Question

400-450 words

Briefly explain the importance of international expansion as a viable diversification strategy

Answer 1

Expanding your business internationally is one of the viable diversification strategy. It helps your business to grow in such a manner where you go out from your domestic region to explore more resources, use more strategies, tap more markets and achieve the best of effectivity to make sure your business is growing as per the plan and objectives. The importance of the international expansion lies with what the are advantages that one can seek doing the same process.

1. New Markets: In a survey, it was estimated that 96% of the world’s consumers live outside of America. Thus, when you are expanding your business internationally, you are giving yourself and your company a new chance to conquer more markets and more consumers. This means more sales and more revenue for your company. For example, organisations like IBM and Nike maintain  activities  in the Netherlands because it offers direct access to 175 million European customers within approximately 300 miles.
2. Growth and Diversification: Many organisations expand their businesses internationally to grow and diversify their assets as well as resources, which is an action a company takes to protect itself from hitting against the uncertain events. For example, companies having international operations can often many a times offset negative growth in one country’s market by operating successfully in another market. These companies can also use these international markets for introducing more unique services and products, which helps the company to maintain their positive revenue operational stream. Coca Cola diversifies its business using global operations. It targets and operates in many countries helping it to grow and diversify its business at large.
3. Access to Talent: Using the international strategy for growth is also important because of the opportunity it gives us to access more resources, new talent pools and many new skills and advantages that we are not aware of. International labour and markets can offer many unique advantages for the terms of unique productivity, diverse educational backgrounds, more skillsets to offer, new languages etc. For example, Netflix increasing and spreading its business across so many countries hire specialised employees who are aware of many cultures so that the right targeting could be done by understanding the right culture and language of the people of the market.
4. Competitive Advantage: Companies choosing to diversify and expanding the business operations using the international strategy tends to have a competitive advantage as well for example Amazon. More markets could be handled together making your business stand out bigger and better than your competitors.