International Business- The key to success
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International business comprehends profitable accomplishments that take place to encourage the transfer of goods, services, resources, designs, and technologies within national frontiers. There are different ways international business takes place: importing, exporting, licensing, franchising etc. For a company to succeed in an international market, it should be able to identify its diversity and should be able to cope with the uncertainties and possibilities in a repeatedly fluctuating universal market.
There are a large number of organizations that are involved in International trade one way or another. We can take an example of McDonalds, this is an American fast-food chain opened in 1940, and by today it has more than 36,000 outlets all over the world[2]. And according to research there was a higher sale all over the world compared to the USA[3].
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Although, the question that arises here is: why do companies want to expand internationally? If answered in two words, it’s because they want “higher profits.” However, there are many other reasons to expand on a global level: expanding internationally helps improve the brand image and loyalty, and this helps in increasing the brand value of the company, hence, acts as an intangible asset to a company. International expansion also helps increase revenue streams and this enhances the growth of the company. Expanding in new markets also creates employment which benefits the society as a whole. After conducting market research, the company can also take an advantage of favorable government regulations of a particular country, making it easy for the company to adjust to its surrounding. For example, expanding in countries like Hungary and Ireland have a very low percentage of corporate tax[5] and expanding in such countries would benefit a company as they would be paying lower percentages of taxes.
However, when considering expanding internationally, a business must also consider its drawbacks. Sometimes if a company grows a lot, the owner might lose his ownership over the company and decisions made by others may affect the business in a negative way. Another drawback is that a lot of market research is required which is very time consuming and expensive. Expanding internationally also involves high amount of investment which involves high risks leading to stakeholder conflicts between owners and shareholders. Expanding internationally also involves cultural differences, taste preferences etc. which may lead to redesigning of goods or services, changing working methods and many more external influences.
To conclude, international business is of great importance to a company as it can help the company reach heights of success to an extent, but it also has its limitations that can affect the company negatively.
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[1] “Certificate in International Business.” Texila Edutech Pvt Ltd, www.texilaedu.org/product/certificate-in-international-business/.
[2] “McDonald’s.” Wikipedia, Wikimedia Foundation, 23 Sept. 2017, en.wikipedia.org/wiki/McDonald%27s.
[3] Press, Associated. “McDonald’s Sales Rise Globally–but Dip in U.S.” Inc.com, Inc., www.inc.com/associated-press/mcdonalds-earnings-q4-2016.html.
[4] “McDonald’s.” Wikipedia, Wikimedia Foundation, 23 Sept. 2017, en.wikipedia.org/wiki/McDonald%27s.
[5] Jahnsen, Kari, and Kyle Pomerleau. “Corporate Income Tax Rates around the World, 2017.”Tax Foundation, Tax Foundation, 11 Sept. 2017, taxfoundation.org/corporate-income-tax-rates-around-the-world-2017/.