The global expansion of companies has added many benefits to the corporate business. When a corporation hit the global market, it results in many advantages. Small and medium-sized enterprises, on the other hand, face more challenges compare to the established companies when it comes to heating the global market or becoming an international product.
Global expansion occurs when companies extend their services or products to more than one continent. It is when their target the global market and not just a country or two. Global expansion is of value as a corporate business strategy. This is because when one is involved with global expansion, it means that they export their products to different countries and continents as well. This gives them a chance to distribute their goods and services at a subtle investment. Another value of global expansion is that companies get the opportunity to form partnerships with other foreign people. Meeting people with different or more expertise adds value. Also by creating these partnerships, companies can build more branches all over the world instead of exporting their products where needed. when expanding globally, a company may also decide to buy an already formed company in a different country, a strategy known as wholly owned subsidiaries. This is of value as a business strategy because a company will not have to export their products or find new investors. Wholly owned subsidiaries is when a company buys another company in a different location, they retain the management and the workers as well but become the new owners. This also saves the company the trouble of finding a location or workers for the new company.
Many companies have taken this step of global expansion to add value in their products by enabling it to reach people all over the world. Some of these companies include Dominos, being a food making industry, they can sell their products all over the world, it is impossible to export food since it is perishable, but by expanding and building in different continents, a larger population can enjoy the product. Another example is Coca-cola. This is a globally known product that is very popular with almost everyone despite the country or continent which it originates.
Small and medium sized companies encounter many challenges along the way. Some of these difficulties include a shortage of capital; much SMEs lacks the capital to grow their product to a level where they can compete with the already established companies. SMEs also face the challenge of lacking foreign representation; this is because many foreign investors consider them a high risk and would rather work with the already full-blown companies that are less of a risk. Another challenge experienced is the inability of small and medium-sized companies to be able to match their competitors prices. The prices set by the large companies, if matched by SMEs will not produce beneficial results for them. SMEs also lack the capability and even experience to manage their time to deal with the international market, thus find difficulty in obtaining the support of other foreign countries. Most local governments would prefer working with the established companies rather than help the growing companies; this is because the established companies are less of a risk. They are also reliable when it comes to the paying of taxes and establishing an international relation with other countries.
Global expansion has many advantages both to the company and to the countries involved. Companies should aim at expanding their boundaries and hitting the global wall to maximize their profits. SMEs are also important, given a way out, they have the potential to become international and grow to the level of the already full-blown companies.
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