Entering global markets is an effective method of reaching consumers around the world and expanding business. eBay is an example of a company that failed to perform well when it entered the global markets in China and Japan. Various reasons defined the unpopularity of the organization on the international markets. Its inability to compete with the local company TaoBao, which allowed users to connect and communicate with the sellers directly, defined its failure to attract clients. In Japan, it was not ready to accommodate its services to customers’ needs, which resulted in the clients’ refusal to use eBay. Consequently, such circumstances as the absence of a global, corporate, and “think global and act local” mindset in an organization may influence the intention of the organization to withdraw from the foreign market (Argus & Samson, 2021). eBay’s initial attempt to enter the global market revealed how its inability to understand the local culture, the risks for the organization, and the appropriate strategy defined the necessity to withdraw.
However, some companies decide to continue their business in foreign countries despite their losses because they aspire to demonstrate commitment and accountability. Although the achievement of the strategic goals is a complicated task, it displays the power of the organization and its commitment to compete in the industry and gain recognition (Argus & Samson, 2021). The decision to stay in the market might be the sign of ambitions and far-reaching marketing strategies, which require time and sacrifice. Simultaneously, these companies might view the global strategy as its primary purpose, desiring to enter the foreign countries and use its experience to understand how to make business successful, which requires time and finances. Therefore, the diminishing returns might be perceived as the necessary stage for development and progress.
Reference
Argus, D., & Samson, D. (2021). Organisational (business) strategy. In Strategic Leadership for Business Value Creation (pp. 47-88). Palgrave Macmillan, Singapore.