Reasons why Companies go International

By OluwaseunP. Adeola

As the business environment became more turbulent, sophisticated and competition grew stiffer, businesses needed to be more proactive, creative and more open to the realities of the global trend of occurrences. The motive behind every success minded company is to cut cost as low as possible and maximize profit in all of it transactions and operations. Therefore, to achieve business objectives, maintain cardinal values of the company and equally deliver values for customers’ money, it then behooves on the company to plan strategically how it would cope with the many business challenges in ensuring that it wins a significant share of the target market. Going international is an effective way of staying afloat of the ‘business waters’.

International business has been defined in various ways and by different authors. The online business dictionary defined it as ´The economic system of exchanging goods and services, conducted between individuals and businesses in multiple countries. Doole &Lowe (2001, 31) also defined it as ´the performance of business activities that direct flow of a company´s goods and services to consumers and users in more than one nation for a profit’. Going by the definitions of international marketing, this simply means the process of taking goods and services to people outside the location of the company that produced it. One can however conclude that for the purpose of achieving business goals in the implementation of marketing mix, two levels are involved. At its simplest level, international marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe.

Prof. Duncan, a USA based lecturer in his lecture delivered to the students of International business student at the Savonia University of Applied Sciences Kuopio, Finland (Feb.2009) stated clearly some of the important factors that are responsible for companies and businesses going international. The factors are as follows:

1. To build brand image
2. Sales growth
3. Access to scarce resources
4. Leverage core competences
5. Respond to competition
6. Too small home market
7. External initiatives to spread the product
8. To diversify sources of sales and supply

Furthermore, the Indiana state University, USA (online source.15.03.09) grouped the reasons for companies embarking on international trade into two broad categories; Proactive and reactive reasons.

PROACTIVE REASONS:

• Economics of scales
• International markets
• Resources access and cost savings.

REACTIVE REASONS

• International competition
• Regulations and restrictions
• Customer demands

Ponsse oyj, (Finnish company) the market leader in the forest machine industry could not have achieved such a great success by limiting its dealings within the shore of Finland. The ponsse company did well by acting proactively to extend the company’s marketing strategy to concern the target markets and this they achieved by going international.