Most Internet sites suffer losses for at least three years before they turn profits. Some Internet-based companies pose a threat to competitors who rely solely on traditional distribution methods. They use the World Wide Web to cut post-production costs by bypassing intermediaries like wholesalers and retailers, and to expand their customer base worldwide. Transportation Technology Advances in transportation methods are helping to globalize both markets and production activities. Containerization in shipping allows the same containers to be transferred among trucks, trains, and ships-thus increasing the efficiency of international shipping.
Companies go international for one of two general purposes-to increase sales or access resources.
Firms take the leap into international markets when they're confident that other cultures are receptive to a product. There is one McDonald's for every 29,000 people in the United States and in China there is only one for every 40 million. Excess Production Capacity Companies sometimes produce more goods and services than the market can absorb. If the firm can find new sources of demand, it can spread its fixed costs over a greater number of units produced-thereby lowering per unit costs of production and increasing profits. Access Resources Companies go international to access resources that are unavailable or more costly at home.