Pros and Cons of Going International
Pros and cons of going international
When thinking about internationalization, a lot of people instantly associate it with multinational companies. It cannot be said that they are wrong; however, internationalization is a far more complex phenomena as it does not only consist of companies setting their headquarters outside the borderlines of the countries of origin. If an entity simply decides to import or export commodities or services, their action can also be described as ‘going international’; producing effects both domestically and internationally. In recent years, the number of companies that chose to get involved in international business operations and transactions increased substantially to the point where becoming visible in the world market became very difficult. When operating internationally, a company should consider its mission (what it will seek to do and become over the years; what is the purpose of the company’s existence); its objectives (what is the company trying to accomplish according to its mission); and strategies (means to achieve its objectives).The main reasons for the increased number of companies that want to go international are the following: * Minimizing competitive risk * Acquiring resources * Expanding the sales * Diversifying the sources of sales and supplies.
Minimizing competitive risks. Although companies indeed go international for maximizing the profits, in most of the cases, they do so in order to minimize the competitive risks posed by their competitors; making internationalization more of a defensive measure, that is necessary in surviving the fierce competition. The profit resulted from international operations might even help certain competitors achieve economies of scale by increasing their productivity and reducing their costs through investments in technology or in vital departments such as R&D or Marketing. In other words, the companies that go international have the upper hand whilst,
When thinking about internationalization, a lot of people instantly associate it with multinational companies. It cannot be said that they are wrong; however, internationalization is a far more complex phenomena as it does not only consist of companies setting their headquarters outside the borderlines of the countries of origin. If an entity simply decides to import or export commodities or services, their action can also be described as ‘going international’; producing effects both domestically and internationally. In recent years, the number of companies that chose to get involved in international business operations and transactions increased substantially to the point where becoming visible in the world market became very difficult. When operating internationally, a company should consider its mission (what it will seek to do and become over the years; what is the purpose of the company’s existence); its objectives (what is the company trying to accomplish according to its mission); and strategies (means to achieve its objectives).The main reasons for the increased number of companies that want to go international are the following: * Minimizing competitive risk * Acquiring resources * Expanding the sales * Diversifying the sources of sales and supplies.
Minimizing competitive risks. Although companies indeed go international for maximizing the profits, in most of the cases, they do so in order to minimize the competitive risks posed by their competitors; making internationalization more of a defensive measure, that is necessary in surviving the fierce competition. The profit resulted from international operations might even help certain competitors achieve economies of scale by increasing their productivity and reducing their costs through investments in technology or in vital departments such as R&D or Marketing. In other words, the companies that go international have the upper hand whilst,