Companies decide to “go global” for a number of reasons. Perhaps the most urgent reason is to earn additional profits. If a firm has a unique product or technological advantage not available to other international competitors, this advantage should result in major business successes abroad. In other situations, management may have exclusive market information about foreign customers, marketplaces, or market situations. In this case, although exclusivity can provide an initial motivation for going global, managers must realize that competitors will eventually catch up. Finally, saturated domestic markets, excess capacity, and potential for cost savings can also be motivators to expand into international markets. A company can enter global trade in several ways, as this section describes.
This is important because it explains why companies choose to expand into other countries. Businesses often go global to make more profit, especially if they have a unique product or special knowledge that gives them an advantage. They may also expand because their home market is full, they have extra production capacity, or they can reduce costs by operating internationally. Understanding this helps us see how and why companies grow beyond their own borders.