Question

Competing in international markets allows multinational companies to 1) gain access to new customers, 2) achieve lower costs and enhance the firms competitiveness by more easily capturing scale economies or learning curve effects, 3) leverage core competencies refined domestically in additional country markets, 4) gain access to resources and capabilities located in foreign markets and, 5) spread business risk across a wider market base. The movement into international markets can also be a form of diversification for a business. Moving into related or unrelated businesses.

Now that you have an understanding of additional ways a company can expand, can you share a business that has successfully moved into international markets and diversified into a related or unrelated market? Has the decision to move into the international market proved to be a successful strategy? Why or why not? *Cannot use Apple Inc.*

Answer 1

For this case, I state the example of a food chain - McDonald's Inc. who has entered into almost all countries and cities world-wide. Their core business product is Burger. However, they use differentiation strategy in terms of varying the taste of Burgers from country to country, to tend to the local taste buds. For examples, Indian prefer spicy foods. Thus, McDonald's in India provide burgers with more spices. Whereas Americans prefer less spicy foods. Hence burgers in U.S. contain less amount of spices, only salt. We therefore observe that this related diversification strategy has facilitated McDonald's to enter into international market and thus, it's business has grown multi-fold.