Discussion-4

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 Discuss the primary factors that motivate companies to expand internationally. 


 

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Response -1 (Vikas)

 

Motivating Factors

In new markets, global expansion & Business Development is a hot topic & an exciting subject for 90% of prosperous SMEs in the digital world of today.

There are several reasons for proceeding the business internationally, on the contrary, every company objective for going internationally or expand its business internationally, penetrating new market & its customer base expansion (Zekiri, 2016). There are numerous factors considered for the expansion of business internationally, and these are explained below:

·         Profitability & Growth: Many companies for growth move to global markets. Introducing internationally new products can extend their sales, revenue and customer base.

·         Economics of Scale: Growing markets scope & size aid to attain economies of scale. Approaches of the International market provide economies of the scale even though the distribution of risks & costs amid markets. This occurs when the product unit cost drops as the volume of production increases.

·         Services or Product Uniqueness: The product with distinct qualities is not possible to meet rivalry in the foreign markets & enjoy enormously options all through universal marketplaces.

·         Risk Diversification: Numerous companies turn international so they can spread. In various countries selling products decreases the exposure of the company to political along with economic instability in the country (Foss, 2011).

·         Spreading research & development costs: By spreading the market, a firm quickly recovers the R&D cost. It is specifically true regarding products comprising R&D higher cost. As a consequence of the big marketplace & also because of more extensive coverage in international markets of the correct market segments, it eases the quick recovery of these costs.

·         Ideas & Resources: In the domestic country, because of resources unavailability or companies at a better rate of competition move into the international market. Moreover, companies ensure globally to gather diverse ideas in various countries diverse lifestyle in addition to extending them workforce (Zhu, Wang, & Quan, 2011).

·         Employees: Every organization wants employees who are well trained & skilled, like Result Company, move to the universal market to find alternative labor source at a lesser cost.

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