Motivations in Going International

Profits are the major proactive motivation for international business. Management may perceive international sales as a potential source of higher profit margins or of more added-on profits.

The gap between expectation and reality may be especially large when the firm has not previously engaged in international business. Even with thorough planning, unexpected influences can change the profit picture substantially.

Reactive motivations influence firms to respond to environmental changes and pressures rather than blaze new trails. Competitive pressures are one example. A company may worry about losing domestic market share to competing firms that have benefited from the economies of scale gained through international business activities.

In general, firms that are most successful in international business are usually motivated by proactive— that is, firm internal— factors. Proactive firms are also frequently more service oriented than reactive firms. The clearest differentiation between the two types of firms can probably be made after the fact by determining how they initially entered international markets.