How International Business Expands Traditional Practices

With the globalized nature of business nowadays, most corporations have been aggressive in expanding their networks beyond their national borders. The companies that choose to brave the odds and take their business elsewhere are usually the ones that have already made a lot of profit in their original country of origin. Expanding to another country requires a lot of resources. But aside from this, it is also important that the new company realizes the differences in the business and cultural environment in their home country and target country.

Though the company will still be carrying the same name and logo, the link to the parent company may only be limited to the senior officials who will probably be asked to oversee operations in the country of choice. The bottom line, though, is that the conditions that govern the company in one country might be different in another. This means that the business approach in one locale may not necessarily work everywhere. The tried and tested solutions in the United States, for instance, may not be the best way forward in developing nations in Asia.

Before the company expands to other areas, feasibility studies are usually done to see the likelihood of the business flourishing in the proposed area of expansion. After rigorous analysis and consultations with the stakeholders both locally and in the target country, the parent company will then decide if the venture is worth the time, money and effort.

Most importantly, businesses also exert effort to enter into new markets. A new country presents a new challenge to any company, no matter how strong the corporate image and strategies are. For instance, McDonald's had a hard time topping the fast food battles in countries in the South East Asian region. Most Asian countries also prefer to patronize their own brand of beauty products, soaps and other toiletries over brands imported from the US and Europe. The political systems also vary from state to state. There are differences in the way laws are legislated, taxes are filed and how much the government is allowed to meddle in corporate affairs.

The psychology, traits and quirks of people are likely to be a big difference, as well. The market for certain products in the United States might not necessarily have the same dynamics as with the Middle East and Africa. The population that also seeks employment also possess different skill sets and strengths. The entire context of that country's society also dictates what type of management style should be used.

Most countries outside of Europe and the US have lower costs of living, so cost-cutting companies usually outsource their services and production to developing countries like India, the Philippines and Malaysia to save money on production and employee salaries.

In the end, the whole mantra of business expansion in the international context is all about the effort that companies put in knowing their new market and emphasizing the need of tailor-fit solutions for specific problems and situations. Before venturing into the unknown, it makes sense to do your due diligence, so you know if offshore expansion would be appropriate for your business.


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