Factors behind the global expansion

Overview

In the current and competitive market, every major company is looking around a way to expand their businesses beyond their respective confinements. As a result of this, company expansions are a hot subject of discussion. Company management across the world try and adapt many techniques for expanding their business to outer countries to expand their customer base, gain new feedbacks and work towards building a reputation in a foreign population (Sun, W., & Pang, J. (2017).

Factors behind expansion

Several companies in the past and present have expanded their businesses, and as a result, have gained worldwide reputation over the years. (Li & Belal (2018). There can be many reasons for a company to expand their businesses (Osano (2019). They can be driven by many factors such as necessity, cost control, but mostly contribute towards a selected set of goals, which are as follows:

• Increased profits: Expanding internationally increases the chances for the company to earn more profit by marketing their products to a new customer base. Gaining a new customer base enables the company to launch new products as per their needs and demand. This, in turn, fetches more profit for the company through additional sales.
• Enables growth: international trade allows a company to employ new staff for foreign branches. Since the dealings are made at a global level, therefore the company deals in international currency, due to which they can invest in further endeavors.
• Diversify: since international customers have varied tastes, products and services need to be modified as per their preferences. New products and services are launched, older facilities and products are updated by adding new features to them.
• New ideas: A company expanding internationally has to hire new personnel in the marketing and management departments who can understand the local market better than the existing employees of the company. The new employees bring new ideas to the table, giving the company a new scope to test and try new concepts.
• Market advantage: International expansion gives a company an edge over its competitors. The overseas expansion brings a strong brand awareness of the company, as compared to a local competitor, which is confined within a provincial border.
• Less competition: Companies selling a particular type of product or services possessing a unique set of qualities which are otherwise unavailable in that country tend to face less competition, as compared to their home country where chances of similar product or services being available in the market are very high.
• Enables foreign investment: foreign expansion and brand awareness allows a company to make new collaborations with various other multinational companies. Also, this encourages foreign investors to come forward and invest their capital in the company. In some cases, companies operating internationally receive additional funds from the government for showing interest in expanding into their countries.

Conclusion:

In today’s global economy, every small and big company is looking out for a way to expand well beyond the borders of their home country. As of 2016, almost 87 percent of the companies operating in the USA has grown their business on foreign soil, as they believe global expansion is a necessary element in the long term growth of the company.