Managing Global Expansion

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Managing Global Expansion: A Conceptual Framework.
Business Horizons
| March 01, 2000 | Gupta, Anil K.; Govindarajan, Vijay | COPYRIGHT 1989 JAI Press, Inc. (Hide copyright information)Copyright [pic]
There are at least five reasons why the need to become global has ceased to be a discretionary option and become a strategic imperative for virtually any medium-sized to large corporation.
1. The Growth Imperative. Companies have no choice but to persist in a neverending quest for growth if they wish to garner rewards from the capital markets and attract and retain top talent. For many industries, developed country markets are quite mature. Thus, the growth imperative generally requires companies to look to emerging markets for fresh
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5. Globalization of Competitors. If your competitors start to globalize and you do not, they can use their global stronghold to attack you in at least two ways. First, they can develop a first-mover advantage in capturing market growth, pursuing global scale efficiencies, profiting from knowledge arbitrage, and providing a coordinated source of supply to global customers. Second, they can use multi-market presence to cross-subsidize and wage a more intense attack in your own home markets. It is dangerous to underestimate the rate at which competition can accelerate the pace of globalization. Look at Fuji 's inroads into the U.S. market, historically dominated by Kodak. The trend is happening in other industries as well, such as in white goods, personal computers, and financial services.
In the emerging era, every industry must be considered a global industry. Today, globalization is no longer an option but a strategic imperative for all but the smallest firms. The following framework and set of conceptual ideas can guide firms in approaching the strategic challenge of casting their business lines overseas and building global presence:
* How should a multiproduct firm choose the product line to launch it into the global market?
* What factors make some markets more strategic than others?
* What should companies consider in determining the

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