Motivations for Global Expansion
Many mid-sized companies recognize an urgent need for a presence beyond their home markets. The motivators for global expansion are:
- Customer Demand - Important clients are reducing the number of suppliers to gain efficiency, and require product and services where their operations are located.
- Competition – Growing competition in home markets forces companies to compete in new markets.
- Reach Larger Markets – Many international companies need to escape the boundaries of their limited home markets. This often includes a need to expand within the United States and Canada, the largest markets for many consumer and business products and services.
- Amortize High Fixed Costs – Products or services that require a high investment in R&D and start-up cost require a larger global target market to recoup the initial capital outlays.
- Buffer Economic and Product Cycles – Despite a more synchronous global economy, there have been instances even in recent cycles where demand in certain countries, especially emerging economies, has held up better. In other cases, demand for certain early or late life cycle products is focused in specific markets.
- Emerging Markets – Asia, Africa, Latin America – may have the highest growth potential, but market entry is a challenge for mid-sized companies with limited resources.