Strategic Management: A Competitive Advantage Approach, Concepts and Cases, 16/e

Advantages and Disadvantages of Doing Business Globally

Firms have numerous reasons for formulating and implementing strategies that initiate, continue, or expand involvement in business operations across national borders. Perhaps the greatest advantage is that firms can gain new customers for their products and services, thus increasing revenues. Growth in revenues and profits is a common organizational objective and often an expectation of shareholders because it is a measure of organizational success. Potential advantages to initiating, continuing, or expanding international operations are as follows:

1. Firms can gain new customers for their products.

2. Foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks ...