Exploring International Business Expansion and Entry Strategies

The assignment discusses the reasons for international business expansion, including market saturation, profit seeking, competitive advantages, and market diversification. It outlines the decision-making process for entering international markets, considering factors like product marketability, data av...Read More

Internationalization:
When an organization decides to expand its business functions to a new country, there are may be
many reasons for doing the same. Some of these include:
 Looking for a brand-new way to make profits
 Increase in competition in the existing market
 Expansion into a new type of product or service
 Saturation of the existing market
 Catering to customers abroad or a new demand market
As the decision to expand in a different country is made, a company has to analyse the internal and
external environmental conditions as well before the right country for expansion is chosen. From the
internal perspective, the company might have to evaluate the actual funding that it has, whether the
expansion is aligned with the company’s goals and objectives, if some of the existing employees
would be able to relocate to the new location and train the new team of people and if the
infrastructure at the current location is sufficient to handle the added training and development of a
new team that is overseas.
From the external environment perspective, an organization must evaluate the political and legal
climate of the countries in focus. The target country must have a positive relationship with their own
country and their regulations should be appropriate enough to help the company expand. Apart from
this, there should be economic stability in the target country and the minimum number of wages for
the employees must also be accounted for. Lastly, the socio-cultural differences must be judged and
the demand for the product or service must also be taken into account.
There are several methods of entry that can be adopted to expand business functions in a new
country. However, given the nature of the product or service and the alliance acceptance that is
readily available in the target country, a company can easily chose one of the following ways to
expand their business functions:
 Licensing
 Franchising
 Contract Manufacturing
 Turnkey Operations
 Management Contracts
 International Joint Ventures

 Distributorship
Product based companies tend to adopt distributorship of their products in the target country.
Licenses are given by service-based companies that allow other distributors to sell their products.
Franchising is given by food chains typically that promote the idea of selling of their brand name in
other countries. For example, McDonalds or clothing stores.