Learning Topic
Discuss about Evaluation of Opportunities for International Expansion Companies may decide to expand internationally for a variety of reasons. Before deciding on an international strategy, however, it is important to clearly understand the rationale and motivations for international expansion.
These motivations typically include one or more of the following:
seeking new markets—Company growth objectives that cannot be met with domestic demand drive the search for new revenue sources. The company may also want to establish a strong foreign presence to gain a first-mover advantage.
geographic advantage—Some countries provide resources and strengths that are not available in the company’s home country. Access to skills and knowledge is a common motive for international expansion. The establishment of effective global hubs can also increase distribution efficiency.
risk diversification—Economic downturns in one location can be mitigated by a company’s presence in another location.
keeping up with the competition—If the company has a competitive rivalry in its home country, it may follow its competitor into a new territory.
Namely, international expansion allows companies to take advantage of global business opportunities including the following:
marketing and distribution of products and services, establishing production facilities to produce more competently or cost effectively,
procuring raw materials or components, or services of lower cost or superior quality, and entering into collaborative arrangements with foreign
