RE: Discussion - Module

Why do companies expand into foreign markets and what are the entry mode alternatives for their expansions?

Today, we live in a world where globalization has overcome us, in which companies have to find new ways to remain as strong as in the past, that’s why over the years have been taking the decision to expand their market to other countries or continents, and not be just a local sale that can be damaged by other corporations that come to compete with them.

Taking such decisions to expand their market to other countries is not easy, as it involves a number of factors, such as political, economic and cultural risks, besides regulations that may have certain products in the different places.

The entry mode alternatives for expansions are direct export, indirect export and foreign production. The first two are based in home production and their most advantages are that they can have the opportunity of learn about other markets before making and invest and reduce the risk of operating overseas.

What are the factors that cause a company to change its strategy?

As we have been discussing in other modules, there can exist many reasons which ones a company needs to change their strategy pursuing just one reason elevate their sales.

I will mention some of such reasons:

Overview, due to demand it creates the need to develop new products which meet customer needs.

Competition, Due to the entry of new products and with a better price is what makes a company change its marketing strategy, launching new campaigns to promote their product.

Technology, Due to development in technology that we have today, companies need to be updated in this regard and have to upgrade their employees as well (For example using new computer programs)

Desire of growth, just the desire to keep growing encourages companies to change their strategies to start selling franchises, as Subway in 1974, today having around 22 524 franchises around the United States.

Need to improve Process, The need to implement new production processes or improve existing, to remove all bottlenecks that occur within the company.

Government regulations, is another reason I consider very important to campanies in changing their strategy.

What are the different types of diversification? How do corporations determine which diversification strategy to follow? How do you evaluate the performance of a company's diversified strategy?

The different types of diversification are:

Horizontal diversification

Consists in the development of new products or services that may attract existing customers in the company. For example, a water purification can also introduce ice as a new product.

Vertical Diversification

Consists in introduce business value and offer products or services that are necessary for what the company sells. For example a

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