Many companies have been taking their business into foreign nations. Whether it be an operational move to produce products at a lower cost or a marketing strategy which involves selling an existing product to a new market, international business is and will continue to be on the rise.
This growth in international business (also called globalization) has been attributed to many factors including changes in technology, politics, economics, competition, labour and other costs, education and skills, environmental pressures, foreign exchange markets, import and export regulations, trade agreements and even the weather.
The following are the 6 most prevalent reasons for why a company might want to move a portion of its business into another country:
- Technology has allowed for improved logistics and thus reduced shipping and transportation costs as well as improved communication between remote teams of workers around the world.
- Governments are becoming more cooperative as they recognize the benefits of international trade and thus remove restrictions and work together to solve issues that span across borders.
- Infrastructure in foreign countries continues to improve thus allowing companies to more readily conduct business within and across borders.
- Consumers, primarily due to the internet, have greater access to information about products and services and thus are demanding or directly purchasing goods from other nations.
- Competition is forcing companies to continuously reduce costs which is driving many production facilities as well as services offshore.
- New Markets all of the above factors have allowed companies to then offer their existing products and services to entirely new foreign markets.
It is undoubted that international business will continue to rise as our world continues to become more accessible for businesses. In order to fund this international growth, many businesses will use a combination of senior debt, mezzanine debt and equity.
