Friday, May 3, 2019
The main reasons why companies decide to internationalize their Essay
The chief(prenominal) reasons why companies decide to internationalize their activities - Essay ExamplePorter (2011) identifies how paramount the risks ar as they atomic number 18 associated with new entrants in a market when entry cost barriers ar reduced or even so when technological advancements make it easy for new entrants to replicate war-ridden products and infuse new competitive forces in the market. Growth in the competition after a business products are in the maturity do along the product lifecycle and when markets are becoming saturated with emerging competition, it is no longer sustainable to carry the presence in the domestic country. Instead of attempting to diversify the business product portfolio, which is not always accomplishable using existing resources and existing knowledge, firms will seek new foreign markets as an opportunity to create revenues and remove competitive risks. In this capacity, they can maintain the same operational costs associated wit h product occasion and create a new demand with foreign consumers as a mover of sustaining its profit margin. Furthermore, sourcing and manufacturing are now becoming a more globalised function as industry-wide benchmarks and standards are being established (Cavusgil, Yeniyurt and Townsend 2004). This means that supply chain networks are becoming more homogenous on a global understructure which makes it easier for competition in a certain industry to gain the same type of procurement advantages associate to cost and distribution. As emerging markets establish the distribution networks and tangible infrastructures necessary to reach foreign markets, competitors are able to benchmark supply strategies and erode any competitive advantages once achieved by another competitor. Further, the magnate of competition to achieve replicable value-added activities in procurement drives another competitor to seek new opportunities to regain competitive advantages. Internationalisation, as it is related to procurement strategies, provides new opportunities to innovate new product development.
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