Why do you think a currently-successful firm might wish to expand its operations internationally?

There are numerous reasons for successful companies to expand internationally. The primary purpose for any company to be in business is to make a profit. With that said, the primary motivator for firms to expand internationally is to increase profits. There are, of course, many other reasons, but in the end, they are all aimed at creating or maintaining profits.

As a company grows, it is important to diversify its assets. By expanding operations internationally, growing firms become less reliant on the success or failure of a government. In addition, they are less likely to suffer catastrophic losses due to regulations imposed by these governments. Having diversified internationally, a successful company protects its profits against sudden shifts in taxation policy, supply networks, and/or a geopolitical event.

Being the first to reach a market has significant advantages. It is always difficult to unseat a favorite, and the favorite is often simply the first to get their product out. Successful companies might expand internationally to maintain their edge over competitors in areas where they anticipate future competition. Being too slow to get to growing markets is dangerous to future success.


I think tariffs are important to the conversation. Companies that have diversified internationally are more protected against sudden shifts in tariffs that are imposed around the world. It may be possible for production and supplies to be shifted from one country to another to reduce the effect imposed on a company by a particular host nation. Like any portfolio, one invested without diversification across various business sectors and international regions is more risky than one that is allocated properly.


Keyword: management cadre, global economy, international business, exchange rates, economic incentive, foreign investment