International Business: Institutional Voids – Article Example
International Business: al Voids Why are voids opportunities for your business? al voids results when there are hindrances to the normal working of a business. For example, the business may lack an environment where buyers plus sellers converges to perform their normal duties of buying and selling (Khanna et al. 13). This becomes a void because the business cannot make the expected progress in terms profits. The spaces created in the business require filling thus a business opportunity arise due to the requirement for filling these loop holes (Khanna et al. 15). Businesses with voids do not have sufficient infrastructure to work smoothly. These voids create a condition that requisite information and implementation of contracts becomes impossible. This situation forces other investors to intervene to quench the needs of consumers by creating, designing and manufacturing products similar to those of the institution in void. In addition, a business can leverage its voids by filling those voids itself. For instance, it may determine the opportunities for filling the loopholes such as making an upgrading on market institutions (Khanna et al. 16).
2).Transaction costs are a measure of understanding how well the market works. Why?
The costs become a measure because they differ in different markets. For example, in emerging markets the transaction costs are high in comparison to those in developed markets. Such a case is evident in Argentina where the process for registration of a business number is higher than in Australia (Khanna et al. 18). In this situation, Argentina is an emerging market while Australia is a developed market. High transaction costs discourage ventures in markets while lower costs motivate business ventures. With high costs of transaction, inefficiency arises hence capital costs rises. There is decreased labor and trading requirements due to increased expenditures (Khanna et al. 19). Performing comparisons of utilities involved while buying and selling of goods plus services depicts the market conditions. This provides a comprehension on how efficient or inefficient a market works (Khanna et al. 21).
Khanna, Tarun, Krishna Palepu, & Richard, Bullock. Winning in Emerging Markets: A Road Map for Strategy and Execution. Boston, Mass: Harvard Business Press. 2010. Print.