Beyond doubt, you can pinpoint more than one of the below reasons that match your organizational strategic needs leading to the choice of going international.
Your reasons fall within two categories:
- Proactive It is you who strategically decided to grow
- Reactive You have to fight back the changes in the business environment. So you are being forced for that move.
When the company decides to grow or initiate strategic changes the proactive motivations are:
- i. Profits are the most important motivation for firms to engage in international affairs.
- ii. Specific knowledge over a foreign customer, foreign market or a particular connection.
- iii. The existence of a long-term commitment from the management to the process of internationalization.
- iv. Differences in taxation between different countries and the tax benefits from export.
- v. Economies of scale that companies obtain from their increased production due to the existence of additional demand in foreign markets.
When the company seeks avoiding loss or adapting to changes imposed by the business environment the reactive motivations are:
- i. Competition pressures are one of the most important motivations for which a firm may use to penetrate foreign markets to maintain turnover.
- ii. Overproduction may be a strong motivation in the firm decision to internationalize.
- iii. Decreasing of domestic sales and reducing of the market share has an effect similar to that of increasing competitive pressure.
- iv. Excess of production capacity is also one of the most important reactive factors of the process of internationalization.
- v. The ultimate reactive motivation quite common especially for firms in the European Union is closeness to external customers