What is international diversification and what are the challenges?

Diversification across borders. Challenges: • Different customer types and preferences • Local economic, regulative, political, and cultural institutions that often differ substantially from home. = competitive disadvantage vs local competitors who have superior knowledge of local market, institutions, supply chain contacts, etc. Therefore the foreign entrant needs to balance this with significant resources and capabilities advantages. These can be global brand recognition; access to more advanced technology/manufacturing; marketing or sales skills; access to capital.