Reasons for Companies Going Internationally
Southern Wesleyan University
International Management MGMT 5363
Dr. Franklin Pruitt
January 27, 2011
Outline I. Introduction II. Reactive Reasons a. Definition b. Globalization Of Competitors c. Trade Barriers III. Proactive Reasons d. Definition e. Economies Of Scale f. Growth Opportunities g. Resource Access And Cost Savings IV. Conclusion V. Referemces
Reasons For Companies Going Internationally Introduction
Globalization is here to stay. Companies choose to go international for the following simple and compelling reasons: * To build more brand and shareholder value * To add …show more content…
The word proactive means to act in advance, which also mean you, are anticipating for something to happen so you can plan ahead for the situation. Companies who are proactive in international business are, in most cases better positioned than companies that simply react.
Economies Of Scale
Economies of scale are proactive reasons why companies are going abroad to do business. “Careful, long-term strategic planning encourages firms to go international for proactive reasons. One pressing reason for many large firms to expand overseas is to seek economies of scale” (Deresky, 2011). An economy of scale means increasing efficiencies by producing volume.
“The relationship between the availability of scale or scope economies and the globalization of industries is that in more and more industries size matters in determining competitive levels of efficiency” (Segal-Horn, 2002).
A growth opportunity is a second proactive reason why companies choose to go international to prosper. When a company or a franchise finds it has problems expanding their business at home then they choose to seek expansion growth through the international markets. An example of this would be the McDonald’s Corporation. McDonald’s made the announcement of their plans to