Potential advantages and disadvantages of firms wishing to became international, and potential advantages and disadvantages of host countries wishing to accept such firms”

MK2X01CN- INTERNATIONAL MARKETING

“Potential advantages and disadvantages of firms wishing to became international, and potential advantages and disadvantages of host countries wishing to accept such firms”

Count words: 2,242
20/05/2010

 
1. Advantages For Firms Wishing To Become International.
Companies can go abroad for multiple reasons. There are trigger factors in whichorganisations strategically make the move to expand their business across borders like competitive pressure in domestic market, declining in sales and saturated market.
1.1 Growth Size
One of main advantages for going abroad is the company growth size to increase the profit margin of companies, increase the market share and get new ideas for the business.(http://tutor2u.net/economics/gcse/revision_notes/firms_growth)
Easy Jet airline British company, which operates in domestic and international market, sought the opportunity to expand their business in November 2009 by increasing new connections and routes, flying 3 times per week between Gatwick and Sofia, Bulgaria capital. Easy Jet also plans to expand to Romanian market and introduce routes to Poland in the Gdansk city. The companywants also to growth in Central Eastern Europe. (Source:https://www.easyjet.com/EN/News/)
1.2 Economies Of Scale
Economies of Scale are the cost advantage that business obtains when the cost per unit falls as output increases.
Coca-Cola reports solid first quarter 2010 operating results, with unit case volume increasing a strong 3%, in line with our long-term volume target. Coca Cola achievedbroad-based international unit case volume growth of 5%. Eurasia and Africa unit case volume grew 11% with continued strong growth of 29% in India and 18% growth in Turkey. Pacific unit case volume grew 5%, cycling 4% in the prior year quarter, and Latin America unit case volume grew 4% with strong 12% growth in Brazil. Europe unit case volume was even with the prior year quarter, with growth inFrance and the Benelux countries as well as in our Bottling Investment territories including 5% growth in Germany and 2% growth in the Nordic Region.( http://www.marketwatch.com/ Coca-Cola Company Reports 2010 First Quarter Financial Results)
1.3 Efficiency Use of Natural Resources.
Another advantage is the efficiency use of natural resources. Raw materials, natural resources and land can be obtainedcheaply when operating overseas.
Pioneer Natural Resources, is a US company based in Texas and their business is to explore and produce gas liquid, gas reserves and oil to meet world energy demand. The company have strategically expanded to Tunisia and South Africa to obtain more efficiency use of natural resources in those countries. Also, Pioneer is exploring a determinate area in Alaska.(Source: Pioneer Natural Resources. Annual Report.2009.)
1.4 Seasonal Demands
Seasonal demands is also an advantage that companies consider when expanding abroad.
Seasonal demand is the consumer interest in purchasing particular products only during a specific period within the calendar year. (Business Dictionary.com) For example, in the tourism sector many customers in Europe prefer to taketheir holidays in Christmas time and travel abroad to sunny and warm places.
Thomas Cook group is a UK retail travel company and operates in northern Europe, North America, and continental Europe. Their demand for summer holidays booking increases especially in the regions of northern Europe and continental Europe. Thomas Cook is having a huge demand hotels booking, airlines tickets and tickets forWord Cup matches in South Africa. (Source: Thomas Cook.com, Financial Times and Bloomberg Business Week. 2010.)
1.5 Extending Product Life Cycle.
Extending product life cycle is another advantage for firms wishing to expand abroad. Product have stages of life like; development, introduction, growth, maturity and decline. (Tutor 2U.com)
Companies adopt strategies to extend the life of product...