Essay Sample on Start a Business Abroad: Challenges, Legal Requirements & Failed Cases

Introduction

Starting a business or opening a company in a foreign country faces many challenges due to changes in business culture across nations and compliance with varying regulations and policies. Inappropriate marketing strategies and campaigns can make people boycott some products, hence, causing the firm to fail. Besides, the firm should meet the legislative and legal requirements to run and operate in Foreign Direct Investment. Coca Cola was unable to run in Israel due to the controversies surrounded its new marketing campaign, which made customers avoid consuming their products. This challenge was a significant drawback in the company's operation in Israel.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

According to Eglash, (2019), Coca Cola launched a countrywide campaign that involved branding its products, especially sodas with the first names of people in Israel was against the culture of the people of Israel. The purpose of branding cans and bottles was to attract more customers and facilitate personalized drinking experience. What the company thought could be the best strategies turned against the company's expectations. Israel is a country with a strong cultural identity that is tied to ethnicity and religion. The issues of perceived exclusion and inclusion are sensitive which is why the idea of personalizing bottled did not work as expected. In response to the individualization of the company products and omission of some names, the Arab-Israel citizen petitioned this move by terming the campaign as being discriminatory. This legal challenge was a significant failure, which made many customers boycott using Coca Cola products. In an attempt to embark on Foreign Direct Investment in Israel, the company reacted on the petition where the company representative assured people whose name was not in the products that they can get their names printed on the cans and bottle at any Coca Cola designated stores countrywide. It enables its printer to write Arabic characters, which some citizens argued that they are unprintable. The company's reaction will allow it to continue controlling its ownership. Also, the company has been operating in Israel since 1968 due to its compliance with the legal and political requirements. It does not evade paying taxes and government obligations as required by the government of Israel.

FDI restrictiveness measures the nation's FDI regulations by considering discriminatory screening, foreign equity restrictions, diplomatic personnel mechanisms, and operational restrictions. Coca Cola faced discriminatory screening restrictions because the consumer believed that its campaign was biased and not culturally sensitive. Israel is a start-up nation that is highly innovative and creative. Innovation and creativity are this country's culture, which allows for the creation of more business opportunities. Coca Cola's ethos is all about the product. The company concentrates on the production and expansion of their business to other countries. However, the firm's purpose in Israel is to reflect the country's innovative and creative culture. It is committed to innovation and investing in strengthening its operation in Israel. Israel is a low context culture country because of its constant communication styles (IOR., 2019). Nevertheless, Israel has a lot of cultural groups, which makes communication less direct, but they vary their communique according to different situations.

Conclusion

In conclusion, inappropriate product campaign was a significant failure in Coca Cola's operation in Israel. Despite meeting legal and political requirement, the company faced FDI restriction because discriminatory in branding and personalizing their products. The country has a low context culture, highly innovative and creative which makes it favorable for investment.

References

Eglash, R. (2019, April 29). New Coca-Cola ad campaign mired in sensitive Israeli identity politics. Retrieved from https://www.washingtonpost.com/news/worldviews/wp/2013/05/23/new-coca-cola-ad-campaign-mired-in-sensitive-israeli-identity-politics/.

IOR. (2019). Israel. Retrieved from https://www.iorworld.com/resources/israel/.