International business is defined as a business entity that engages in international economic activities and that conducts business functions with all those businesses that do business in abroad. Most of the business entities in current scenario have been emphasizing towards globalization so that the scope of business can be encouraged (Lowe and Doole, 1997). The design of international business strategy cannot be separated from the external macro level context in which it operates. The present research study has been made on Bank of China which is engaged in the provision of banking and other financial services such as commercial and investment banking, insurance and other investment services. As per the market analysis, it has been observed that the company operates its business through various segments such as corporate banking, personal banking, treasury operations, insurance services, and investment banking services. There is a wide range of financial services which Bank of China has been delivering to the clients as per their specific needs and demands (Menen, 2010).
Corporate strategies of Bank of China
The corporate strategy of subsequent bank includes offering adequate services to the corporate customers, providing diversified authorities to the government body, managing trade related products and so on. Bank of China ensures that they are giving proper credit services to the clients.
On the other hand, corporate strategies of Bank of China include earning more foreign currency so that the value of domestic currency and country's economic state can be enhanced and improved. Similar to other banks, Bank of China also provides deposits and other overdraft facilities to the customers so that they can manage their financial aspects in an adequate manner. The bank has been trying to include several things in the service provision where in chief emphasis has been given towards diversification and expansion aspects. The treasury operations segment of the bank deals in foreign exchange transactions, it also increases customer based interest rate; thus as a result, overall capability of the earnings can be enhanced (Bank of China well positioned for continued overseas expansion, 2015). At the same time, the investment banking segment includes debt and equity underwriting and financial advisory which augments financial capability of the bank. It has also been observed that the Bank of China specializes in underwriting general and life insurance business services so that safety can be delivered to people. Other segment of the bank comprises of investment holding and other miscellaneous activities that aids in augmenting the financial capability of the bank. To expand the services, Bank of China has been focusing on different market entry strategies.
Bank of China seems to be highly emphasized towards corporate banking because that is the chief source of acquiring long term profits and revenue. The bank focuses on such thing so that collaboration with different successful entities can be made. The main aim of emphasizing on corporate banking is to increase long term partnership with major business customers (Lynch, 2006). Hence, in such respect, the bank defines business with small and medium sized enterprises because that is a crucial part of corporate banking business. This is highly committed to excellence and it also aids the entity to become efficient and professional partner which satisfies various needs of small medium enterprises. Bank of China (considered as the fourth biggest lender that provides better financial services to the clients) has been planning to set up more US branches by selling asset and securities (Verbeke, 2013). The planning has been made this year in terms of facilitating cross border investment amid the two countries. Currently, Bank of China has its branches in New York, Los Angeles and Chicago and in order to look more forward, the bank has been planning to establish the business in Panama (South America) (Bank of China, 2015). However, the expansion plan has to overcome stringent US regulations which are made for foreign banks.
Apparently, when Bank of China has made a decision to enter an overseas market, it looks for more business growth and success. From several resources, it has been found out that with a unique and comprehensive financial platform, Bank of China offers commercial banking, investment banking, insurance services, asset management, aircraft leasing and other financial services so that complex demands of different customers can be fulfilled. Hence, to enter in new market place, Bank of China can emphasize on market entry strategies because that is the planned method of delivering services to a new target market and distributing them to different customers (Lowe and Doole, 1997). Hence, in such respect, Bank of China can acquire assistance from formal and informal institutions that delivers financial help from diversified contexts. This is also another source of finance through which Bank of China can acquire assistance to operate business properly in new target areas. Many companies successfully operate in a niche market without changing the market segment and it happens due to formal and informal institutions (Peng, Wang and Jiang, 2008).
Implications of formal and informal institutions
Formal and informal institutions have an essential role in a market economy to support the effective functioning of market mechanisms. This assists the firms to engage in market transactions without incurring undue expenses on costs or risks. These institutions generally include the legal framework and its enforcement on business practices and along with the same, it also includes regulatory regimes. The institutions are strong in developed economies, their roles and contributions are almost hidden and invisible (Lynch, 2006). However, in contrast to this, when any market does not work in proper way in some emerging economies, the overall facets of the economy gets suffered.
Hence, institutions can provide positive and negative impacts on market entry strategies in which the Bank of China will be able to conduct all the functions in new American market properly. Concluding the entire research study, it can be said that China is not a single market; but its province is different; therefore the market can grow in the same way if comes in collaboration with other entities. From the research study, it is also evaluated that the significant growth of overseas investments really started to develop strengths of banks and other institutions in the year 2002 as China opened up and join the World Trade Organization. This depicts the opportunities of more growth and success. On the other hand, the impact was swift because Chinese companies grew quickly as they capitalized on new found knowledge and they have also invested their reserves and leveraged funds in different activities (Men