The Proposal of International Operation in Argentina

Introduction
O.B.Q was established in October 1986, located in Washington, USA. It is a medium sized leather manufacturing company which aims to introduce and promote our various local leather products to foreign countries.

O.B.Q had a great development by using efficiency and effectiveness in the past 20 years. It is able and intends to expand our company, enter into the market of Argentina internationally (It is capable to expand our company internationally to Argentina). It is necessary to analyse deeply of five main environments in Argentina to see (justify) whether Argentina should be selected as a good location for investment (, at the same time to set up our business.) and for our company to set up a business.

Information on Argentina
Argentina is located in the southern of South America which is the second largest country in South America after Brazil and the eighth in the world. Continental extension is 2.791.810 Km2.” (including Malvinas Islands, other South Atlantic Islands and part of Antarctica).” Including the Antarctic Sector, The total area of Argentina is 3.761.274 Km2 .It is bounded by Bolivia, Paraguay, Brazil, Uruguay, Atlantic Ocean, and Chile. (Basic Information)

Legal Environment
The legal system of Argentina mix (is a mixture between) US and West European legal systems. It has not accepted compulsory ICJ jurisdiction. The constitution of Argentina of 1853,as revised in 1994, based on the republican doctrine of the division of powers into three different areas: executive, legislative and judicial.It branches at the nation and provincial level. Each province has its own constitution and it mirrors the structure of the national constitution.( Argentina )

Political Environment
Democracy returned to Argentina in 1983. Argentina's constitution of 1853, as revised in 1994,Under the constitution, the president has a great power, he can appoints cabinet ministers and authority to enact laws by presidential decree under the urgency and necessity condition and the line-item vote.

Recently, Argentina has had a strong partnership with the United States because of the support of UN peacekeeping. Argentina also is a committed member of the 3+1 framework(Argentina, Brazil, Paraguay, and the US),and has actively cooperated with the U.S. in counterterrorism operations in the Tri-border region.

George W. Bush and Kirchner met recently in November 2005, and many senior U.S. officials visited Argentina too. The office of the Secretary of Defense and the Argentina Ministry of Defense hold an meeting, alternating between Argentina and U.S.

Economic Environment
Most Latin American governments cut the tariffs, removed the nontariff barriers and set the realistic exchange rates for freer international trade. Numerous free trade agreement were seted up, and welcome foreign investment. For instance, Argentina is one of the members of free-trade bloc which is known as the Southern Cone Common Market, or Mercosur. Argentina also is a member of WIPO and WTO.

Though there was a economic crisis which was prostrate in the past four years, now as Argentina’s debt dwindles, president’s power steadily grows.

About 37.3% of GDP was foreign trade in 2004, it is a great increasing after 1990, which was 11%, and plays an important role in Argentina’s economic development increasingly. About 23% of GDP is exports in 2004, up from 14% from 2002. The trade surplus of Argentina is $12.1 billion in 2004.

Worldwide due to value the quality and taste of beef in Argentina, the amount to 10% of the export. Leather is one of a important exports in Argentina.

One of the concentration of U.S. investment is manufacturing.

Social Environment
Argentines are a mixtual of multicutural and racial groups. Recently, there was a significant flood of new immigrant’s arrival from neighboring Latin American countries. Besides 38.5% of the population was living under the poverty line in the urban areas, unemployment is another significant problem in Argentina.

In addition, transportation and communications are well-developed in Argentina.

Culture Environment
There are 17 native languages in Argentina, but Spanish is the official language. However, some immigrant communities retain their language as a badge of identity. Italian and BBC English also widely used and understood in Argentina.

In fact, most of the beliefs and rituals that are a part of Argentina culture , and their official state religion in Argentina is Roman Catholicism.

Tango which is a dance and music is popular culture in Argentina, it has captured the imagination of romantics worldwide. Besides, Argentines enjoy living in the comparatively high standards.

Analysis

Legal Environment
There is no any reasons to cancel the project which is invested in Argentina on account of the legal system on there is similar to which in the U.S. We are in no need to acclimatize ourselves to the new legal system, for instance, their basic principles, procedures and methodology. Therefore, O.B.Q can be more confident to handle the business in Argentina. Apart from that, although managers are from America, they can maximise profits in the different location.

Political Environment
Political regulation in Argentina is similar to that in the U.S., hence the company can surely adapt to the political environment there. In addition, as Argentina and the U.S. work hand in hand and has built up a good and strong relationship recently, there is not much of a worry to our investment at Argentina. As a result, the business between Argentina and the U.S. would be successfully.

Economic Environment
As more and more free trade agreement were seted up in Latin American, such as the Southern Cone Common Market, foreign countries are easier to operate their business in Latin American. Also, Latin American can exports or import easier. In other words, we can expand our business in Argentina because of numerous of free trade agreemen. The more important thing is that Argentina is a member of WIPO and WTO, obvious improvement was seen on foreign tradings. it is in advantage to the investment of O.B.Q in Argentina.

Our objective of the company in Argentina is to export the leather to any other countries while leather is one of a important exports in Argentina. So, it will get a considerable benefit for O.B.Q because of this.

The solution of the financial crisis and the well development of GDP in Argentina recently, demonstrates the operation in Argentina is possible. As a consequence of that, O.B.Q might also be affected if the economic environment develops steadily.

Social Environment
There will be some risks in such a nation of diverse national and ethnic group, such as the discrimination between different ethnic group. Besides that, nearly halt of the population in Argentina is poverty. As a result of these, it has no doubt that these will affect the business of O.B.Q. However, one of the social problems is unemployment, which brings benefit to O.B.Q. and this indicates that there are high job opportunities can be offered to them.

In addition, the well-developed in transportation and communications are good for the export of leather of O.B.Q.

Culture Environment
Though Spanish is the main language in Argentina, BBC English is widely used as well. Thus, it is more convenient and easier to communicate in Argentina while BBC English is similar to American English.

The cultural dimensions of Tango have to be considered which the first is power distance, means the people accept unfair allocation of power in institution.

According to the religion and the living standard of Argentine, we can see that Argentines are collectivism where the people should oversee their families or an organisation , and their dimensions of quality of life is high.

Recommendations and Conclusion
In view of the analysis about investment in Ukraine, most of the factors discourage O.B.Q to extend its business on there furthermore all the requirements are hardly found. It is supposed to enlarge businesses in the country which we are familiar to and those environments which are similar to American, particularly the cultural environment owing to our production requirements. The countries that O.B.Q will probably think about are the South American countries.

O.B.Q can adopt geocentric attitude which means hiring the managers from around the globe. This type of attitude needs a global view both at the organisation of home country, American and also host country, the country we are intend to invest. As the environments of the host country are similar to American, it is less difficult to achieve this attitude.

To establish international operations, it ought to access the stages of passive response, initial overt entry and established international operations. First of all, O.B.Q have to export the products to foreign countries followed by contracting with foreign firm to make a trial to see whether it is acceptable by them. Finally, O.B.Q can operate by licensing, strategic alliances, joint ventures and foreign subsidiary. By giving other organisation the right to use our product specifications, share knowledge with foreign company, form an independent organisation, and a direct investment overseas, O.B.Q will have a brilliant performance in the future having applied these approaches.