Question

4: Explain the many reasons why companies locate outside of their home country.

Answer 1

Companies locate outside of their home country due to following advantage of the other countries -

Open Up Untapped Markets

The biggest problem entrepreneurs have today is that they are constantly competing with others in their home country. Getting a unique idea is nearly impossible, and the chances are that there are at least a hundred other companies with similar concepts. Standing out from the crowd can be hard, but it’s not the same all over the world.

Something found in India could be non-existent in a country like Canada. Establishing a base of operations in another country could open up a completely new base of customers.

Government Incentives

A lot of countries have problems attracting foreign investors and businesses. To encourage people to come, they put the potential for tax cuts and grants on the table. Come up with a great business idea, agree to move to that country, and you can get a boost right from the beginning.

Just make sure that you’re weighing the pros and cons before you bother to chase these incentives.

Better Business Environment

Some countries are notoriously anti-business. That’s why more and more companies are deciding to move to other parts of the world where they don’t have to deal with the same bureaucracy.

More favorable rules can allow you to run your company without worrying about the paperwork that comes with running a company at home. Once you have your second citizenship you can get right to work with running your company.

More Business Recognition

Brand visibility is a major concern for newer companies. One of the first things to do when doing business in another country is to establish your brand. Many companies’ set up operations in their home country and then open a branch in another part of the world. This extra brand recognition makes it much easier to gain customers, and it gives your brand a sense of credibility.