— Insufficiency of Domestic Demand – It is not possible for each product available in the market to have an equal and growing demand in the domestic market. Some products are not in demand in the domestic market but have higher demand in the international market. The firm needs to identify the same and take a decision to enter into foreign markets.
— To Utilize Capacity – When the production of a certain product is much higher than the demand in the domestic market, the decision can be made to enter the international market to utilize the capacity of the production.
— Legal Restrictions – Legal Restrictions are often seen when the international market is involved. But some of the Restrictions are also seen in the domestic market about the production and distribution of certain commodities, resulting in finding the ways to distribute the product in the places where they are not restricted.
— Relative Profitability – When a product is exported to the market where it is a necessity, the profit percentage increases in relatively higher rates as compared to the domestic market.
— Less Business Risk – The business can grow in the international market as there is less probability of having the competition in the same market in the international platform. It is not a guarantee that the business will be at its peak at the first time it enters into the international market, but it will not be at the losses either.
— Increase Productivity – When a business enters into the international market, it is an understatement that the production will be increased due to many factors including demand completion and new technological changes to increase production at cheaper rates.
— Social Responsibility – Sometimes it becomes a social responsibility to export a certain commodity to the place where that product is not available but the need is higher.
— Technological Improvement – When a business enters the international market, it is introduced with new technologies and products which can be adapted by the firm to improve it’s production and also to give stiff competition to the successfully operating firms in the international markets.
— Product Obsolescence – The demand for the product differs in different markets at different points of time. When the product becomes obsolete in the domestic market, it may be in demand in the international market. This can be found out by surveys to be conducted by the firm itself.
Importance from others point of views
— International Collaboration – Many countries collaborate with other countries to exchange their products and services so that it is beneficial for both the countries. International collaborations ensure the export of products and services available in large amount in the domestic market in exchange of import of the products and services which are not available in the domestic market but have high demands.
— International Business brings various countries closure – When international business occurs, the countries are involved in the same. It ensures good relations between the countries. The interaction between the representatives, in government as well as at local levels, ensures that the cultures and important factors to be kept in mind are discussed. Also, it will help to find the habits and necessities of other countries required while doing the business with them.
Nikita Singhal BBA 6th semester morning shift Division A TIAS New Delhi.