Why do companies frequently expand their business operations into other countries?

Answer 1

Outsourcing - they can access other sources in other countries (Canada for example has many Natural Resources - fresh water, mines, etc...)

Diversification - they can reach different types of people and different cultures to expand sales (for example, creating a line of sun protection in hot, sunny countries)

Answer 2

Expanding Business AbroadA firm that is engaged in cross border business is defined as Multinational Corporation. A Multinational Corporation is a company that has been incorporated in one country and has production and sales operations in other countries. Many companies' foreign sales exceed their domestic sales and the percentage of profit generated by foreign activities was often higher than the percentage of sales.

Reasons for becoming multinational of companies:

• To Broaden Markets-Saturated home markets ...ask for market development abroad ( Coca Cola,Mc Donalds etc.).
• Multinational seek new markets to fill product gap in foreign markets where excess return can be earned.
• To seek raw materials :- Multinational secure the necessary raw materials required to sustain primary business line ( Exxon,Wal-Mart ).Multinationals also seek to obtain easy access to oil exploration ,mining and manufacturing in many developing nations.
• To seek Technologies: - Multination's seek leading scientific and design ideas.
• To Seek Production efficiencies: By shifting to low cost regions like GE.
• To avoid political hurdles such as import quota, regulatory measures of governments, trade barriers etc.
• To Diversify : - To cushion the impact of adverse economic events
• To postpone the payment of domestic taxes
• To counter foreign investments by competitors