Why Do Companies Go International?

by Neil Kokemuller; Updated September 26, 2017

In general, companies go international because they want to grow or expand operations. More specific motives include generating more revenue, competing for new capital, diversifying and recruiting new talent.

Generating More Revenue

Domestic companies constantly look for opportunities to add customers and revenue streams. When growth strategies are used up on the national level, the next path is to seek out international growth. Distributing your products in additional countries increases your customer base. As you offer compelling solutions and build loyalty across international markets, revenue strengthens and escalates as well.

Competing for New Capital

Closely connected to the goal of more venues is the desire to acquire new capital. Even if company operators generally are satisfied with revenue levels, the race for international expansion often is about competing for resources. If you don't enter a ripe market with your solution, competitors do. Not only do you miss the revenue source, but you lose out on valuable cash that you could use to promote your company at home and abroad. In some cases, a strong domestic company gets overrun by a lesser player that succeeds globally, and grows big through global synergy.

Diversifying the Business

International expansion allows a company to diversity its business in a couple of key ways. First, you spread the risk of slowing demand across multiple countries. If one market never gains, or loses, interest in your offerings, you can pick up the slack with success in other countries. Also, companies often enhance innovation and develop additional variations of their solutions when they operate in multiple countries. Product diversification similarly insulates you from the risks of declining interest in a particular item.

Recruiting New Talent

Operating in international markets also gives you access to a larger and more diversified talent pool. Employees who speak different languages and understand different cultures enhance connections with a broader customer base. You can also structure global work teams in a way that allows for synergy in building a global brand. In addition, you can connect with suppliers in international markets and take advantage of raw materials and resources unavailable in domestic markets.

Tips

  • Access to opportune partnerships or emerging customer markets may also compel a business to go international at a particular time.

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.