Question

Conclusion of why firms engage in international business

Answer 1

International business provides both a large risk and a large potential reward. The most common reason that a company would engage in international business would be for the potential millions of new customers that could buy their product.

For instance, Coca-Cola was very popular in the United States, but gained millions of new customers and much more profit once it started being sold in other countries. Similarly, other countries may be able to provide resources that are priced lower than in a company's original country. The company could then try to market their product in that country and have a lower production cost with the cheaper resources, which means a higher profit if the sales are equal.