What has contributed to the global popularity of international businesses?
Globalisation has made communication between countries, regions and people much simpler, allowing businesses to expand globally and have a larger contribution to the global marketplace. Taking a business overseas can provide you with many opportunities for growth and development, which has been a big driving factor for small businesses choosing to go international.
Whether you are working in a management position for a company, want to pursue a business career or considering starting your own company, it is advantageous for you to be aware of the importance of international businesses. Find out why so many businesses are choosing to go global.
Why has the concept of international business become popular in the modern world?
International businesses offer unique advantages to industrialists and business professionals for growing their organisations. As a result, the business world has touted the concept as being beneficial, enhancing its popularity across the globe.
Here are the advantages that you can look forward to if you take your business international:
- Increased revenues: According to the 2016 FedEx Trade Index, business leaders engaged in global trade claim to grow faster than businesses that remain local. Taking your business international can have a big impact on your company’s revenues. Expanding into new countries will open up opportunities to connect with new clients which can help you increase your business revenue.
- Support for domestic industries: By taking your business abroad, you are also contributing to the host country’s economy. Resource delivery and management, litigation, the handling of business laws, technological help, management expertise and product development might have to be outsourced. Many international organisations form joint ventures to maximise resource management and to create goodwill.
- Opportunity to diversify: International markets can open up new avenues for your current products or services. It also provides you with an opportunity to expand your specialisations beyond your current range to serve the new markets better. For example, fast food chains such as McDonald’s offer different menus in different countries to suit the local tastes better. This diversification has made these chains popular throughout the world.
- Disposal of surplus goods: One of the many advantages of having an international business is that you have the option to circulate your surplus goods. When you have a local business, your surplus products often find their way to a warehouse where they might sit for years and become obsolete. With a global business, you can avoid wastage by directing the surplus products from one region to another where there might be a deficit.
- Longer product lifespan: Most people are keen to upgrade to newer products even if their current appliances or products are working well. This is particularly true for developed countries where people have a higher standard of living. International businesses can ship their products to developing countries where they can have a higher shelf life.
- Lower production costs: Most developing countries have lower production and labour costs than developed countries. Hence, you can save a lot of money if you move your company’s production operations to these countries. You can also increase the scale of your production owing to the reduced cost and better availability of raw materials and technical expertise.
- Foreign exchange earnings: Making your business a part of the global market can help you benefit from various currency fluctuations. Your foreign customers can end up paying you more if the value of their currency becomes weaker or the value of your currency becomes stronger in the forex market.
- Efficient resource usage: The availability of natural resources differs in different countries. Some nations might be rich in petroleum resources while others might have a lot of forest reserves. It can be beneficial to take your business to a country where the raw materials for your production are cheaper than in your home country.
- Large-scale employment generation: International businesses create a lot of direct and indirect employment. Taking your operations abroad will mean that you have to employ locals in the host country. Your business can also support local industries which would result in further employment of new people.
- Enhanced reputation: Operating your business in a foreign country can also increase the reputation and goodwill of your organisation as well as improve your credibility at home and in the international market.
Apart from these benefits, many foreign countries offer massive tax cuts and are more relaxed in terms of market regulations to incentivise companies looking to expand abroad. This has caused an increase in the number of organisations expanding their operations overseas in the recent years.
If you want to know more about the advantages of free trade and international business strategy, you should consider pursuing a degree in management. The Postgraduate Diploma in Management from the London School of Business and Finance is a qualification that offers you a corporate-focussed approach on the major trends in international business.
Click here to find out more about the course and how changes in international business trends can be utilised to take your business forward.
This article is written by Sweha Hazari and edited by Emma Chadwick.