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What are the pros and cons of international business?

Technological advancements have made the world a global village. Internet proliferation has also made it possible for businesses to have an international presence, thanks to having websites and other online access points that are accessible from all over the world. However, to have a real relationship with people, businesses need to establish their outlets or branches in various places across the globe. Going international has its benefits, such as increased profits and expansion of the market, thus reducing risks of depending on a single market. All the same, it has its challenges, too, including the risk of business failure in a new region, the effect of cultural disparities, and so on.

Here are the advantages and disadvantages of international business that businesspeople may need to weigh in on before expanding beyond the borders of their home countries:

The pros

1. Improved visibility of the brand

The visibility of the brand(s) of a company expands along with the expansion of the market. This increased visibility makes it easier for future entrance into new markets and for negotiations with distributors and other parties.

2. Increased revenue with more product exposure

Due to the increasing growth in technology, especially the Internet and communication channels, it is easier to bring onboard an international sales force, thereby allowing marketing to function at the local level better than ever before. The improved localization fosters greater relationships, increases customer loyalty, and achieves overall growth in sales and increased profits.

To take advantage of increased product exposure, business representatives can arrange to visit countries that accommodate international businesses, like Singapore. For easy processing of visas to Singapore, Visa Express is a reliable agent that offers great tips and advice for such trips.

3. Less vulnerability to changing trends

The business pattern keeps changing from time to time, and mostly the customers act in mobs rather than as individuals. In case an unfavorable trend emerges in one market, there is the benefit of having an escape in other markets, where you can arrange to move inventories and thus significantly reduce the risks.

The Cons

Language barrier Business entry into new markets faces one great challenge of having to learn the local language for proper communication, promotion, and other business tasks. Despite the innovation of apps and software that translate one language to another, this technology is not always perfectly able to deliver the actual meaning. This barrier slows down the success of the business.

1. Currency fluctuations can do away with profits

There is the risk of sudden elimination of expected profits due to fluctuations in international currencies, as American companies experienced in 2015. The possibility of other costs on foreign currency exchanges further dips into the profit margins.

2. The politics of host countries affect the business

Politics in the international arena is quite different from that of the home country. It is possible for the governments of some countries to seize a profitable foreign business operating in their territory if doing so would be in their best interest. Also, some countries put restrictions on ownership or even on the areas or industries in which foreign businesses can operate, which could negatively affect a business.

Conclusion

These advantages and disadvantages of operating a business globally show that there are additional running expenses; however, with proper planning and assessment on the absorption of the costs, there are also chances of getting higher returns.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

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