Advantages And Disadvantages Of Foreign Business

It also requires more of an investment and commitment by the international company which creates a higher risk. There is also the down side of having difficulty managing local resources.

The foreign partner can also become a competitor by selling its production in places where the parental company is already in.

The foreign market must offer a location advantage that makes it profitable to produce the product in the foreign country rather than simply produce it at home and export it to the foreign market. It includes resource endowments, economic and social factors, such as market size and structure, prospects for market growth and the degree of development, labour and input materials costs, the cultural, legal, political and institutional environment, government legislation and policies

With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.

Laws: Other countries have different laws regarding distribution, manufacturing and advertising. If the products are being manufactured in Thailand, there might be import tariffs.

The people of those countries will be mad if that company moves out. Since companies have gone global, their officers are also from different parts of the world. Their headquarters are in one place and factories in another. It starts to get hard to tell where the company belongs.

and the foreign distributor, often ensure an extensive portion of the financial costs are absorbed by

Globalization can be defined as ‘international integration’, which can be described as the process by which the people of the world are unified into a single society and functioning together. This process is a combination of economic, technological, and political forces (dictionary.com).

Moreover, even though producing in Vietnam would suppose a strong saving in cost in the labor-intensive processes, the risk of mold duplications and counterfeits is high. The imitation of the company’s products would eliminate the differentiation that allows them to charge a much higher price than the local manufacturers (15$ compared to 3$). Also, the company lacks of experience establishing a wholly owned subsidiary in a new country.

This alternative does not need traders to intervene in sales representatives’ jobs but the company has to make sure that both departments are able to identify prospective customers and make existing customers still trust in the company’s performance.

Appendix B clearly shows, that from a sales representative’s point of view it does not pay to build a team. Assuming that a successful sales representative, who is in the company for about 2 years (meaning that his own sales are still on the rise of 20% annually and not declining, because he is shorter than 5 years in the company), acquires one sales representative in his circle of friends, it can be seen that already in their first month, let alone year together, it diminishes the sales of the leader. The more members he accepts in his team, the greater are his losses from his own revenue and hence, his profit. This is

Lately, the international financial integration has increased. Over the years, the world economy has witnessed an increase in the number of individuals and businesses using international banking services. In today’s competitive global economy banks have the option to solely service their home market, to export services to foreign markets, or to establish a presence in that market. Essentially, banks have two options of expanding their operations in foreign markets. They can either service foreign clients through their domestic offices or they can establish a presence in the foreign markets. In general, the reasons for bank internationalization in

Even though a company must invest a large amount of money to get started in a foreign country, this can have the long-term effect of lowering costs. by take advantage of large tax benefits. The company can also pay less for labour and other goods that may be needed for the production of products. This lowers the overhead for the company and helps it operate more profitably

First, some countries do not allow agents at all or to represent a foreign manufacturer an additional requirement may be imposed by the countries such as a physical after-sale service presence. Second, many governments make a substantive distinction in the way agents and distributors are considered by their judicial systems. Since agents tend to be individuals or small businesses many countries place them under their labor law. This may affect termination notice period on the part of exporter and restrictions on the number of hours worked, taxation, certifications, licenses,

For any company going out for the foreign market is because of any one out of globalization, reducing tariff all over the world, to increase the market share, saturation of the local market, for getting the economies of scale of production, to use their excess capacity and use the resources where it is available at law cost.