Question

• Explain how firms can increase revenue and profit by expanding globally.
• Identify the different international strategies for competing and their pros and cons.
• Explain the pros and cons of using strategic alliances to support international strategies.
• Compare and contrast the different modes that firms use to enter foreign markets.
• Identify the factors that influence a firm’s choice of entry mode.
• Recognize the pros and cons of acquisitions versus greenfield ventures as an entry strategy.  
• Explain the promises and risks associated with exporting.
• Explain the basic steps involved in export financing.
• Identify information sources and government programs that exist to help exporters.

Answer 1

Question : Explain how firms can increase revenue and profit by expanding globally.

Through globalization firms can expand globally. When the goods and services of a firm moves from its domestic country to other countries then the firm can be considered to be expanded globally. Thus when firms are expanded globally they can increase their revenue and rate of profit. The firms that are operating globally have following benefits,

• They are able to sell their domestic products in international markets and thus can expand their market globally. This will help to increase the growth rate of the firm as it sells products produced at domestic country at both domestic and international market. It will help the firm to reach more customers and there by increasing the sale.
• They will be having cost advantages as a result of large scale production. Thus they can have economies of scale which will contribute to increase profits.
• Valuable skills in foreign operations can be leveraged in order to warn greater returns to the firm.
• There will be competitive advantage. When the opponent of a firm is not operating often in an expanded market, then the firm can take a first mover advantage that will help the firm to create a powerful and strong awareness among the customers in that market about the brand before the firm's opponent enter the market. This will have positive impact on the demand for firm's product and hence its sales and revenue will increase.