After the world economic globalization happened, the number of companies that expand into others has increased. Even though the idea of international business is not new and existed since XVII century the top of the international expansion was after the Two World Wars. What are the reasons of companies’ participating in International Business and what profits it may bring?
The main explanation why this happens lies in company leaders’ striving to expanding the sales and acquiring other parts of financial market to spread their influence on them. Taking into account that developing countries differ from developed ones in the way that the consumers look up to the western lifestyle and the western companies use it as a chance for expanding their sales. Besides when the sales drop in one region, there are more possibilities tomake up for it in the other regions.
One of the most significant reasons for international expanding is that both developing and emerging countries are rich with minerals, metals and opportunities for the agriculture. These countries catch the eyes of western multinationals who would like to get an access to the resources. That is why a lot of international businesses settled in Africa and South Asia which are profitable for the western business of finance for their large deposits of minerals. A plenty of emerging markets lack he expertise and the resources for making a use of the resources. Thus welcoming the western companies gives them opportunities for growing the economies.
Due to the liberalization of many developing countries and their opening up the economies, nowadays is considered the best time for international business. It is caused by the economic crisis that brought about a great damage to the world economy.
Owing to the fact that companies are meant to be profitable it is understandable that they expand into the countries that can bring them more profits then their own country. As a matter of fact there are many political, economic and other risks that may occur. They may be different according to countries, and there is point dividing all the risks between all the countries where the company operates than face all them only in one.