Why do firms internationalize?
Currently, businesses are expanding their presence beyond their local platforms. This process of increasing their accessibility in many countries constitutes internationalization. There are numerous reasons why businesses internationalize, but normally they yearn for business expansion or growth.
In international platforms, companies can easily hire cheap labor as compared to that in their local nations. From this dimension, companies will be able to reduce their overall management costs, which will result in high working capital. Consequently, such companies will be able to expand their services using the available capital thus making them gain competitive advantage over their competitors in the market.
Besides, firms internationalize in order to acquire new ideas from the foreign workforce. With the high rate of globalization and development in technological applications, businesses also have to update themselves on the changes that affect their operations. Exchange of ideas in the international platform keeps the management updated on the present business management skills; this prevents instances of wide information gap.
Since workforces have different backgrounds, there are high possibilities for the business to tap new thoughts on how to improve their performances globally. Firms also internationalize in order to expand their client base. Businesses can internationalize by cooperating with other foreign companies so that they adapt easily to the new environment. Notably, when businesses increase their customer base, they are likely to get high returns on such investments.
A small home market may also dictate the need for internationalization in order to tap the high global population. A business can also go international if it faces stiff competition locally, and they are the only producers of such products worldwide. In the international front, such business will not experience stiffer competition as compared to the home country. In some foreign countries, for instance, such business may enjoy complete monotony. To that end, it is evident that businesses internationalize mainly to increase their profitability.
Why should you study international business?
Studying international business furnishes one with how to manipulate the complex parameters that have currently dominated the business world. Given the dynamic nature of markets, business managers have to understand these multicultural competencies so that the businesses remain relevant. In addition, the study of international business enables entrepreneurs and managers to learn and understand the different tastes and preferences of consumers in foreign nations.
In this aspect, they will be able to acknowledge the paradigm shift in preferences of the current world population and even learn how other nations handle issues of tax and business laws. The current globalized world also necessitates the need for studying international business due to the high rate of interactions among people of different nations. In understanding the cultural differences that exist between countries, organizations will be able to produce particular products for a specific target market.
As a result, businesses will be able to increase their profitability, as consumers will purchase most of their products. In addition, the study helps in understanding business opportunities that exist in other countries and business ownership and regulations that other nations have put in place.
Such opportunities can help businesses to develop new strategies on how to expand their presence to the international platform by considering the political and ethical systems that exist in foreign countries. Countries have different economic and political ideologies; therefore, business owners must comprehend the new environments and the interconnectedness that subsist in these countries. When a businessperson understands the concepts of international business, he/she will be able to relocate into other nations with ease.
