The decision for a company to go global heavily depends upon the availability of suitable acquisition targets and the condition of potential sellers. Many developing nations offer cheap labour and location costs. Global operations are often much more attractive as they reduce the overall executing budget in order to increase the profit. For example, it is possible to cut business overhead costs in countries with relatively deflated currencies and lower costs of living. It is often cheaper to employ a workforce in these countries since the cost of living is lower. For example, Zara is one of the major companies across the globe who has taken an immense advantage from this viewpoint, as majority of their developing and assembling operations takes place in Spain with relatively cheap labour and location costs.
Ownership advantages are company assets used to obtain market power linking to the core competences or resource-based strategy. These advantages can be asset based or transaction-based. Transaction-based advantages come about because of the way things are done. Tesco’s lean supply chain management and its use of loyalty card data are the ownership advantages of the firm, in terms of skill or assets or both, to survive and compete in the foreign market.