Domestic versus International Expansion Institution Affiliated Date Reasons

Domestic versus International Expansion Institution Affiliated Date

Reasons for domestic expansion • The domestic environment is familiar – No need to gather fresh resources, logistics and suppliers – The natural, political and legal climate is known • There is need to build domestic markets and promote local production – It is better to promote home country than a domestic country

Reasons for international expansion • There is a wider market – Expanding internationally can be a solution to a market that is very competitive – The business can exploit markets with less competition abroad • Access to new technology and cheaper labour hence cost savings – Business will enjoy greater economies of scale

Similarities • Both options will require a little more investment in market research and new facilities • The level of competition may be consistent depending on the nature of business • There is still some level of logistics to get more inputs for the expanded enterprise • Globalization might level out both markets

Differences • There may be less competition in international expansive than in domestic expansion • International expansion lead to greater markets • There is a lot of unfamiliarity in international expansion hence more risks (Walker, 1989) • Domestic expansion is easier and less risky

Recommendations • I recommend domestic expansion due to a number of reasons: – To form a strong basis for international expansion – To fully exhaust local resources and opportunities – It is easy to launch new products in a familiar market • The business should focus on exhausting the domestic market first, and use the proceeds therein to go global

References • Jacob, F. , & Strube, G. (2008). Why go global? The multinational imperative. In Global Production (pp. 2 -33). Springer, Berlin, Heidelberg. • Walker, B. J. (1989). A comparison of international vs. domestic expansion by US franchise systems. International Franchise Association.