International Business: The New Realities, 5th Edition

Why Do Firms Internationalize?

1. 1.4 Describe why firms internationalize.

There are multiple motives for international expansion, some strategic in nature, others reactive. An example of a strategic, or proactive, motive is to tap foreign market opportunities or to acquire new knowledge. An example of a reactive motive is the need to serve a key customer that has expanded abroad. Specific motivations include the following:

• Seek opportunities for growth through market diversification. Substantial market potential exists abroad. Many firms—for example, Facebook, Gillette, Siemens, Sony, and Biogen—derive more than half of their sales from international markets.20 In addition to offering sales opportunities that often cannot be matched at home, ...