Question

What are the factors that are facilitating businesses to consider moving globally? What are some of the benefits and downsides of setting up operations outside their home country for businesses?

Answer 1

The major factors which are facilitating businesses to consider moving globally include the integration of economies leading to easy access into foreign markets with least barriers such as regulations, tariffs etc. The businesses are moving global because the government and other financial bodies have made it easy for an organization to undertake international business through providing adequate support and assistance in finding and establishing a threshold into the foreign markets to understand the need and meet the demand of foreign markets. Moreover another important factor which facilitated businesses to go global is the concept of international business which makes FDI, joint ventures, mergers and acquisitions possible for businesses to operate globally. The businesses are being provided financial aid through venture funding which supports business to enter foreign markets. Market research and availability of wide amount of information and knowledge also makes it possible for business to understand global markets.

Some of the major benefits of business on entering in global business outside the home country include increased scope for profitability and growth which the local saturated market do not provide. Entering into global business enables a form to strengthen its financial position by capturing wide market share, attracting potential customers and thus increasing the profitability of business. Another advantage is the awareness and familiarity about the foreign trends, technology, infrastructure and technical know how which the company can imitate and incorporate into its business operations and thus make it more efficient. Moreover setting operations outside the home country provides the opportunity of receiving a competitive edge and staying ahead of competition through keeping up with the industrial and global trends. The business can also develop a new customer base and retain them, which might not be otherwise possible incase of restricting the business to home country.. The major disadvantages or downsides of performing business outside the home country would be that it involves a lot of cost, risks and involve utilising of previous resources of organisation . If the business would not be able to manage in the foreign environment it might bring lots of losses to the business or even be a reason behind its failure. Moreover there are various barriers for business such as cultural and linguistic barriers, government regulations in specific areas, constant inspection in foreign market etc which can create problems for the business and make it hard for it to handle such operations.

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