A company may opt to expand outside its domestic market for any of four major reasons:
a.  To gain access to new customers – Expanding into foreign markets offers potential for increased revenues, profits, and long-term growth and becomes an especially attractive option when a company’s home markets are mature.
b.  To achieve lower costs and enhance the firm’s competitiveness – Many companies are driven to sell in more than one country because domestic sales volume is not large enough to fully capture manufacturing economies of scale or learning curve effects and thereby substantially improve the firm’s cost-competitiveness.
c.  To capitalize on its core competencies – A company may be able to leverage its competencies and capabilities into a position of competitive advantage in foreign markets as well as just domestic markets.
d.  To spread its business risk across a wider market base – A company spreads business risk by operating in a number of different foreign countries rather than depending entirely on operations in its domestic market.
0 Comments