To begin with, I believe that a proactive approach exhibited by a firm, makes a statement that do not want to lose their competitiveness. One such reason is capitalizing on economy of scale and growth (Pearce & Robinson, 2011, p. 125). Businesses can lower their cost per unit and spread their cost over more items by selling and producing more products due to an increase in customer demand within a new market segment. Another reason is incentives that can be receive from foreign governments (Opening Profile, 2015). For illustration, the research notes that tax incentives, marketing assistance, grants, and expedited plan reviews have all been undertaken by governments in order to entice new businesses. Finally, resource access and cost savings may be realized (Opening Profile, 2015). This can be seen by building the product where the resources comes from instead of shipping the product stateside.
On the other hand, sometimes an organizations should be reactive in their approach to move globally. One reason may be to wait and allow the other competitors to incur the high cost of introducing the product or service (Pearce & Robinson, 2011, p. 119). For instance, Walmart spent approximately $1.1 billion to expand into Mexico. Another reason may be that the customers demand that the suppliers function locally in order to maintain...
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...e can present barriers. Finally, foreign regulation may change standards that could reduce market position (Pearce & Robinson, 2011, p. 132). For illustration, anti-competition practices such as dividing territories and price fixing can reduce the organizations niche because it reduce competition in certain areas and disassembles the free market.
In summary, this essay discussed foreign branching, equity investment, and wholly owned subsidiaries, as well as, the risks associated with a foreign subsidiary strategy which include understanding of the culture, language, and market, in addition to, a long term commitment, employing host country citizens, and regulation shifts. Each of these methods can be implement simultaneously or individually. The best methods to implement are the ones which yield better growth and profit, but a reduction in risk and liabilities.
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