Supply Chain

Drivers of Global Expansion

Why do companies go international?

Since the end of World War 2, international trade has increased by 30x after adjusting for inflation. There are four main drivers of global expansion:


Companies can outsource operations like materials sourcing, manufacturing or product development to reduce costs. And it’s often possible to take advantage of economies of scale by selling in multiple markets, reducing overall marginal costs.


Organizations may follow competitors into new markets to avoid losing market share. Competitive dynamics can also interact with the cost driver: If one company releases a new low-cost product, its competitors may be further incentivized to outsource to releaae a similarly priced offering.


Large companies may strive to be global brands so global travelers can get the same experience wherever they go. And consumers have become increasingly open to buying foreign products, which somewhat levels the playing field against domestic competition.


Tech innovations have made it easier for consumers to buy foreign products online, and for retailers to advertise to foreign markets. And many aspects of modern supply chains are made possible through the integration of countless software systems.