International expansion allows for the organization to reach new customers and generate additional revenue.
Rebecca Cline
Due to the fact that there is only so much growth that can happen in a country, sometimes organizations look outside the country in order to continue the growth. International expansion allows for the organization to reach new customers and generate additional revenue. Although internal expansion can provide a great deal of wonderful things for organizations, there is also risks involved in expanding internationally. Companies who operate in more than one country tend to be more profitable than companies that operate solely in one country (Block et al., 2019).
When a company decides to expand internationally. It is important that the company does research and becomes familiar with the country that they are looking to expand into. Although it is important to know about the financials well being of the country, it is also important to know about the culture and the government when expanding internationally. When expanding in the United States, it is many times easier because companies are already familiar with the government and the financial standing. Although there will be some variation on the economic wellbeing of certain areas and the culture may vary slightly from region to region, domestic expansion is much less risky.
The C-Level executives should consider a few things before deciding to expand internationally. The first thing that should be considered is the competition in the country that the company is looking to expand into. If there is also a similar business in the country, is there enough business to make the expansion profitable? Looking into the financial aspect of the expansion is also important. It is important to know the tax rate, the currency exchange rates as well as the cost of living and livable wage for employees. If any of these items are out of line, the expansion may not be profitable. Laws and regulations vary greatly from country to county and can cause delays in businesses entering new markets. When looking into expansion, it is essential to find out what needs to be done and the length of time it will take in order to be able to successfully plan and budget for the expansion.
When looking at ways to mitigate risks, it is important to research the countries that are potential locations for the expansion. It is essential that the organization not only chooses a country with a stable economy, but also a country that has a customer base that is interested in the product/services that are going to be provided. If there are organizations already in the market that provide the services or good that our organization will provide, it is essential for our organization to have a plan as to how to set our company apart.
Resources:
Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management (17th ed.). McGraw-Hill Higher Education.
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