After having assessed the resources available to SMEs and LSEs which are necessary in order to approach the challenges and rewards in international expansion in this post, we can take a closer look at the process followed to initiate the internationalisation process. In general terms, each company takes a series of incremental steps designed to develop an international presence.
All in all, the approach which is being followed pertains to the will of a company to look for something necessary to the creation of value or to the maintenance of its strategic advantage. If we were to list internationalisation motives we would have the following:
A company can decide to internationalize by emphasizing the reward associated with a successful marketing venture (proactive motives) as well us by understanding the risks associated with not taking advantage of internationalization opportunities (reactive motives).
In this post we’ll address the following topics:
1. Proactive Motives for International Expansion
2. Reactive Motives for International Expansion
3. Change Agents
4. Risks Associated with International Expansion
Let’s now see what types of reactive motives can lead companies to approach international market growth.
Usually, companies do not address a costly and time-consuming endeavor because of only one factor. On the contrary, there may be one or more change agents pushing the organization towards foreign opportunities.
Even if there may be a wide variety of elements pushing companies towards internationalization goals, there is still a wide variety of factors hindering internationalization. Among these the most common we can list comprises.
Moreover, there are a variety of risks which depend on the general market environment, commercial risks and political risks.
General Market Risks
This is by far the category that provides the highest amount of potential issues\limitations. The list below is simply a list of some of the most frequent ones.
How can one balance these issues? Essentially in three ways.
These risks may be present before the internationalization process is started, or alternatively they can present themselves after investments have been made. It is still possible however to approach a de-internationalization strategy.
De-internationalisation is a process determined by internal and external factors whereby the international company shifts towards a configuration with a lower international presence. This can be then further implemented via Figure 2.5 showing typologies of withdrawal in response to shifting market conditions.
As discussed in this post there are a variety of reasons that push companies to seek international expansion, being able to identify which main reasons are inducing your company to grow abroad is a useful insight to develop a fitting marketing strategy.
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