The Challenges Faced by Any Company When Competing Globally

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Table of Contents

Introduction
Discussion
Conclusion
Reference

Introduction

Nowadays, companies extend their businesses through competitive advantage, which serves as the process to promote the product more successfully than competitors. However, applying the same advantages on a global scale becomes almost impossible, increasing the importance of global value creation that considers similarities and differences in larger geographic areas. Such companies deal with the liability of being foreigners aligned with more financial issues and adaptation that risks providing useless products for the global community.

Discussion

Companies often face the liability of being foreigners or additional costs outside their home market. For example, another country’s market may require fees for foreign ownership, new patents, and trademarks (Alcacer, 2015). It happens because each country tries to support more domestic products and eliminate its competitors through such regulations. Meanwhile, the company should consider the additional costs of transferring employees, technologies, and suppliers. Consequently, a business that expands abroad faces expensive investments due to new regulations and taxes.

Another problem is that when a business operates locally, it targets homogenous customers, relying on their needs and wants. However, when it expands globally, there are many unexpected differences in geographic markets as the customer segments enlarge and customer demand and reaction become impossible to predict (Alcacer, 2015). As a result, companies that neglect a given country’s comparative advantages struggle with adapting their products and services to the local communities. The products that lack customization and adaptation to the new market and overlook the importance of local innovations lose their sales quickly.

Conclusion

To conclude, every company aims to expand abroad to find new resources, lower costs, and more customers. When stepping outside of the home country into a diversified global market, businesses need help with expensive costs imposed by a foreign market. The company risks providing irrelevant products and services to the global community in such cases because customer segmentation is not homogenous.

Reference

Alcacer, J. (2015). Strategy reading: Competing globally. Harvard Business Publishing. Web.

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The Challenges Faced by Any Company When Competing Globally

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