Advantages And Disadvantages Of Going Abroad

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2.3 Advantages of going abroad
‘Two hundred giant corporations, most of them larger than many national economies, have sales that in total exceed a quarter of the world’s economic activity. On that basis, Philip Morris is larger than New Zealand and operates in 170 countries. International trade in 2003 accounted for over one-quarter of U.S. GDP, up from 11 percent in 1970’ (Kotler, P., & Keller, K. L., Marketing Management, 12th ed., 2006, Pearson, Prentice-Hall, p. 668).
Companies benefit of expanding business and international operations in several ways. Nowadays, internalization becomes very popular and important strategy for Companies all around the world. More and more firms try to go abroad for personal benefits. There are several purposes why company can benefit from going abroad:

1. Since Company increase market size, it will also increase production and they can benefit from Economies of scale
2. Diversification in another economy will reduce the risk. Economic, political and social factors can play important factor in company’s success
3. Bigger market size will lead to greater sales and profits if market expansion set up successfully and foreign market entry is chosen correctly.
4. Having operations in different countries, it requires better understanding in cultural and social differences. Companies benefits from it in a way that it can bring knowledge to its home country processes. As a good example could be how Starbucks introduced Italian coffee drinking
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