Global expansion is challenging to retailers due to many factors that are not predictable. However, seeking opportunities in foreign markets is still attracting to retailers, even though they would have to carefully consider the advantages and disadvantages of global expansion.
On the good side of global expansion, for those who have already been in mature domestic markets, retailers need to look at a bigger picture and think about the markets they have not touched before – foreign markets. Ideally speaking, the foreign markets could probably become another potential target market, which could help the retail company increase more sales, profits, and reputation, just as how well they have accomplished in their domestic country. Company could also be beneficial from the lower costs of land and buildings in foreign countries that would decrease their production cost. Moreover, retailers could also take advantage of the lower locally labor cost in countries like China, India, Indonesia, and so on to minimize a portion of production cost.
Nevertheless, on the harmful side of global expansion, there are plenty of international transactions, government regulations, culture, and even politics that might not be favorable to the retail company. It could be totally opposite to the advantages mentioned above. The products retailers are planned to sell in foreign countries might be restricted by foreign laws and regulation. The locals might not be interested in the products because of cultural differences or price differences. That is why the article “The Advantages & Disadvantages of International Franchises” suggests that retailers need to do market research before entering the new market, especially the foreign ones. What’s more, the constantly changing exchange rate would be a financial problem to consider in term of global expansion.
All in all, global expansion is a double-edged sword that has advantages that can increase company size when taking good use of, and disadvantages that can hurt retailers if they do not do their market research before entering internationally.