FACTORS THAT MAY CAUSE A FIRM TO GO INTERNATIONAL
A company can chose to go international due to the following reasons
Access to additional markets: The main advantage that makes most companies to spread wings abroad is the admission to additional markets. Along with that, a company that sells to numerous countries gets the aptitude to balance and spread risks e.g. if one country is going slow, the company can trade with another country which has a stronger economy. Kenya is a member of different economic integrations like East Africa Community to give Kenya’s products a bigger market.
Financial factor: The leading reason to go global is wealth. A local market is restricted, and there is only a limited scope to grow. There may be other markets which require the company to be present in other countries, so going global makes perfect sense. The world is a blend of opportunities and diversity. There should be some golden policy for going global. One of them may perhaps be 'Do well in the local market first and then do well globally'. Today Kenya Commercial Bank (KCB) and Equity Bank have moved to Southern Sudan and other East African Countries. The two banks do well in their domestic market. Dreamcatcher Productions Limited has set up shop in Uganda and Southern Sudan after excelling in Kenya domestic market.
Universal nature of product and services: Entrepreneurs go global, if their products/ services are moderately universal in nature, i.e. it is competent enough for consumption, cutting across caste, creed, race, culture, technology etc. This means that the ground of vision for the business is prolonged and faces fresh challenges in the diverse environments of operation. This is even more appropriate when the business customers are mobile and move from one country to another. The customers feels privileged t find his/her home country product in another country he/she is travel to eg Coca Cola drink.
Small local
area market: There may be very tiny market in the restricted area
depending on products or service. The Global market is a much larger opportunity.
Such a market helps in offsetting the costs. You are reaching more people and
can generate more revenue. There are some hazards and challenges in going
global like additional capital required and risk, along with challenges in
working with diverse cultures, different laws, dissimilar languages, political
risks and so on. For instance, Kenya
is major producer of tea enough for home consumption and export.
Access to additional markets: The main advantage that makes most companies to spread wings abroad is the admission to additional markets. Along with that, a company that sells to numerous countries gets the aptitude to balance and spread risks e.g. if one country is going slow, the company can trade with another country which has a stronger economy. Kenya is a member of different economic integrations like East Africa Community to give Kenya’s products a bigger market.
Financial factor: The leading reason to go global is wealth. A local market is restricted, and there is only a limited scope to grow. There may be other markets which require the company to be present in other countries, so going global makes perfect sense. The world is a blend of opportunities and diversity. There should be some golden policy for going global. One of them may perhaps be 'Do well in the local market first and then do well globally'. Today Kenya Commercial Bank (KCB) and Equity Bank have moved to Southern Sudan and other East African Countries. The two banks do well in their domestic market. Dreamcatcher Productions Limited has set up shop in Uganda and Southern Sudan after excelling in Kenya domestic market.
Universal nature of product and services: Entrepreneurs go global, if their products/ services are moderately universal in nature, i.e. it is competent enough for consumption, cutting across caste, creed, race, culture, technology etc. This means that the ground of vision for the business is prolonged and faces fresh challenges in the diverse environments of operation. This is even more appropriate when the business customers are mobile and move from one country to another. The customers feels privileged t find his/her home country product in another country he/she is travel to eg Coca Cola drink.
Stiff
competition and hostility in the home market: Cutthroat
competition can be detrimental to company survival. Companies can choose to go
global to diversify and avoid home hostility and a survival tactic
Availability of
cheaper factors of production: A company can decide to
move to another country due to availability of factors of productions
like
cheap labor, availability of raw materials, friendly government policies,
technology. More and more European and American companies are going to China
to manufacture their products there due to availability of cheap labour and raw
materials.
Godfrey Chege
Senior Accountant, Dreamcatcher Productions Limited
CPA, BBM (Moi University, Finance and Banking)
Godfrey Chege
Senior Accountant, Dreamcatcher Productions Limited
CPA, BBM (Moi University, Finance and Banking)
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