International Opportunities

While there are various advantages for international diversification, some firms would rather not expand internationally. This is especially so for small firms and the main reason is that the cost of diversification may outweigh the advantages. Small firms are also less aware of the risks involved in choosing to go international and this creates uncertainty as the entire phenomenon presents itself as the notion of moving from known to unknown. Insecurity is another issue of concern, particularly in the contemporary global context where terrorism is now a reality to live with. Taking the example of Kenya, a developing country, incidences of actual and perceived insecurity are high, especially now at a time when the country is preparing for elections. Various countries, such as the U.S., have warned their citizens against traveling to some counties in Kenya due to the insecurity issue (U.S. Passports & International Travel, 2017). As such, someone who dares to establish a business in Kenya as a way of expanding one that is readily established in his or her home country may be perceived as unreasonable. 

For firms that are well-established and with owners who wish to diversify internationally, the option of establishing a business outlet in regions where the laws and regulations are lax is quite tempting. One advantage of lax laws and regulations for a business establishment is that the owners of the business can freely decide about their sources of labor, raw materials, and other business prerequisites without strict control from the host country’s government. Laws regarding minimum wage, use of child labor, working conditions, anti-bribery, discrimination, and environmental accountability are stricter in the U.S. than in other countries and this attracts the U.S. entrepreneurs to expand internationally. In India, for instance, the only laws that are emphasized in business regulations align with the environment and employees’ safety (Government of India, n.d.). This leaves an entrepreneur at liberty to decide how he or she runs the business without much interference from the government. 

References

Government of India (n.d.). Legal aspects: Key regulations. Retrieved from http://www.archive.india.gov.in on 1/8/2017