How can firms increase profitability and profit growth when expanding globally?

Firms can significantly increase profitability and profit growth when expanding globally by entering markets where local competitors lack similar competencies. This approach allows the firm to leverage its unique advantages, such as advanced technologies, superior products, or more efficient processes, which can be difficult for local competitors to replicate. By occupying a space where they have a competitive edge, firms can capture market share, establish pricing power, and build a loyal customer base, all of which contribute to increased profitability.

Additionally, entering markets with weak local competitors often means less competition, allowing the firm to better position itself to exploit market opportunities without engaging in intense price wars or heavy promotional expenses. This strategy not only enhances the chances of success but also enables firms to enjoy higher margins as they strengthen their presence in the global marketplace.

While standardizing products across all markets may improve efficiency, it does not always cater to specific market needs, which could limit growth potential. Similarly, avoiding localization strategies might ignore valuable market nuances, and entering markets without local knowledge can risk missteps that undermine profitability. Therefore, focusing on the unique competencies in new markets creates a path for sustained growth and profitability in the international realm.