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Reasons Firms Go International

Updated February 21, 2017

A firm that goes international is a company that chooses to expand its operations or to sell its products abroad. Sales increase with going abroad, but marketing and advertising costs go up too. Going international could refer to firms that export their products to other countries and to firms that have established their branches and production units abroad.

Bigger Market, Increased Sales

The most compelling reason for firms to go international is that it helps their business to have a very wide reach and a very large base of potential consumers. This reduces the firm's dependence on its traditional (local) market and opens up enormous opportunities for growth and profit in booming export markets. When a firm sells its products or services in different countries, its diversified market allows it to make profits even when the economy of its home country is not in great shape. The firm's international presence spreads the risk over different markets.

Higher Profits

With a bigger market, a firm is able to sell more products or services, and hence get bigger profits. This is particularly true if the firm is in a country where the resources, labour and costs of production are low. If a firm manufactures its products in a country where the costs are high, then it can move its production to another country where the costs are low. In either scenario, the firm will be able to market its products and services at a rate lower than competing manufacturers.

Better Brand Value

Going international helps a firm establish its presence better in markets and boosts its brand value. The firm becomes more recognisable. This helps the firm not only in international markets, but also in its home market. Competition is tough, and better brand value can give the company an edge over its competitors.

Fresh Outlook

Firms that go international can attract employees from different countries and with different backgrounds. Employees with different perspectives help the firm's knowledge base with newer ideas and suggestions for growth.

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About the Author

Marcus Paine started writing in 2002 and has worked with some popular publishing houses in Gloucestershire like Edward Elgar Publishing and Nelson Thornes. His work, "Exploring Cheltenham" was featured in Elgar Publishing's weekly newsletters. Paine earned a Bachelor of Arts in journalism and a Master of Arts in mass communication from the University of Gloucestershire and London Metropolitan University, respectively.