Global Industry Analysis

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In general, there are four elements to a country a more appealing place to expand to than another country: (Notation - XX is country that the company is currently in YY is the country that the company is thinking about expanding to)

Market Drivers

  • The most important is if YY's customers have the same taste and preferences as XX's customers. If this is true, the company might be able to just export its products into YY without much localization.
  • Existence of global customers??
  • If country XX and YY have the same distribution channels, the company will be able to export its supply chain and marketing without much effort.
  • If the company has some idea how to market in country YY, this will make it easier to move.

Cost Drivers

  • Often times it might be worth it to expand to YY just to gain economies of scope and scale.
  • Often times moving manufacturing to YY because labor costs there are cheaper than they are in country XX
  • Sometimes it might be extremely expensive to transport goods and products from XX to YY, so it might make sense to set up manufacturing facilities in YY.

Competitive Drivers

  • Globalization of competitors??
  • If the industry is extremely concentrated in country XX, the only way to grow might be to expand to country YY
  • Differences in industry concentration across countries??