International strategies enable firm ventures into global, multidomestic, or transnational. Risk diversification, market opportunity, and economics of scale are some incentives that make firms use international strategies. Firms diversify their risks by venturing into different markets. External factors will be felt less by the firms if one country or market is affected; hence they can maintain consistent revenue. Firms make diversification strategies to take advantage of market opportunities. Demand for the products in the international market, less competition, possible shift to the product produce may incite a firm to go international. Example of companies which have expanded to take advantage of market opportunities is Beiersdorf and Sony. Firms venture into the international market due to economies of scale. International strategies enable firms to venture into countries and locations where it is cheap to produce, distribute, and transport the final products. Wage differences, legislation, availability, and flexibility of suppliers among some countries may be lower than others hence attracting international firms. The benefits of implementing international strategies are business growth, competitive advantages, and diversifications. Companies expand faster when they venture into international markets due to an increased market for the products. International strategies enable firms to discover new markets and avoid saturated markets; this makes them stay ahead of their competitors. Companies can also introduce new products in the new markets.
International diversification has many benefits for companies. Diversification enables companies to utilize available resources hence more revenue. Risks are also diversified hence increasing the likelihood of success. Effects of ups and downs due to business due to changes in spending patterns are minimized. Risks associated with investing in one product are minimized. Companies are discouraged from diversifying by the risks associated, legislation and regulations, and huge capital requirement. Twitter is an example of a company that has not diversified.
Business regulations are put in place to protect the environment, protect consumers, and ensure that companies are accountable for their actions. Firms may be tempted to locate businesses where these laws are lax. The advantage of locating in countries that are not strict in their business laws is that they can make to pay less tax and other legislative expenses. Companies can also use cheap labor and resources without any restrictions. Competitive advantage is also easy to achieve. Businesses may not succeed in business environments with lax law. Failure to follow laws will lead to unfair competition. Violation of human rights will also persist, raising concerns from international lawmakers. Businesses will be rigid; change will be hard because only large companies will dominate the market.