FACTORS THAT MOTIVATE COMPANIES TO EXPAND INTERNATIONALLY.
New markets have emerged around the world. International expansion of companies has become a topic of the day. Companies want to go global and develop. There are several factors or reasons that are behind the motivation of companies to expand. Every company around the world wants to become an international company, if not, then it wants its business to be an everyday thing. The dream of each company is to penetrate and expand its customer base around the world (Zekiri, 2016).
Several factors are behind the motivation of companies to operate internationally. The following are some of the reasons that inspire the companies’ necessity to work globally: Growth and profits- When a company starts operating internationally, then the company would have increased its customer base if the customer base increases then that means more revenue generation to the company. The company would increase its profits, and as a result, its growth will be spectacular (Utamaet al. 2018). Another reason that motivates companies to expand their operations is the diversification of risks; some companies want to operate internationally so that they can spread risks. Spreading the risks ensures that the company remains in activities even in an event where the other countries have been affected in one way or the other.
Companies would also want to operate internationally because of the creativity, innovation and resources. In the mother countries of the companies, there may be inadequate resources, or because of the change and creativity of the company, it is doing better than any other company in the country (Serrat, 2017). The company would, therefore, expand its operations to other countries in either in a bid to source for more resources or in an attempt to diversify its ideas in the different countries. This would increase its workforce, its resources and profits. Every company wants employees that are well trained, employees that are resourceful to the company. For some companies to get this kind of employees, they start operating internationally whereby they would be in a position to bring onboard employees with diverse backgrounds and skills that would be beneficial to the company at large.
Sometimes the legal and political factors of a particular country may necessitate the expansion of a company. In a country where political stability is not guaranteed, then it may be necessary to expand the operations of the company to other countries. Economies of scale is yet another factor that motivates the companies to expand their operations. Some companies would also want to operate internationally so that the costs of research and development would be spread. This could either be within the company and its subsidiaries or within the international companies that are in the same market. The costs of research in the market would be shared among the companies, and the benefits would go to all the companies in that particular market (Le Polain de Waroux, 2018).
References
Zekiri, J. (2016). The Motivating factors for entering into Foreign Markets-The case of Republic of Macedonia. Ecoforum Journal, 5(1).
Utama, W. P., Chan, A. P., Zahoor, H., Gao, R., &Peli, M. (2018). Exploring the Strategic Motivation of Internationalisation: Indonesian Contractors’ Perspectives. Construction Economics and Building, 18(4), 64-83.
Serrat, O. (2017). Harnessing creativity and innovation in the workplace. In Knowledge solutions (pp. 903-910). Springer, Singapore.
Le Polain de Waroux, Y., Baumann, M., Gasparri, N. I., Gavier-Pizarro, G., Godar, J., Kuemmerle, T., … &Meyfroidt, P. (2018). Rents, actors, and the expansion of commodity frontiers in the Gran Chaco. Annals of the American Association of Geographers, 108(1), 204-225.