With the fast paced changes occurring in the market, both in the local as well as in the international context, businesses are expanding in order to take advantage of the economies of scale as well as to target a larger market for improving their revenue base and the resultant profits. The businesses as a result have established new methods for entering foreign and international markets for conducting business.
The common strategies used by firms to expand into the international market pertain to joint ventures, investing in new businesses in international locations, acquisitions and mergers as well as franchises. Aside from this businesses also hire subsidiaries and intermediaries like distributors who manage and operate in the international market to provide the products and service to the target market. The steps that are usually employed in a typical investment by an international business pertains to “(1) exports are employed initially in order to serve customers in psychically close foreign markets; (2) subsequently, Greenfield marketing subsidiaries are established in these markets; (3) finally, firms engage in mergers and acquisitions, create subsidiaries that incorporate several value-adding activities and penetrate psychically distant foreign markets.” (Hashai & Almor, 2004)
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