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Analyse how internal and/or external sources of change may create reasons for international business expansion. - HSC - SSCE Business Studies - Question 27 - 2011 - Paper 1
Question 27
Analyse how internal and/or external sources of change may create reasons for international business expansion.
Worked Solution & Example Answer:Analyse how internal and/or external sources of change may create reasons for international business expansion. - HSC - SSCE Business Studies - Question 27 - 2011 - Paper 1
Step 1
Internal Sources of Change
Answer
Internal factors such as organizational restructuring, innovation in products or services, and changes in corporate strategy can drive a company toward international expansion. For example, when a business develops new technologies, it may seek to tap into larger or more profitable markets abroad to maximize returns on investment. Additionally, changes in management philosophy or operational capacity can lead to a desire to expand internationally, particularly if domestic markets are saturated.
Step 2
External Sources of Change
Answer
External factors that can prompt international business expansion include changes in economic conditions, competition, and globalization. As markets become increasingly interconnected, companies might find new opportunities to establish their presence in foreign markets. Furthermore, external pressures such as competitive threats from foreign firms can push businesses to expand internationally to remain competitive. Changes in trade regulations or economic partnerships may also incentivize companies to consider international markets.
Step 3
Implications for Business Strategy
Answer
Choosing to expand internationally due to these internal and external sources of change requires careful consideration of the potential risks and rewards. Businesses must evaluate factors such as market entry strategies, cultural differences, and legal environments. A well-thought-out strategy can mitigate risks associated with international expansion while capitalizing on new growth opportunities.
Step 4
Conclusion
Answer
In conclusion, both internal and external sources of change play a crucial role in motivating companies to pursue international business expansion. By understanding these dynamics, businesses can develop strategies that align with their overall goals and market conditions.