationalization or confiscation of property in case some case. Civil disorder may affect personal security.
There are many benefits of entering Pamonia market, which include increase in market share, availability of cheap labor in some in that country, increase in the streams of cash flows, innovate and other benefits. Their presence in that country will increase confidence for the government of Pamonia.
The problems associated with entering Pamonia include Operating costs: Operating an office or any other form of branch in Pamonia is not like opening a branch in the home country. “Financial control problems that lead to theft and loss. In a typical start-up office for a global service expansion, companies will frequently deploy a small team of employees to support existing clients and develop new business. The early financial issues of an expansion office revolve around expenses — such as location costs, travel, meals, housing, and new business development — before gradually shifting to revenue management as business grows” (RMS,2007).Often this companies find open to fraud, outright theft and other malpractices. within a small business resource skilled in international tax laws, experts say the next best step is to retain a business services provider that can handle payroll, bookkeeping, compliance and regulatory issues”(RMS,2006). This can be very costly in the long run for the company.
This company, Flyboy Inc. Will enter with the agent avoid the problems mentioned above. The arrangement will involve the can enter into strategic alliance with an agent in Pamonia and the arrangement will involve how marketing will be done, collection of sales revenue, maintenance of aircrafts, maintaining the office for Flyboy, ordering the craft immediately the customer makes an order. He will also be involved in ensuring compliance with the laws of that country, maintaining proper books of accounts and other relevant laws.
Pamonia was colonized by Italy. It means that there is a relationship between Italy and Pamonia. There is a possibility that Flyboy will face language barrier, to overcome you need a person who understands the language. Since government colonized by some countries tend to be loyal to the colonizers and the citizens of the colonizing country are respected then we will use an Italian firm to market this company.
If the company delivers an aircraft to Pamonia without marketing and no agent then the profit margins will be high as the cost of marketing have been eliminated. Secondly, this will have high costs of maintaining the aircrafts in the long run.
Croft, M. (1995), “The Bill to Change”, Marketing Week, pp.29-30.
RMS ; 2006; considering international expansion? Avoid these four key dangers. Web.