International Expansion: The Good, The Bad, and The Ugly

Author: Humza Mirza (Grade 12 International Business)

What is it?

Recently, I have come to learn about international expansion and its importance in the business world. Successful international expansion is a major determinant of success. International expansion has been a part of the corporate world for ages. However, it is not an effortless process. There are many businesses that are largely successful in North America, but fail terribly in other countries. For instance, Walmart failed in Japan and Home Depot failed in China. International expansion is not as simple as bringing your product into another country. It requires combining two cultures together whilst still satisfying the desires that individuals from both cultures have. Before, expanding businesses also have to conduct a lot of market research because not every business will be able to thrive in multiple countries.

The Good:

I am sure that it shocks no one to hear that international expansion has many benefits for businesses. The most obvious advantage of international expansion is that businesses grow as a result of it. When a business introduces themselves in multiple nations they allow their business to grow financially and increase their global footprint. The growth of a business can lead to more innovative products. International expansion also allows businesses to gain loyal customers in more than one country. If one nation’s customer base is suffering financially, rendering them unable to spend money, a business can still rely on a loyal customer base in a separate country that will continue to purchase their products. If a business remains in their home country then they are limiting themselves to the workforce in that country. There are so many talented individuals all over the world who are in need of employment. When a business expands to another country they open their doors to the local talent in that country. It is common knowledge that one of the biggest threats to a business is its competition. When a business expands and enters a market where they have no competition it increases their chance of success substantially.

The Bad:

Many successful domestic businesses fail terribly abroad. That is because international expansion has many risks. A major risk that is involved with international expansion is the risk of compliance with policies. Businesses are often only aware of government policies surrounding their business in their home country, but are unaware of policies in other countries. Due to unawareness, when businesses expand oftentimes they fail to operate within compliance of the country which they expanded to’s regulations. Like any other business move there is a financial risk to expanding internationally. Before, a business begins the expansion process they have to conduct market research on the market that they want to enter to learn whether or not they have the ability to be successful there or not. Businesses may have to conduct market research on various countries before they find a country which they want to expand to. The market researchers that are hired to conduct this analysis are costly. Additionally, the cost of establishing your business in another country is also very high. Therefore, if a business spends all this money and then is unsuccessful in the new country which they wanted to enter they will endure a major financial loss. In class, we learned about how important it is to understand the culture of a country that you want to do business in. It is understandable why we learned about integrating cultures because failure to do so is a common reason why businesses fail internationally. 

The Ugly – My Opinion:

Although many may disagree I believe that businesses should expand internationally. Business is not all about profit and loss and making money. Business goes beyond that. International expansion may have its risks, but at the same time it helps bring people together! When a business chooses to expand they bring their product to another nation. In some cases, it is the first time the people of that nation are able to access a product like the one the business is offering. New products may help the people of that nation prosper in various ways. International expansion builds relations with separate cultures. International expansion has helped us all to see that despite our differences we can work, live, and play amongst each other.

Works Cited:

“The Advantages and Disadvantages of International Expansion.” Capital GES, 2 Dec. 2020, www.capital-ges.com/the-advantages-and-disadvantages-of-international-expansion/#:~:text=Increased%20business%20growth,experience%20your%20product%20or%20service.

MediaBeacon. “Case Study: Companies That Failed Internationally From a Lack of Social Understanding.” MediaBeacon, MediaBeacon, Inc., www.mediabeacon.com/en/blog/case-study-social-understanding.

Seale, Andrew. “Seven Epic Cases of Companies That Failed Internationally.” Firmex Resources, 13 Dec. 2019, www.firmex.com/resources/blog/seven-epic-fails-by-businesses-that-tried-expanding-into-foreign-markets/.