OPPORTUNITIES AND THREATS OF INTERNATIONAL BUSNIESS


International business refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.
Examples of multinationals are Coca-Cola, Cadbury Schweppes, McDonalds, Kellogg's, Cummins, and many more. An important characteristic of these organisations is that they have well established corporate brands that are widely recognised - for example, Coca-Cola is the second best known expression in the world after OK.
The International business environment is totality of factors or forces surrounding internationally operating firm that influence the firm’s performance and outcome in the global market. They are:
1.     Political and Legal environment
2.     Trade and commercial environment
3.     Competitive environment
4.     Socio-cultural environment
5.     Economic environment




The opportunities of international business are as follows
1.     Earn foreign exchange: International business exports its goods and services all over the world. This helps to earn valuable foreign exchange. This foreign exchange is used to pay for imports. Foreign exchange helps to make the business more profitable and to strengthen the economy of its country.
2.     Optimum utilization of resources: International business makes optimum utilization of resources. This is because it produces goods on a very large scale for the international market. International business utilizes resources from all over the world. It uses the finance and technology of rich countries and the raw materials and labour of the poor countries.
3.     Achieve its objectives: International business achieves its objectives easily and quickly. The main objective of an international business is to earn high profits. This objective is achieved easily. This it because it uses the best technology. It has the best employees and managers. It produces high-quality goods. It sells these goods all over the world. All this results in high profits for the international business.
4.     To spread business risks: International business spreads its business risk. This is because it does business all over the world. So, a loss in one country can be balanced by a profit in another country. The surplus goods in one country can be exported to another country. The surplus resources can also be transferred to other countries. All this helps to minimize the business risks.
5.     Improve organization’s efficiency: International business has very high organization efficiency. This is because without efficiency, they will not be able to face the competition in the international market. So, they use all the modern management techniques to improve their efficiency. They hire the most qualified and experienced employees and managers. These people are trained regularly. They are highly motivated with very high salaries and other benefits such as international transfers, promotions, etc. All this results in high organizational efficiency, i.e. low costs and high returns.
6.     Get benefits from Government: International business brings a lot of foreign exchange for the country. Therefore, it gets many benefits, facilities and concessions from the government. It gets many financial and tax benefits from the government.
7.     Expand and diversify: International business can expand and diversify its activities. This is because it earns very high profits. It also gets financial help from the government.
8.     Increase competitive capacity: International business produces high-quality goods at low cost. It spends a lot of money on advertising all over the world. It uses superior technology, management techniques, marketing techniques, etc. All this makes it more competitive. So, it can fight competition from foreign companies.
The threats are as follows
·       Threat to socio- cultural values
·       Inequitable distribution of benefits
·       Erode of national sovereignty
·       Insecurity in job and income source
·       Environmental degradation
·       Unfair competition and rise of monopolies
·       Increase in exchange rate uncertainties.
·       Developed countries can stifle development of undeveloped and under-developed countries.
·       Economic depression in one country can trigger adverse reaction across the globe.
·       It can increase spread of communicable diseases.
Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale

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