Question

Why might a U.S. based firm choose not to compete in global markets?

Answer 1

Ans.

U.S. based firms choose not to compete in global markets because of 3 risk -

a)Political Risk

Every country have different rules and regulations and they might interfere time to time when your doing business there , which harms the business operation. Certain countriers like Somalia where the government is unstable , most companies try not to venture out in these countries.

b)Economic Risk

This type of risk is based on the countries economic condition and the policies . Where each countries have certain restriction and rules when you want to enter the market , where you need to know various dimensions of the market , because they are unpredictable in nature and which is hard for the managers of the companies to know.

c)Cultural Risk

These types of risk is all based upon the various preferences and taste of the consumers ,different languages, norms and customs of the country. Some product might work well in some countries and some product fail because of this. So planning and entering the market by taking account for all this requires huge amount of capital which is not economical , were most of the companies don't have this much resources, and without this planning , companies fail.

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