Objective Of International Business

Objectives Of International Business

International businesses can improve a company’s performance by increasing profits and reducing costs. Both of the results generate greater profits for the company. There are several objectives of international business, each of which allows a company to improve its performance.

1. Attract foreign demand:

Some companies are unable to increase their market share due to fierce competition within the industry. Alternatively, changing consumer tastes could reduce demand for the company’s products. Both of these conditions allow an entity to consider foreign markets where potential demand may exist.

You already have a business there and therefore have some name recognition, so you are focusing your efforts on future growth in those markets.

The general electric philosophy is that economic growth varies from country to country, so you need to position your business in a market with increasing demand. It is believed that as globalization progresses, only the most competitive companies will be able to serve their employees and shareholders effectively.

The motives of companies to attract foreign demand are summarized in a recent Procter & Gamble (P & G) annual report.
It would help if you continued to drive P & G growth in these countries, which are part of the world’s largest and strongest economies.

2. Utilize technology:

Many companies are establishing new businesses in so-called developing countries, where the technology level is relatively low. Other companies have established new communication systems in developing countries.

Other companies that create power generation, highway systems, and other forms of infrastructure do extensive business in these countries. Motor Company and General Motors are seeking to take advantage of the technology by establishing factories in developing countries in Asia, Latin America, and Eastern Europe.

3. Use of economic resources:

Labour and land costs vary widely from country to country. Companies often try to establish production in places where land and labor are cheap. The cost is much higher in developed countries than in other countries. Many companies have subsidiaries in countries with low labor costs.

Many companies have set up production plants in Singapore and Taiwan to take advantage of labor cost savings.

Many companies have also set up factories in Hungary, Poland, and other Eastern European countries with low labor costs. Motors companies pay workers on the Mexican assembly line about $ 10 per day (including benefits), while workers on the US assembly line pay about $ 220 per day.

4. International diversification:

If all the assets of a company are designed to generate sales of a particular product in the country, the profits of the company are usually volatile. This instability is due to the exposure of companies to changes within the industry or economy. The performance of a company depends on the demand for this product and the economic conditions in which it operates.

The company can mitigate this risk by selling its products in several countries. Many companies doing international business are less affected by economic conditions, as economic conditions can vary from country to country. If a company sells its products in multiple countries, overall performance may be more stable, so the business is not affected by the economic situation in one country alone. For example, if the economy is weak, demand for products may decrease, while economic growth in other parts of the world may increase for the overall demand of the products.

Many companies are diversifying their business across countries. Due to its geographical diversification, the company is less exposed to the economic situation. Of course, you are exposed to some of the foreign economic conditions in which you do business.