Reasons for doing business internationally
There are several reasons to do business internationally:
New markets
Businesses can take advantage of gaps in the market in other countries in order to sell their product or service. This can be an opportunity for the business to grow even when the home market is saturated.
Increased market share
This is how much of the market is controlled by a company or product. Businesses can expand their share of the international market for a commodity or service by trading in other countries.
Brand exploitation
Once a brand becomes well-known, it can be beneficial for the company to use it extensively to make the most of it.
Market leadership
When exporting to a market where a similar commodity does not yet exist, a business can set themselves up and secure sales before other businesses reach the market. This can provide the necessary competitive advantage to lead the market.
Technological dominance
Technologically advanced companies are able to tap into a global market before other companies develop the technology.
Comparative advantage
It can be cheaper to manufacture goods in some countries. Wages may be lower or tax rates in the country may be lower than in the UK, so businesses can take advantage of this and make more profits.
Growth
One of the main reasons for trading internationally is growth. There are 67 million people in the United Kingdom but there are 1.4 billion people in India and 8 billion (8,000,000,000) in the whole world! By growing, a business can benefit from economies of scale which are the reductions in the cost of each unit produced due to the size of the business.