o Why Companies Grow
o Why Companies get involved in International Business
o Reactive Reasons, Proactive Reasons for exporting
updated last 2009 July 09
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are forced into international selling due to the competitive environment.
While it might be wonderful to stay the same size and just focus on quality,
the problem is that the competitive environment creates situations where
your competition continues to grow - so, if you do not grow and expand
you will lose customers.
Your former customers will move to larger vendors that can offer lower prices (because they sourced components internationally and can offer economy of scale).
|from Page 15 in the textbook by Richardson|
|Why Companies Have to grow||The main purpose
of business is to make money for the people who own the business. All other
objectives are secondary to achieving this goal - it may sound heartless,
but it is the essence of capitalism.
Achieving this goal obviously means making enough money to stay in business several years in order to pay back any money you borrowed to get started, and make enough money that it is worth your while to have developed the endeavour. Therefore managers seek to increase or to stabilize profits, which partly depends on
Why can't a business just stay the same size?
Why does a business have to sell outside the territory of its original customers?
Why does a business have to access resources outside the territory of its original base?
The answer to these questions is the answer to why International Business exists - and will be explained in the lecture.
A big part of the answer to why business has to grow is simply based on the fact that business cannot stay the same size - if your business does not grow, the competitors will grow, and soon you will lose your customers to competitors who grew, and had more selection, or made cheaper products.
So you have to grow because the nature of the competitive environment will not let you stay the same size
|Why Companies do IB..||Why
Companies get involved in International Business
There are 4 major operating
objectives that may cause companies to develop International Business
Which, if you do #3 and #4
|Reasons for IB Growth||Overall
general reasons for International Business growth
There are many many reasons why international business has grew enourmously in the 1990's and the first decade of Y2K - but essentially these reasons can explained due to 4 main influences
Government trade policies
liberalized (made less restrictive)
|COMMENT||So this leaves
companies with the challenge of why go international. Sometimes they think
of the situations (mentioned above) and decide, in a proactive way, that
they should start exporting, or importing in order to be more competitive.
Sometimes they don't have a specific corporate direction to go international, it just happens because they are forced into it and they are reacting to some competitive or economic or technical pressure.
So we describe these two directions as being Proactive or Reactive.
|from Page 303 in the textbook by Richardson|
||reactive - from
reaction, to receive information, then act
Reactive reasons for going
means to act in advance, to anticipate something happening, and plan for
the situation. Companies who are proactive in international business are,
in most cases, better positioned than companies that simply react. If you
simply react you might make a mistake and not do things properly because
you are stressed for time, money or manpower.
Proactive reasons for going international include
for going international include
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