International Business Essay

1600 Words7 Pages
1. Explain the different reasons for firms to enter foreign markets. The quick growth of globalization in recent decades has influenced the nature of business. Firms tend to go international because of both strategic motives and reactive motives. Strategic motives are to take advantage of technological developments, maintain a competitive edge and gain better benefits. In contrast, reactive motives are to adapt the change of business conditions and protect themselves from the market competition. In addition, the rise of high technology and the ease of international trade have helped products/service move across borders and appear almost every markets. For example, by 2010 export of goods and services had exceeded $18.9 trillion and increased nearly five times compared to that of 20 years ago (Ball et. al., 2013). Therefore, firms need to enter foreign markets to remain competitive and develop wisely otherwise their competitors will surpass them. There are many other motives that encourage firms to expand globally. First, they have better client base and more opportunities for growth through market diversification. According to Briggs (2013), roughly 96% of the world’s population lives outside the U.S, so reaching out to foreign markets would help firms tremendously extend their total market and increase their sales. Expanding into various markets also helps finance new development or increase innovation. Additionally, companies will have greater access to global sourcing advantages and a larger talent pool. It also helps firms quickly catch new business trends and communicate with local business more completely. Consequently, it generates higher revenues, lowers cost and provide greater profit margin. For instance, Coca-Cola operates plants in other countries including France and Belgium with oversea profit accounts for about 80 percent of that company's

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