Question

Discuss the challenges and opportunities for companies that choose to operate internationally. This must have at least 250 words.

Answer 1

(A) Opportunities for companies that choose to operate internationally:

(1) EXPANSION ALLOWS YOU TO DIVERSIFY:

Keeping your business in the home market can limit potential for profit. One of the downsides companies face when they operate in only one country is the exposure to market changes. Taking your business international allows you the opportunity to diversify your markets, so your revenue is more stable. If your domestic market is slowing down, having the advantage of a global market will help cushion the company during slower economic times.

(2)ENTRY TO NEW MARKETS:

Once your company has been successful in your home country, it’s time to look at markets overseas. However, before you enter the new market, it’s vital to do research. Whether it’s looking at emerging markets in South America, advanced technology hubs in Asia or exploring developed markets in Europe, each region offers plenty of opportunities for expansion success.

(3 )NEW CUSTOMER BASE:

Another benefit of expanding abroad is that it gives the opportunity to not only sell your current product or service to a new customer base but also to invest and introduce new products/services. With a much broader customer base, you can generate more business and increase sales.

(4) EXPANSION ALLOWS YOU TO DIVERSIFY:

Keeping your business in the home market can limit potential for profit. One of the downsides companies face when they operate in only one country is the exposure to market changes. Taking your business international allows you the opportunity to diversify your markets, so your revenue is more stable. If your domestic market is slowing down, having the advantage of a global market will help cushion the company during slower economic times.

(5) IMPROVE YOUR COMPANY'S REPUTATION:

One of the reasons why businesses expand globally is to be able to provide a reliable service to their international clients. A good global reputation will attract new customers. Expanding abroad allows a company to build name brand recognition and establish credibility internationally.

(B)Challenges for companies that choose to operate internationally:

1: Language and cultural barriers

It should go without saying that if you don’t speak the same language as your customers, communication is going to be a challenge. It’s certainly possible to run your product descriptions through Google Translate – which is a great tool in certain circumstances, but we would not recommend solely relying upon it to represent any company in a new country.

2: Local competition

If you’re making a killing selling handmade knives in Australia, you might think you can just export that business model to the UK. But what if there’s another company selling handmade knives? One that’s based in the UK.

3: Tax codes and compliance issues

Dealing with tax can be a headache even when you’re only operating in a single nation. Dealing with taxes, fees, and tariffs for international trade can be a major obstacle for a lot of companies – especially smaller businesses.

4: Supply chain risks

Imports, exports, shipping, and logistics are all things that large enterprises have departments dedicated to. That’s because managing a supply chain that crosses national boundaries can be a real challenge.

If you’re shipping goods from the APAC region to Europe or America, you’ll have to contend with geographical distance. However, the cost and time involved in shipping aren’t the only problem.

5: Operational risks with hiring staff

You will need more staff to handle the increased pressure on your business of working in another country. You may even need to hire staff on the ground in the new country. The specifics vary from business to business, and from country to country.

However, regardless of your specific situation, hiring more staff is always a risk. You’ll not only have increased overheads, but you’ll have to put your trust in new people – potentially even new people you never meet face to face.