THE ADVANTAGES OF EXPANDING BEYOND THE DOMESTIC MARKET Unit

GOING GLOBAL

THEADVANTAGES OF EXPANDING BEYOND THE DOMESTIC MARKET

Unit

Goingglobal has been the in thing in business for several years. Manyfirms, both small and big have ventured into the global marketchoosing to go for the larger market and ignoring the myriad ofproblems associated with it.

Goingglobal for many businesses exposes them to a larger market. Theselarger markers imply high revenues and higher profits and presentopportunities to capitalize on economies of scale and lower costs ofdoing business. For profit making businesses, this is their corepurpose of existence: to grow profits and increase returns oninvestment. The Asian market and specifically India and China withtheir populations that run into billions remain very attractive formany western firms who are eager to meet the demands of a growingmiddle class in those countries that exceed 500 million. The marketalso has a growing skilled labor force that is comparatively cheapercompared to other markets. Going global enables firms to tap thesetalents. The European Union market is also perceivably homogenous andeasy to address (Schiffman etal.2010).

Anotherkey reason why firms go global is to capitalize on their nationalheritage. Some brands are heavily associated with their country oforigin and if the association is positive in the eyes of foreignconsumers, them it is an easy sell. For instance, German automakers,Mercedes, BWW and Volkswagen are heavily linked with Germanefficiency and superior quality. For such reasons, these marketershave to go global to be nearer other markets such as the US andEurope which demand such products (Schiffman etal.2010).

Itis clear that going global has many benefits though it is a riskyaffair. However, businesses thrive by managing risks and where therisks are higher, the higher the returns. Therefore, going globalwill continue to attract more risk inclined businesses pursuinghigher returns and better growth opportunities. However, those thatfail to manage these risks accordingly will fail miserably.

References

Schiffman,L. G., Kanuk, L. L., &amp Wisenblit, J. (2010). Consumerbehavior(10th ed.). Upper

SaddleRiver, N.J.: Pearson Education/Prentice Hall.