Theyare several reasons why XYZ Company would want to expand itsoperations to Turkey. In the recent past, international expansion hasbeen an important business strategy. This is due to the benefitsassociated with international expansion. However, there are severalrisks associated with it. One of the most important reasons why XYZwould like to expand into the international market is expanding themarket and sales. By venturing in Turkey, the company will expand itsaccess to untapped markets resulting into increased sales. Althoughproducts and services similar to what XYZ is offering may beavailable in Turkey, by establishing a new base will directly impacton the accessibility of the markets. This will result into marketdiversification (Gioeli, 2014). Additionally, international expansionwill significantly reduce the risk of operating in a single market.Business organization operating within a single economy is directlyaffected by turbulence in the economy. A slight change in consumerbehaviors, liquidity and economic factors as well as social politicalfactors will directly impact on the business organization.Additionally, when operating in a single market, the risks associatedwith intense competition and entry of new competitors is relativelyhigh. International expansion reduces these risks by shielding theperformance of the business organization from factors within thedomestic economy (Luo & Tung, 2015).
Themode of operation that will be adopted by XYZ Company in Turkey willbe merchandise export. This is the most common form of internationalbusiness in the modern world. XYZ Company will be exportingmerchandise in bulk to turkey. Since XYZ is a manufacturing company,exports to turkey will result into increased scale of production andconsequently expanded market. The expanded market will translate intoexpanded sales. This will be the operational model in the short run.In the long run, XYZ will considered direct investment in Turkey.Direct investment through partnership with local manufacturers anddistributors will increase the market share of XYZ Company in thecountry (Daniels, 2015).
Byexpanding to foreign market, there are important resources that XYZwill gain. Usually, a market in the foreign market exists because theproducers in the local market are unable to meet the needs of themarket. Additionally, distributers will seek goods from overseasproducers if they will enable them gain competitive advantage,especially if the foreign manufactures are offering the products at arelatively lower price (Daniels, 2015). The human and capitalresources provided by these distributors will be essential for XYZCompany. This is because the distributors will market and distributethe products on behalf of the company. Additionally, throughexpansion to the foreign market, XYZ Company will minimize its risks.This is because the company will be operating in more than onecountry, probably with a different business cycle. This will minimizethe impacts of economic slowdown or recession on the operations ofthe company.
Thereare several factors that will have an impact on XYZ Company in itsattempt to expand into the Turkish market. The most important factorsare physical and social factors. These social and economic factorsinclude geographical barriers and geographical influences, politicalfactors and legal factors, behavioral factors, economic factors(Daniels, 2015). For example, the legal policies and trade laws inturkey may have a direct impact trade agreements, employment andtaxation. However, the company can be able to mitigate thechallenges associated with these factors through adequatepreparations. For example, before venturing into the market,extensive market research and analysis is critical (Liesch, 2011).
Daniels,J. D., Radebaugh, L. H., & Sullivan, D. P. (2015). Internationalbusiness: Environments and operations(15th ed.). Upper Saddle River, NJ. Pearson.
Gioeli,A. (2014). Internationalbusiness expansion: a step-by-step guide to launch your company intoother countries.Los Angeles, CA: Over and Above Press
Liesch,P. et al. (2011). “Risk and Uncertainty in Internationalisation andInternational Entrepreneurship Studies”. ManagementInternational Review.51(6), p 851-873.
Luo,Y. & Tung, R. (2015). “International expansion of emergingmarket enterprises: A springboard perspective”. Journalof International Business Studies(2007) 38, 481–498.