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The Benefits of Trading Internationally (Opportunities for expansion (Once…
The Benefits of Trading Internationally
Opportunities for expansion
Once, businesses have just started trading internationally, they can recruit more staff, as there will be more areas of work for a business to get involved in, whether it is working in new head offices abroad, managing more communications from the internal country or managing more supplier relationships.
This is an opportunity for businesses to expand outside of the country they are based in.
Businesses can maintain the cost competitiveness in their domestic market.
There is increased sales for businesses operating internationally as they can sell their products to more customers in more countries, which also increases the businesses profit as well.
Businesses can open more offices in more countries, which means more popularity and sales would be increased aswell, which leads to higher profits.
Better Risk Management - One of the significant benefits of international trade is market diversification. If businesses just keep focusing only on the domestic market, they may expose themselves to increased risk from downturns in the economy, this could be: recessions, political factors, environmental events and other risk factors. Becoming less dependent on a single market may help a business who wants to trade internationally to mitigate potential risks in their core market.
There can be decreased competition - A businesses product and service may have to compete in a crowded market in their own country, but they may find that they will have less competition in other countries abroad.
The is opportunities for longer product lifespans - Selling a product to an overseas market can extend the life of an existing product as emerging markets seek to buy high technical products from places like America or Japan, from businesses like Microsoft, Apple, Sony or Samsung.
Easier Cash Flow Management - When a business has just started trading internationally, it may wise for them to ask for a payment upfront, whereas at their internal main country, the business may have to be more creative in managing cash flow while waiting to be paid. So this is why a business expanding itself overseas could help to manage their cash flow more effectively.
Disposal of surplus goods - Businesses can have an outlet to dispose of surplus goods that they are unable to sell in your home market, when trading outside of their internal country.
Enhanced reputation - Doing business in other countries can increase a businesses reputation. Successes in one country can influence success in nearby countries, just like in the UK and the countries close by like Ireland, France or the Netherlands. This can then raise a businesses profile in their market niche. It can also help increase a businesses credibility, both abroad and international. This is one of the benefits of international trade that may be difficult to quantify and, therefore, easier to ignore.
Greater Variety of Goods Available for Consumption - International trade brings in different varieties of a particular product from different destinations. This gives businesses and customers a wider range of choices which will not only improve their quality of life, but as a whole it will help their internal country grow in economy.
Promotes Efficiency in Production - International trade promotes efficiency in production as countries will try to adopt better methods of production to keep their costs down in order to remain competitive. Countries that can produce a product at lowest possible costs will be able to gain larger shares in the international market. Therefore this is motivation to produce efficiently arises. This will help to increase the standards of the products and customers will have a good quality products to choose from.
Consumption at Cheaper Cost - International trade enables a country to consume products which either cannot be produced within its borders or production that may cost very high. Therefore it becomes cost cheaper to import from other countries through foreign trade
Trade Fluctuations are reduced - By making the size of the market large with large supplies and extensive demand international trade, this reduces trade fluctuations. The prices of goods tend to remain more reasonable.
Fosters Peace and Goodwill - International trade fosters peace, goodwill, and mutual understanding among nations. Economic interdependence of countries often leads to close cultural relationship and thus avoid war between them. Therefore positive relations are increased when popular countries with large numbers of international businesses are trading with one another.
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