I always wondered the motivation some companies get to expand their business to the global arena while others seem to maintain their status in their origin countries. And then I learned the leading factors that promote the growth of a business to the online platform. However, I did realize that different companies have unique reasons for the expansion; nonetheless, most of the times companies consider, the cost, competition, market forces and the available technology.
In terms of cost, companies are mainly challenged with means to reduce the cost of production within their business. Therefore, depending on its type of trade, a company may decide to outsource their business to a different country due to the low manufacturing prices there (McQuillan & Sharkley Scott, 2015). In other cases, it may be bombarded by large capital investments and nee for acquiring of heavy machinery. In this case, it becomes necessary to export their business to a different country to spread the cost of the fixed items (McQuillan & Sharkley Scott, 2015).
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Companies also move due to competition internally or externally. Most companies want to secure a place in the worldwide market share. Hence companies will expand their reach when their fellow competitors also move internationally. Also, they may choose to retaliate against foreign companies that come to their home market and take up their market share by moving to the foreigner’s home market (Zucchella, Palamara & Denicolai, 2007).
Additionally, the global market these days has become somewhat uniform in their needs. In light of this, companies have taken advantage and moved their business to the worldwide market. Many consumers have grown fond of foreign products and are willing to try them. Moreover, consumers have become aware of the best alternatives existing in different countries (Kraus, et al., 2017). For instance, the Land Rover Company is known for the manufacturing of quality vehicles like the Range Rover, and people worldwide have noted the quality of their cars hence prodding the companies to take a step to the global market. Similarly, the Mercedes Benz Company has also had to do the same expansion (Kraus, et al., 2017).
Lastly, technological advancement has necessitated the need for globalization of companies. The internet has made it possible for companies to compete through various online platforms (Zucchella, Palamara & Denicolai, 2007). Therefore, urging the need to extend their businesses through online sites that are accessible to all countries globally. Moreover, technology has made communication, transportation, quality management and supervision much easier; hence, the business does not face many challenges in adapting to the foreign market. It makes.
References
Kraus, S., Mitter, C., Eggers, F., & Stieg, P. (2017). Drivers of internationalization success: a conjoint choice experiment on German SME managers. Review of Managerial Science , 11 (3), 691-716.
McQuillan, D., & Sharkey Scott, P. (2015). Models of Internationalization: a business model approach to professional service firm internationalization. In Business models and modelling (pp. 309-345). Emerald Group Publishing Limited.
Zucchella, A., Palamara, G., & Denicolai, S. (2007). The drivers of the early internationalization of the firm. Journal of World Business , 42 (3), 268-280.
