Question

Corporations go abroad for many reasons.  Discuss the five major reasons companies cross boarders to do business and discuss any ethical and/or moral conflicts that can arise.

Answer 1

Five major reasons due to which companies are going into cross border to do the business-

A. Economies of scale is one of the most important reason for entering into another countries for various joint ventures and mergers and doing business because it will be helping them in order to extend their market reach

B. Diversification of the business as when businesses are expanding overseas it will mean that they will also be having a better diversification benefits across different countries

C . they will also have a natural hedge against depreciation of currency against another currency when they have a multinational presence and they will be having a better management of their foreign exposures.

D. it will also help them to acquire larger market share through mergers and acquisitions by expanding into another countries and making business collaboration

E. it also helps them to raise capital from outside the domestic territory and they also leads to cost-cutting because company will be generally Preferring those countries where the cost of capital are lower.

Ethical and moral conflict which can arise are related to pricing of products in different countries as there can be difference in the prices of products which are set in different countries and it could also lead to outsourcing of the jobs by companies which can lead to a conflict of interest with its domestic stakeholders.