Unit 5 – Reasons for conducting business internationally

For each of the below reasons, explain what they mean and research a company who has
successfully expanded internationally. We will be looking at these in our next lesson.

1. Growth
2. Additional revenue streams
3. Brand exploitation
4. Access to new markets
5. Diversification
6. Increasing market share
7. Market leadership
8. Technological dominance
9. Comparative advantage
10. Economies of scale
11. Fiscal benefits
12. Preferential tax rates

1) The long-term existence of a corporation depends on growth. It facilitates asset

acquisition, talent attraction, and investment financing. Profit and corporate
performance are also fuelled by it.
2) The revenue streams via which a company receives income from the selling of goods,
or the rendering of services are known as revenue streams. The kinds of activities that
a firm engages in determine the kinds of income that a business records on its books.
3) The phrase "brand exploitation" is general. This is when a third party uses a brand's
intellectual property to profit from its goodwill. There are several ways to abuse
brands, including through fake websites, patent theft, and social media impersonation.
4) Companies may speed expansion and take advantage of a variety of possibilities, such
as access to a new customer base, by participating in the global marketplace.
Companies can create new income streams and gain a competitive advantage over
rivals by gaining access to a new consumer base.
5) The creation of new goods and services that are comparable to those you presently
offer is referred to as diversification. For instance, an orange juice company
introduces a brand-new "smooth" orange juice beverage alongside their flagship
orange juice "with chunks."
6) The percentage of total sales (measured in dollars) or total output that a company has
in a certain market is known as its market share. For instance, Coca-Cola has long
held a market share of between 40 and 45 percent of the sales of carbonated beverages
in the United States.
7) Companies that become market leaders were the first in their sector to create a good
or service, or first movers. Market leaders are able to reduce their input costs by
negotiating with suppliers in addition to enjoying high profitability and brand loyalty.
8) According to the theory of technology dominance (TTD), technology may be used in
intelligent decision aids most successfully when a knowledgeable user is partnered
with a sophisticated decision aid.
9) Ability to create an item or service for a lower opportunity cost is a benefit of
comparative advantage. Companies with a comparative advantage are able to sell their
 products and services for less than their rivals do, resulting in higher profit margins
and better sales margins.
10) Economies of scale emerge when a company reaps the rewards of its size. A
corporation gains from a variety of efficiency as it grows. For instance, serving 1,000
people in a restaurant is much more affordable and effective than serving just one.
11) Numerous tax exemptions and reliefs are available to new firms, which may lower
their tax obligation. They consist of tax breaks and credits for expenditure on research
and development, capital allowances for investments in machinery and buildings, and
stamp duty exemptions for homes in underserved regions.
12) They frequently provide customers a lower interest rate than they would otherwise
charge as a reward for their loyalty. A "preferential tax rate" is the name given to this
lowered or lower interest rate. A loan's "preferential interest rate" is often no more
than a few percentage points less than a bank's "regular interest rate."

One of the most successful and well-known businesses in the world is Microsoft. It's hardly
surprising given the company's 45-year history and market worth of more than $1.5 trillion.
In 1975, it started its modest journey in Washington. The business had expanded throughout
Europe and into Japan by 1983.