REDUCING RISK
operating in countries with different business cycles can minimize swings in sales and profits. The key is the fact that sales decrease or grow more slowly in a country that's in a recession and increase or grow more rapidly in one that's expanding economically. During 2011, for example, Gap's North American sales fell 5 percent, but this was mainly offset by its sales growth of 11 percent elsewhere. Moreover, by obtaining supplies of products or compoents both domestically and internationally, companies may be able to soften the impact price swings or shortages in any one country.
Finally, companies often go international for defensive reasons. Perhaps they want to counter competitors' advantages in foreign markets that might hurt them elsewhere. By operating in Japan, for instance, Procter& Gamble(P&G delayed foreign expansion on the part of potential Japanese rivals by slowing their amassment of resources needed to enter into other international markets where P&G was active. into the US. British-based Natures Way Foods followed a customer, the grocery chain Tesco This move expanded its sales and its relationship with Tesco. Mor it reduced the risk that Tesco would find an alternative s who might then threaten Natures Way's relationship with Tesco in the U.K. market.