Proactive Motivations for International Expansion

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Proactive Motivations for International Expansion Firms may choose to expand internationally though reactive or proactive approaches (Deresky, 2011). Proactive strategies are a more aggressive or assertive approach compared to reactive strategies, and are seen where an organization perceive an opportunity which my improve performance. There are four main proactive motivations; the gaining of economies of scale, growth opportunities, resource access and cost savings and finally incentives (Deresky, 2011). Each of these motivations reflects the way that an international expansion strategy may provide the firm with benefits and/or advantages (Mintzberg et al., 2008). Economies of scale are realized when a firm has a relativity high level of production. In any industry there will be costs, as the level of production increases the overhead costs may stay the same, which reduces the actual cost of producing each unit, and may increase profit (Nellis and Parker, 2006). This is an motivation seen with many pharmaceutical firms (Deresky, 2011) Economies of scale may also be obtained in terms of the firm buying power; an organization which is buying large amounts from a supplier may have a greater level of bargaining power to demand contractual benefits compared to a small buyer (Mintzberg et al., 2008). This is an issue seen with many of the large international supermarkets, who leverage their buying power (Mintzberg et al., 2008) Growth opportunities are seen where a firm
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