GROWTH OF INTERNATIONAL BUSINESS

There are a number of reasons for expansion of international business
 

 Expansion of Technology

 

In recent years, the pace of technological advances has accelerated at a phenomenal rate. The knowledge of products and services is available more widely and quickly due to great developments in communications and transportation technology. Today, we have Internet, commercial transatlantic supersonic travel, faxing, e-mailing, teleconferencing or overseas direct-dial telephone service and sales over the Internet, communication available almost instantaneously. Technology has exercised tremendous impact on international business by increasing the demand for new products and services, thereby increasing the number of international business transactions. Greater distances are involved in conducting international business than conducting domestic business that increase operating costs and make control of a company’s foreign operations more difficult. However, improved communications and transformation have sped up interactions and improved managers’ ability to control foreign operations. 

 Liberalization of Cross-Border movements

 International business also involves risk as the regulations may change at any time. Moreover, every country restricts the movement of goods and services and the resources across its borders. Such restrictions make international business more expensive to undertake. Today, governments are generally imposing fewer restrictions on cross-border movements of goods and services and the resources than they did 20 years ago. With the emergence of World Trade Organization, the restriction likely will continue to lower. Fewer restrictions enable companies to take better advantage of international opportunities. However, the increased competition requires people to work harder.  

Development of Supporting Services

The development of international business has facilitated the development of supporting services. For example, banks have developed efficient means for companies to receive payment for their foreign sales. Today, most producers can be paid relatively easily for the sale of their goods and services abroad. Banks credit agreements, clearing arrangements convert one country’s currency into another’s and insurance covers damage en route and non-payment by the buyer. The postal system has also dramatically developed today.

Increase in Global Competition 

 

The pressure of intense competition not only domestically but also foreign can persuade, a company to expand its business into international markets. Today companies can take advantage of many foreign business opportunities. They can spread their production and marketing operations to foreign markets and transport goods efficiently from most places. Once a few companies respond to foreign market and production opportunities, other companies may perceive the foreign opportunities as well. Many other firms have to become more global to acquire and maintain competitiveness.