What are the primary reasons that companies engage in international business?

Allowing your business to go stagnant is as much a recipe for extinction as a species not adapting to changes in its environment. Branching out into international marketing can help your business adapt to changing business conditions and take advantage of technological improvements while expanding your business. Famed American scientist Stephen Jay Gould, speaking about nature, has said, “Evolution is a process of constant branching and expansion.”

Diversified Income Stream

1. Small-business owners understand the importance of diversifying revenue sources; having that one major client can seem like the answer to your business’ success -- until you lose it. Marketing your business internationally expands and diversifies your revenue sources by introducing your goods and services to customers in other countries. Thus, if the domestic economy gets sluggish, you can temper the effect through revenue from countries with healthier economies. A global sales base can help cushion the pain of losing customers via economic hardship.

Technology Reaches Customers in More Places

1. Before the Internet became ubiquitous, small-business marketing dollars were limited geographically. You and like-minded small-business owners had to allocate marketing dollars where it made the most sense, and typically that meant physical proximity to business headquarters -- you know it’s prudent to set up shop where most of your customers are. However, the online buying population has changed all of that. Weigh the costs of adapting your website for online shopping or using existing portals such as eBay to make it easier for customers to buy your goods or services -- whether they’re in your neighborhood or in Hong Kong.

Adapting to Demand Fluctuations

1. Your customers might be clamoring for one of your hot products for six months -- then suddenly the inquiries stop. Perhaps a competitor opens up shop in the same neighborhood. It’s one thing if you anticipate and are prepared for demand fluctuations -- such as if your product is seasonal -- but another if you have a year’s worth of inventory sitting there. While you’re working on your next product or product enhancements to appeal to domestic customers, marketing your product overseas can be just the ticket to clear out your warehouse and stabilize your revenue stream.

International Marketing Considerations

1. Marketing directly to international markets vs. using an existing portal that offers international support requires upfront planning. Acquaint yourself with the local culture in each country -- everything from business practices to search engine mechanisms. For example, do users in that country search with specific words or entire phrases? Is your logo color appropriate for a business in that country or does it mean something socially inappropriate, such as death? Expect to communicate via email, phone or Internet video service, so ensure that you understand the etiquette for formally addressing men and women. Weigh the benefits of having a native-language website designed specifically for each country vs., say, a drop-down menu on your English-language site that allows users to choose the language they prefer. Finally, if you will be working with a partner or have large, steady customers, remember that nothing beats the occasional personal visit, so factor travel costs and time away from your home office into your business and marketing plans.

   No matter how attractive and ‘must have’ your product or service  seems to be, a strictly limiting yourself to your domestic market will have a finite capacity. And once you have reached saturation point, what then?  Because of these limitations wise business owners are looking to go global and exploit the many international trade opportunities – after all, in the global economy; practically every country is a potential customer.

   Here are seven reasons for international trade:

   1

   Reduced dependence on your local market

   Your home market may be struggling due to economic pressures, but if you go global, you will have immediate access to a practically unlimited range of customers in areas where there is more money available to spend, and because different cultures have different wants and needs, you can diversify your product range to take advantage of these differences.

   2

   Increased chances of success

   Unless you’ve got your pricing wrong, the higher the volume of products you sell, the more profit you make, and overseas trade is an obvious way to increase sales.  In support of this, UK Trade and Investment (UKTI) claim that companies who go global are 12% more likely to survive and excel than those who choose not to export.

   3

   Increased efficiency

   Benefit from the economies of scale that the export of your goods can bring – go global and profitably use up any excess capacity in your business, smoothing the load and avoiding the seasonal peaks and troughs that are the bane of the production manager’s life.

   4

   Increased productivity

   Statistics from UK Trade and Investment (UKTI) state that companies involved in overseas trade can improve their productivity by 34% – imagine that, over a third more with no increase in plant.

   5

   Economic advantage

   Take advantage of currency fluctuations – export when the value of the pound sterling is low against other currencies, and reap the very real benefits.  Words of warning though; watch out for import tariffs in the country you are exporting to, and keep an eye on the value of sterling.  You don’t want to be caught out by any sudden upsurge in the value of the pound, or you could lose all the profit you have worked so hard to gain.

   6

   Innovation

   Because you are exporting to a wider range of customers, you will also gain a wider range of feedback about your products, and this can lead to real benefits.  In fact, UKTI statistics show that businesses believe that exporting leads to innovation – increases in break-through product development to solve problems and meet the needs of the wider customer base.  53% of businesses they spoke to said that a new product or service has evolved because of their overseas trade.

   7

   Growth

   The holy grail for any business, and something that has been lacking for a long time in our manufacturing industries – more overseas trade = increased growth opportunities, to benefit both your business and our economy as a whole.

   

   Are you ready to boost your international trade in 2021?

   Do you want to expand further in 2021 and seize more exciting international opportunities but feel unsure about where to start? Or have you already taken the plunge but found you’re unable to perform well in the new market?

   What are the primary factors that motivate companies to expand internationally?

   Reasons for entering international markets.

   large market size..

   stability through diversification..

   profit potential..

   unsolicited orders..

   proximity of market..

   excess capacity..

   offer by foreign distributor..

   increasing growth rate..

   What are the main ways for your company to participate in international business?

   There are several market entry methods that can be used..

   Exporting. Exporting is the direct sale of goods and / or services in another country. ... .

   Licensing. Licensing allows another company in your target country to use your property. ... .

   Franchising. ... .

   Joint venture. ... .

   Foreign direct investment. ... .

   Wholly owned subsidiary. ... .

   Piggybacking..