Engaging In International Markets.
Why companies engage in international business?
Reasons for recent growth of business in international markets.
Benefits of doing business in international markets.
2. Why companies engage in international
business:
• Companies engage in international business for a variety of reasons.
• Identifying these reasons for any firm is important to understand the
nature and direction of its motivation to engage I international
marketing.
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Some of the major reasons why companies engage in international
marketing are as follows:
• To expand sales of the firm
• To acquire resources / technology / skills from foreign countries
• To diversify their sources of sales and supplies
• To capitalize on incentives from governments, local and foreign
• To follow existing customers who have moved overseas
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Reasons for recent growth of business in international markets:
• International business has increase on a rapid pace, especially after
the 2nd world war of 1940’s.
• This expansion in international business has been due to host of
reasons.
• Some of the key reasons for expansion of international business are
as follows;
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• Liberalization of cross-border movements of goods, services and factors of
production, such as labor, capital and technology etc.
• Development of supporting institutional arrangements for international
exchange of goods and funds
• Increase in global competition forcing firms to expand in international markets
• Convergence of world markets in terms of tastes, distribution infrastructure,
technologies and trade regulations.
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• Support from national governments for internationalization of local
firms and for attracting foreign direct investments.
• Growth of resources available to MNC’s and with large pool of funds
ands and other resources firms could easily expand businesses in
world markets.
7. Benefits of doing business in international
markets:
• A country and its people benefit from selling to or even buying from
international markets.
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Exports:
• Propel country’s economic growth as its firms increase sales and
profits
• Exports of quality products and services support or create better jobs
(average export-related job pays more than average national job)
• Selling to international markets diversifies a country’s economy and
hence hedges against economic downturns
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Imports:
• Consumers gain from lower costs, better quality and greater variety
products on the shelves
• Also create essential competition for local companies which then
improve their products and processes