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International Opportunities Essay
International Opportunities Assignment
Despite the fact that international diversification brings about advantages such as new opportunities, some of the organizations or firms do not consider international expansion. Some of the benefits of expanding internationally include access to new technology, expansion of market, and exploitation of core competencies (Hitt, Li & Xu, 2016). However, the firms are afraid of incurring expenses, such as acquisition of new office space, starting capital as well as remuneration for employees.
Generally, the cost of international diversification is enormous. Besides, another reason why firms would choose not to expand is because of the insurance fees due to the company carrying out operations outside the country. The business may choose not to pursue international diversification due to barriers such as language, religion and politics (Hitt, Li & Xu, 2016). For instance, my father works for an international insurance company and has a client who pays five times the amount he would have paid locally to enable him run the business. Another example to show the reason for not expanding is that the European Union uses about 20 official languages for communication.
The firms will always strive to maintain profitability hence it will look for areas where there is laxity in business laws and regulations. Companies will opt to incur less legal and regulatory enforcements to enhance their performance. Some of the benefits include competitive advantage due to the low costs (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014). For example, Nike is a company which is localized in countries such as India as well as Indonesia, which have minimal business regulations. However, the potential risks include unfavorable political environment, which may lead to investment losses and change in the value of currency. There are other risks to the firms, such as conflicts and change in the government policies with regards to taxation................GET A PLAGIARISM FREE COPY