Global expansion is a process. Before expanding globally, an organization must determine if their strategic decisions support the business venture. Strategic decisions, formed by upper management, serve as directives that affect the entire direction of the organization. If much thought has not been placed into the decisions, then the organization is sure to perform poorly; and in some cases, lag behind its competitors. Thus, it is imperative that members of upper management revisit the strategic decisions for intuition and analysis are the secret ingredients for effective strategic decisions.
Essentially, there are ten key external factors that affect every organization. Those external factors are competition, economic, social, cultural, demographic, environmental, governmental, political, legal and technological changes. The link between the key external factors and the organization defines an organization’s opportunities and threats. Those components that make up the linkage include stockholders, suppliers, creditors, customers, products, services, competitors, natural environment, government, etc. Thus, it will be beneficial for the organization to reference or reconstruct their SWOT analysis upon proceeding with the decision to expand globally. Having a sound understanding of the importance of the external environment allows the organization to see how external factors affect the firm’s behavior—changes in the external environment affects changes in consumer demand which in turn promotes changes in the products and services a firm offers.
When expanding globally, there are additional factors an organization should consider such as learning a foreign language(s), the risks associated with importing and exporting goods, war trade agreements, etc. A few advantages of global expansion is gaining economies of scale and capitalizing on lower taxes, wage rates, and inflation.
Considering the relationship between innovativeness and technology, it is clear that information technology has become a vital strategic management tool. The speed and magnitude of change are sparking the evolutionary of e-commerce and technology. Adding an e-commerce aspect to the business can fulfill the theory associated with Porter’s Five-Forces. Porter’s Five-Forces is a business analysis model utilized for assessing and evaluating the competitive strength and position of an organization. This model can be applied to any segment of the economy to seek attractiveness and profitability.
