A reason why international diversification increases

International diversification can be understood as the expansion of a firm Into different countries and geographical regions. This expansion offers firms different advantages like the exploitation of opportunities aboard, economies of scale, sharing of core competencies, and bringedness. Learning is a let on factor of the efficient development of new capabilities. Learning itself is fostered by respective(a) experiences. This shows the connection to International diversification, hence operating in diverse environments (countries/geographical regions) Increases the Intensity and frequency f events and Ideas to which a firm is exposed.Anyway, it Is questionable whether eruditeness through diverse experiences terzettos ultimately to capabilities that increase profit of a world massive diversified firm. To assess this question I am going to evince a few arguments that support and contradict this statement. On the nonpareil hand, managers and workers who submit experiences In diverse environments are more convergenceive than employees who dont have such experiences. This is mainly because these employees have a broader range of experiences and an spot and solve problems more easily than employees with a finalize view.Furthermore, an organization that operates in several countries has a wide range of subsidiaries from that it can learn. These subsidiaries provide access to a wide range of new ideas and new practices that give rise to innovation and lead to increased technological capabilities. In addition, firms which remain In their domestic state of matter as well as In their mall Industry lawsuit kindred threats and opportunities and develop ordinary methods to handle them. Thus, they have relatively narrow experiences and heir methods and capabilities also consort to be narrower because they face a check set of challenges.These limitations wont affect the firm in the short term except I believe that it decreases the performance of the firm in the long run. On the separate hand, firms that seek to enter a foreign market tend to start with cultural close countries at first. As these firms become experienced, they bugger off to expand in cultural distant markets. Thus, many firms dont face such great study opportunities because they prefer cultural close countries which are similar to their mom country.Furthermore, firms dont have to be internationally diversified to encounter learning opportunities. It is also possible to learn from foreign suppliers or foreign customers. Therefore, one crucial aspect Is how learning processes are Implemented and lived In organizations. This depends, among other things, on how the firm and its subsidiaries are organized. A firm that leads its subsidiaries/ geographical regions/product divisions as a strategic place exploits less learning opportunities because it manages its subsidiaries exclusively by financial indicators.In entrant, if a firm manages its subsidiaries as an operat ive holding it intervenes in the day-to-day business to seize synergies and learning opportunities. Hence, cross- border learning has to overcome organizational constrains. That international diversified firms face more possibilities to learn and develop new capabilities that increase profitability but this doesnt imply that they unceasingly outperform non international diversified firms. International diversified firms have to stool settings that facilitate and nurture cross-border learning to exploit the diverse opportunities they face in foreign countries.