Is it a good business practice for large chain stores to relocate overseas?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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It can be a good business decision for large chain stores to relocate overseas.  However, such moves are fraught with peril.

Some large chain stores will want to open overseas branches because they hope to gain large new markets.  This is, for example, why WalMart was so eager to open stores in Mexico.  By opening stores in foreign countries, the chains gain the ability to sell to a new set of consumers.  They hope that this will increase their profitability.

However, this is by no means a foolproof endeavor.  It is very possible for large chain stores to fail when they try to expand to other countries.  This is largely because they may not have a good sense of the culture of the target country and what its consumers’ tastes are.  The large chains may try to do things just like they do in the United States, only to find that foreign consumers expect different things. 

Thus, opening overseas stores can be a good thing for a chain, but the chain must be very careful to make sure that it accounts for any differences in local culture that affect consumer behavior.

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