Reduced Manufacturing cost: As the company enlarges its coverage, large amount of production will subsequently reduce the company’s manufacturing cost. Once the manufacturing cost is reduced, it can sell the product at a cheaper rate and win the market.
Reduced HR cost; As Sindell K (2005, p.266) states, international investing would ensure diversification rather than concentrating in a single product or service. If Natural Detergent Inc buys another profitable foreign company, it can easily acquire a pool of diverse workforce. It would help HR management to be cost effective and creative in a foreign business environment. It is always good for a company to retain its experienced employees who are accustomed to the firm’s natural and technological environment.
Easy Marketing; Natural Detergent Inc can easily introduce its products to public by adding them to the foreign company’s products in local markets. It will avoid the initial difficulties of establishing a new plant in a foreign country.
Increases uncertainty; Foreign market is always a challenge to an American organization. Natural Detergent Inc has to exceedingly rely on the hired individuals in order to meet numerous organizational and legal requirements. In the same way, the company has to invest a good amount in advertising the product though the result is uncertain.
Cultural Disparities; when a company buys a foreign firm of different organizational structure and culture, it would lead to disputes and conflicts of interest among the labors and staff. To an American organization there is an increased chance of cultural conflict because US firms traditionally maintain a high degree of managerial autonomy. Therefore, major HR decision regarding recruitment, retention, and termination, is vested in management (Fenton-OCreevy, Gooderham P. & Nordhang O., 2005). In contrast, organizational decisions in many other countries, are subjected to various external constrains like trade