Question

Describe and give an example of the following strategies for going abroad:

Revenue maximizing strategy
Cost minimizing strategy
Risk minimizing strategy

Answer 1

When going abroad, firms can employ different strategies such as revenue maximizing, cost minimizing, and risk minimizing. Each strategy has its own advantages and considerations, and the appropriate strategy depends on the specific goals and circumstances of the firm.

Step-by-step explanation:

When it comes to going abroad, there are different strategies that can be employed. Here are three common strategies:

1. Revenue maximizing strategy: This strategy focuses on maximizing the revenue generated from going abroad. It involves targeting higher-income countries or market segments that are willing to pay a premium for products or services. For example, a luxury fashion brand may choose to expand into affluent markets like France or Japan where there is a high demand for luxury goods.
2. Cost minimizing strategy: This strategy aims to minimize costs associated with going abroad. It involves seeking locations with lower labor and production costs, such as countries with lower wages or tax incentives. An example of this strategy is a manufacturing company outsourcing production to a country with lower labor costs to reduce overall expenses.
3. Risk minimizing strategy: This strategy focuses on minimizing the potential risks and uncertainties of going abroad. It involves conducting thorough market research, entering into joint ventures or partnerships with local companies, and diversifying operations across multiple countries. An example of this strategy is a tech company establishing partnerships with local distributors in different countries to mitigate the risks associated with entering new markets.

Each strategy has its own advantages and considerations, and the appropriate strategy will depend on the specific goals and circumstances of the firm.