Drivers of Internationalization of Business

Drivers of Internationalization
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Drivers of Internationalization
Internationalization refers to the process of designing products or services in such a way that they can readily access and be acceptable in the international market. In essence, it means extending to foreign countries and is a fundamental component of globalization. Internationalization is paramount since it enables the economy to develop its infrastructure (Jandoust et al., 2018). In addition, it plays a pivotal role in enhancing the quality of products and services to a high level of competition. Several factors combine to drive organizations into foreign trade, including expanding sales, diversifying risks, acquiring inputs, technology, and global competition.
Expanding Sales
More often than not, when companies institute mechanisms that facilitate them to produce goods and services efficiently, the need to enhance sales becomes inevitable. One fundamental way of scaling up the sales of products is venturing into the international market. Expanding sales is paramount since it enables organizations to readily meet their enormous production and overhead costs. Additionally, embracing international markets is critical because it enables companies to sell their products in bulk, creating economies of scale (Sitkin & Bowen, 2013). Equally crucial, expanding sales internationally helps companies enhance their competitiveness substantially. In essence, it paves the way for companies to gain invaluable experience and become better at producing a particular product. Ultimately, the companies sell much more than they would sell by confining themselves domestically. For example, the Irish airliner, Ryanair, saw sense in running its operations out of a London airport instead of using Dublin as its only hub (Sitkin & Bowen, 2013). Since numerous passengers were traveling through the UK, the air the company improved its sales remarkably.
Risk Diversification
The other prominent reason companies resolve to work in several countries at a time is the desire to spread risk. This increases flexibility by allowing companies to minimize over-dependence on a single market. One way of succinctly understanding the need for risk diversification is by looking at it from a production perspective. For example, if a company based all its industrial assets in an area prone to earthquakes and the calamity struck consecutively, its chances of carrying on with manufacturing would be profoundly hampered. However, if the company had industrial plants in other regions, the impact of the catastrophe would be less significant. Similarly, a company that entirely depends on one market alone could suffer extensively if the market collapsed for some reason (Sitkin & Bowen, 2013). For example, any company whose operations revolved around exports to Ukraine must have encountered insurmountable hurdles following the outbreak of w...