What benefits do firms derive by entering into international business?
Answers
Answer:
Firms derive the following benefits by entering into international business :
(1) Goods made available :
It Enables our country to obtain such articles which cannot be produced at home or which can be produced at high cost. It makes it possible to import goods at lower cost from other countries.
(2) Sale of surplus production :
It enables a country to dispose of those goods which are in surplus and to purchase goods which are in short supply.
(3) Cheap goods to customers :
It tends to equalise prices of goods throughout the world. Hence, customers can buy cheap and best goods.
(4) Specialisation :
It enables each country to produce only those goods which it can produce cheaply. Hence, it least specialisation . Each country of the world is thus better off than what it would otherwise be.
(5) Full utilisation of resources :
It provides an opportunity to every country to utilise its natural resources in a better way. Hence, wastage of resources is avoided.
(6) Helpful in difficult Times :
In difficult times like famine, earthquake, flood, war foreign trade is very useful. Articles of short supply can be imported from other countries. In the absence of foreign trade a large part of the population would certainly starve to death in such a case.
(7) Variety of goods :
It enables a country to enjoy large variety of goods of various countries.
(8) Wide market :
Market can be widened and better prices can be secured for the goods.
(9) Cultural exchange :
It leads to connections in several non-business directions as well. Exchange of ideas to promote international peace.
(10) More profits :
International business is more profitable than home trade. A trader will try to sell his goods only in those countries from where he can earn more.
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