Incentives that make firms use international strategies include; easier access to raw materials that lowers cost of production, access to emerging markets, opportunities to use technology, among others.
Advantages of law lax includes submitting employees to poor working conditions without legal implications. But, on the hand if laws come into force international firms may find themselves spending huge amount of dollars in legal battles.
The benefits of adopting international strategies to a firm comprises; location advantages, increased market size and economies of scale and learning (Hitt, 2020).
For example, a firm can locate its production units in areas with low cost of labor or in areas with enough raw materials to save cost of production. For instance, American electronic firms locate their production units in Mexico where labor cost is low and there are no tight legal laws on labor.
Even with all the benefits that come with international strategies firm do choose not to adopt them. this is because of challenges that come with international strategies. For example, firms may fail to employ these strategies due to political instability and protectionism (Hitt, 2020). There are governments that protect local businesses by giving them advantages like tax breaks over international firms. Other nations like Islamic states have instability issues.
Even with all the benefits that come with international strategies firm do choose not to adopt them. this is because of challenges that come with international strategies. For example, firms may fail to employ these strategies due to political instability and protectionism (Hitt, 2020). There are governments that protect local businesses by giving them advantages like tax breaks over international firms. Other nations like Islamic states have instability issues.
