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Companies engage in international for a variety of reasons, but the goal is typically company
growth or expansion. Whether a company hires international employees or searches for new
markets abroad, an international strategy can help diversify and expand a business.

1. any companies look to international markets for growth. Introducing new products
internationally can expand a company's customer base, sales and revenue. For example, after
Coca-Cola dominated the U.S. arket, it expanded their business globally starting in 1926 to
increase sales and profits.

2. Companies go international to find alternative sources of labor. Some companies look to


international countries for lower-cost manufacturing, technology assistance and other services
in order to maintain a competitive advantage.

3. Some companies go international to locate resources that are difficult to obtain in their home
markets, or that can be obtained at a better price internationally.

4. Companies go international to broaden their work force and obtain new ideas. A work force
comprised of different backgrounds and cultural differences can bring fresh ideas and concepts
to help a company grow. For example, IB actively recruits individuals from diverse
backgrounds because it believes it's a competitive advantage that drives innovation and
benefits customers.

5. Some companies go international to diversify. Selling products and services in multiple


countries reduces the company's exposure to possible economic and political instability in a
single country

Reactive reasons for going international include :

a arket - the company is responding to demand it discovers in another location

 it could make this discovery by accident, or by having an affiliated company give


them a tip

a Competitive Environment - it sees competitors going to a particular place

 for example when Honda set up shop in Ohio, some other Japanese auto parts
companies also moved to Ohio to continue supplying Honda

a -olitical Environment changes - Trade Barriers

 tariff or non-tariff barriers: if an exporting company finds that the government in


the recipient country starts to build tariff or non-tariff barriers to block the export,
then it might be a reason for the exporter to set up a manufacturing operation
overseas in order to avoid the tariffs
 buy-local policies: exporting companies may find that buy-local policies may
restrict their exports - which may cause the exporter to set up a local alliance or
relationship

a -olitical Environment changes - Regulations

 environmental regulations or changes in work/safety regulations may cause the


company to go overseas to a less restrictive location

 some Asian companies (selling in to the U.S. market) have moved manufacturing
and assembly operations from the southern U.S. to exico where pollution and
labour regulations are not so restrictive as in the U.S.

a Economic Environment changes

 costs of production at home increase, forcing the company to find a cheaper place to
produce

A many Canadian garment manufacturing companies have moved production


out of Canada in the 1990's for the simple reason that labour is a huge cost
in clothing production and there have been cheaper places found to make
clothes in Asia and South-Asia and parts of Latin America

a chance occurrence

 sometimes a company goes international for the most simple reason, the CEO went
some place on vacation and thought it would be a good place to do business, or a
friend made a suggestion to a senior executive about an opportunity, so the
company seizes on it to do something

 you would be surprised how often it is chance occurrence that causes someone to
get on a airplane and go somewhere - and, keep in mind, most int'l business is done
by companies with less than 50 people

Companies who are proactive in international business are, in most cases, better positioned than
companies that simply react. If you simply react you might make a mistake and not do things
properly because you are stressed for time, money or manpower.

-roactive reasons for going international include:

a expanding sales by strategically seeking out advantages

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 access to resources which may save on shipping or processing costs
 producing inside newly created political or regulatory boundaries (such as free-
trade zones or multi-lateral groupings of countries like the EU or ASEAN)

a launch an offensive into a new market before competitor does (eg. like -epsi into Russia,
before Coke)

a power and prestige


eg. in the early 1990's, a lot of Canadian law firms merged to form bigger firms, and also
boasted about having affiliated law offices in other countries

a incentives
 sometimes the host government will offer special tax breaks to entice an investment

a lower costs of labour, production and energy

a less stringent rules and regulations effecting pollution and labour

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