THE INTERNET AND FOREIGN MARKET EXPANSION BY FIRMS

We all surf internet. While surfing we see a lot of advertisements. They are a form of marketing, but are these helpful to a consumer. Well while surfing on the net we could easily reduce our search thus making our work much more easier and less time consuming. Well below I have mentioned the potential that this market possess and how it could be made much more helpful.

The Internet has the potential to improve the efficiency of market transactions. By use of the Internet companies can:

• Reduce their search costs significantly and

• Increase their ability to respond flexible to new market opportunities as a result of reduced sunk costs.

On the basis of internationalization theory and agency/transaction cost theory the effects of the Internet on foreign market expansion by firms could be adjudged. It shows that a range of foreign expansion effects of the Internet is likely: from limited impact to rapid, widespread global expansion in many cases.

The Internet may contain a challenge to mainstream internationalization theory in regard to the role of knowledge: instead of acting as an initial constraint it may be a factor that propels firms into foreign market expansion.

If we have to in brief list down the different positives that we can get from this then they would be:

1. Reduced Costs, both agency and transaction costs.
2. Wider reach of the advertisements.
3. Easy to give details regarding the product, price, place etc.
4. With the help of internet we can come to know where in the world the demand of our product is more and thus we can target that market much effectively.

There is one major disadvantage to this and it is that it makes our competitors aware about, what we are planning to do. This can prove very costly to the company.

This is just one way of Foreign Market Expansion, but with a major drawback, can you auggest other ways to expand globally.