Importance of International Marketing Part - 2

Part 2 Part 1

Microlevel effects of International Business :

An individual firm can reap several benefits by resorting to international marketing and international business.

1. Growth : By all standards, domestic markets have a limitation of growth potential. After a particular level, it is very difficult for a firm to achieve growth. So, it is left with the option of either product innovation or extending operations to other markets.The latter option is a better way of sustaining growth as the product life can increase significantly when it is sold into the world markets.
2. Fighting Competition : As the protectionist measures by nations are being reduced, firms operating in domestic market only are facing increased levels of competition. Instead of utilizing their resources in fighting competitions, firms continue to look at markets in other countries to cope up with domestic competition. Hence, international business operations provide avenues for both survival and growth.
3. Increased efficiency : By operating on global scale, a firm can select for its expansion lucrative opportunities. Also, it can reduce its product costs through global sourcing and utilise world level technology and talent for business operations. All this makes the business operations more efficient and as a result it can realise higher return per unit investment. This boosts up shareholder’s value and the company image.
4. Scale economics : Higher level operations on account of international operations produce benefits of scale and thus enhance the profitability of firm.
5. Innovation : By operating in large markets, companies can afford to invest in research and technology development. It is established that compared to traditional and mind set firms, innovation driven firms can compete effectively.
6. Risk Cover : By operating on global scale, the fluctuations of demand levels in an individual country does not make much difference on the aggregate sales. Consequently, the uncertainties arising out of risk factors on the operations localized to a country are reduced. Even the financial risks, physical risks, politico-legal risks etc. can be managed more effectively by virtue of global operations.

Part 1