Many companies have moved into other countries because they saw huge growth opportunities there.
Recent interviews of top international executives by the Myrddin Group in San Antonio have revealed they thought they could create value by transferring their business model and American style of product and marketing to foreign markets.
Many initially treated foreign markets much like the United States but soon found that this was not the correct approach. Many American products drew big yawns in Europe and Asia where most of the successful products were local. These national differences in customer tastes and preferences require a change in approach to marketing.
This requires a redefining of the actions managers can take to compete more effectively as an international business.
The Advantages of Global Expansion
Expanding globally allows a business to increase its profitability in ways not available to purely domestic businesses. Companies that operate internationally are able to:
Expand the market for their product offerings by selling those products in international markets.
Achieve location economies of scale by distributing value creation activities around the globe to where they can be performed most efficiently.
Earn a higher rate of return by leveraging any expertise developed in overseas operations and shifting it to other parts of the company’s global operations.
While this sounds simple, it is constrained by the need to customize products, marketing, and business strategy to each of the different national locations. Most multinationals started out by taking their goods or services and selling them internationally.
Companies like Toyota for example found out that the small vehicles that were popular in Japan were not as popular in the US as the larger sized autos. They adjusted their product strategy to the US market and enjoyed the ensuing growth in market share and profitability. McDonald's adapted likewise