In: Finance
Companies that enter into new markets face following risks-
Political risk- If companies go to other countries or go global, they face political risk, their rules and laws are different from domestic country.
Exchange rate risk- When companies enter into new international market, they face currency risk, currencies keep of fluctuating.
Competition- Companies face the tough competition from the existing players in that market.
Culture and taste- Sometimes when companies enter into new market and have not done proper research, they may face cultural issue, people's taste and choice keep on changing.
Mitigating the risk-
Diversification- Companies should diversify their business by launching products for different segments and by manufacturing more products in their product line so that their product portfolio may be balanced.
Proper research- Company should do proper primary and secondary research so that their product in new market may not fail.
Quality product with less price- Company should provide best quality product at low prices in new market so that it can face the competitors.