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Benefits to Firms

  1. Prospects for Higher Profits: International business could be more fruitful than the domestic business. When the domestic prices are cheaper, business establishments can make more profits by selling their products in countries where they get a good price for their products.
  2. Increased Capacity Utilisation: Many companies set up manufacturing capacities for their products which are in greater demand in the domestic market. By planning foreign expansion and obtaining orders from customers abroad, they can think of making use of their excess production capacities and also improve the profitability of their ventures. Manufacturing on a larger scale often leads to economies of scale, which thereby lowers manufacture cost and enhances per unit profit margin.
  3. Prospects for Growth: It is quite annoying for the business merchants when demand for their products reaches a plateau in the domestic market. Such firms can significantly enhance prospects of their growth by getting involved with foreign markets. This is exactly what has driven most of the multinationals from the developed nations to enter into markets of developing nations. While demand in their home countries has reached a plateau, they realised their products were in demand in the developing nations and that demand was picking up quite fast.
  4. Way Out to Intense Competition in Domestic Market: With increasing competition in the domestic market internationalization seems to be the only way to achieve considerable growth. This is the drive for many companies to go global in the search of markets for their products. Thus, international business serves as a medium of growth for companies facing tough market conditions on the domestic grounds.
  5. Improved Business Vision: The advancement of international business of many firms is basically a part of their business policies or strategic management. The vision to go global comes from the need to grow, the urge to become more competitive, the need to diversify and to gain strategic benefits of going global.

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