International Expansion Aims to Expand Dominant Market Share

Founding fathers and their successors have always had a dream: to create a company that dominates its market. Well-known companies such as Google, Apple, and Uber have already achieved this feat. They provide products and services for which there is no substitute. In the U.S., you either pay up or go without these goods and services. 

Large companies often expand overseas in order to capture new markets where they can consolidate their dominant share of the industry before local competitors can establish themselves. These foreign ventures are expected to add substantially to revenue, but also to cut down on costs by leveraging economies of scale across many different geographies at once. There are two primary objectives when a company establishes a business venture in another country: capturing the market share of the global technology industry or discovering new methods for mitigating expenses through multi-location management. One example is China’s Alibaba, which recently filed its IPO paperwork with U.S. regulators, revealing plans to expand its eCommerce dominance into other countries by leveraging economies of scale both in technology and finance.

The increased demand for online shopping, particularly among millennials who are eager to adopt emerging technologies, could provide that company with a first-mover advantage as other companies look for ways to gain that important foothold overseas. 

“Tech companies don’t become big businesses without taking advantage of international markets,” said Gerri Murphy Kline, a financial adviser at Morgan Stanley. “Facebook acquired WhatsApp because it the explosion of mobile connectivity happening internationally.”

Alibaba’s initial prospectus does not mention plans for an international expansion, though the company has made it clear that its next big step is to expand beyond China and account for a bigger portion of the growing global market. “Markets like South America and Eastern Europe are more familiar with the mom-and-pop store,” said Jianying Zha, a professor at Tuck School of Business at Dartmouth College. “There will be challenges when they try to go into more developed markets like Western Europe.” 

“Though established companies may already have strong brand recognition in their local communities, consumers in these areas often prefer local merchants or smaller ecommerce sites where they can find better deals,” said James Falk, cofounder of PARCi, a company that provides an eCommerce platform for smaller businesses to sell their products online.

Large companies often expand overseas in order to capture new markets where they can consolidate their dominant share of the industry before local competitors can establish themselves. These foreign ventures are expected to add substantially to revenue but also cut down on costs by leveraging economies of scale across many different geographies at once. 

“Tech companies don’t become big businesses without taking advantage of international markets,” said Gerri Murphy Kline, a financial adviser at Morgan Stanley. “Facebook acquired WhatsApp because it the explosion of mobile connectivity happening internationally.”

Though established companies may already have strong brand recognition in their local communities, consumers in these areas often prefer local merchants or smaller eCommerce sites where they can find better deals,” said James Falk, cofounder of PARCi, a company that provides an eCommerce platform for smaller businesses to sell their products online.

“As more people go mobile and shopping via smartphone increases, this trend will continue to grow along with demand for goods on the web,” said Stifel Nicolaus analyst Scott Devitt. “Alibaba is likely to be well-positioned given its dominant position in China.

Founding fathers and their successors have always had a dream: to create a company that dominates its market. Well-known companies such as Google, Apple, and Uber have already achieved this feat. They provide products and services for which there is no substitute. In the U.S., you either pay up or go without these goods and…