Why Do Companies Go Global?

Two of the main reasons that companies go global are to expand their customer base and generate additional revenue. Companies also gain synergy from global brand promotion and may develop economies of scale from increased production or distribution efficiency.

As of 2014, China and India are among the largest populations that hold opportunities for a broader reach for U.S. companies. In some cases, pure extension of an offering expands a marketplace. Other times, a company has strengths that allow it to develop an even stronger image and customer base in foreign countries. After a company saturates its domestic market, globalization is one of the few growth options. Along with more customers and revenue, global income creates capital that goes toward further development and promotion.

Global expansion also allows a company access to a larger talent pool and more resources. U.S. companies may set up shop in a foreign country to have closer access to resources used in the business. More affordable labor costs or access to concentrated talent in a particular area compel globalization as well.

The Internet and closer relationships between countries and companies simplifies the process of global expansion. If a company doesn't take advantage of global opportunities, its competitors may reap the rewards.