Exam (elaborations)
BUS 5117 Unit 7 Discussion Assignment
- Course
- Institution
A guide to assignment on international business strategy for firms that operate in foreign countries
[Show more]
Seller
Follow
MasterAddis
Reviews received
Content preview
The global market is increasingly becoming more intertwined requiring firms to engage inbusiness with firms from other countries. Many opportunities are waiting for firms that decide to
engage in international trade. A study has shown that 62% of CFOs buy materials or services
from foreign companies and 73% reported that they engage in some form of trade activity in
foreign countries which shows a huge increase from the past years (Evans, 2021).
Firms that want to capitalize on these opportunities need a solid international business strategy.
Every opportunity has its own risk that needs to be analyzed and mitigated properly. There are
three major benefits to engaging in international business namely new customers, lower costs,
and diversification of the market (Kennedy, 2020). Some risks need to be considered including
foreign exchange risk and political risk (Beers, 2021).
The growth of a firm is affected by the size of the market it operates in and when the firm moves
to a global market the possibility for growth expands as well. This is especially true for firms that
expand into large markets like China and India. This will provide new customers for the firm to
grow its revenue and minimize cost per product. Furthermore, the firm gets access to cheaper
raw materials and labor (Kennedy, 2020). This is only true for firms moving from developed
countries to developing countries.
Many firms are choosing to offshore to reduce costs but that comes at the cost of rising
unemployment in their country. This may not be a long-term goal for firms as the cost of
resources and labor is increasing even in developing countries. The last advantage is
diversification of the market to reduce the risk associated with operating in a single market
(Kennedy, 2020). If that market or country faces economic or political challenges the business
may take significant losses and go bankrupt. Hence, operating in multiple countries and markets
allows firms to take some losses in some places and cover those losses with the profits gained in
other places.
However, there is some risk that should be considered like foreign exchange risk and political
risk. Foreign exchange risk is associated with fluctuations of currency that may result in a higher
cost or reduced profit (Beers, 2021). In some cases, it's a profitable thing, especially for exporters
where their local currency has devaluated or the foreign currency has appreciated. The bigger
risk is the political risk where government instability or government interference affects the
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MasterAddis. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now