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. As the retail sector enters an unprecedented period of rapid change and market uncertainty, there is a growing need for fashion retailers to improve in all operational domains. The major obstacles (along with some other challenges) for fashion retailers that have to be conquered are complexity, stretch and adaptation. Going global for a company is not an easy task, it rely heavily on number of factors. The increasingly interdependent economies such as Eurozone, magnify complexity, as severely poor economic conditions in one country ends up in affecting the overall revenues from the entire region. Even if global operations are limited to “just purchasing”—operating in sprawling geographies brings with it a raft of issues. Different national cultures, different languages, extremes of economic development, regulatory diversity, new and likely hard to decipher- customers are major obstacles in understanding the local taste and orientation of a region.