Question

Why some firm go abroad to raise capital? 4 paragraphs

Answer 1

Obtaining fund through international financing has various advantages associated with it and various firm which has a global presence need to explore this kind of financing in order to gain an advantage over their competitors.

International financing can help a business to increase the overall profit and overall revenue as it can provide them with an extended presence in the international capital market and it can help them to obtain the loan at a low cost of capital which will multiply into larger profits and which will further multiplying into larger sales.

Various firms also choose to raise their funs abroad because they want to play on the differences which arise out of the exchange rate market, because when they feel that their domestic currency is going to appreciate against the the foreign currencies and they want to gain through the exchange rate difference which can help them into getting a larger market share at a low cost of capital. It is also said as economies of scale.

Raising funds abroad also help them to get an international recognition which can help them put ahead of their competitors and which can also help them into getting a extended global market share, as it has the capacity of going abroad and gaining a competitive advantage against competitors buy raising funds abroad

So firm should always decide whether it wants to go Global in order to gain through lesser cost of capital, if it has economies of scale and global presence.