Anna Oleksiak - LSW, Business Communication

''Risks and potential benefits of entering international markets'

Nowadays, along with rapidly increasing globalization, international business has

become a popular topic and has drawn the attention of many growing companies, who started
considering going global. As with any shift in business direction and scope, there are some
potential benefits and risks connected with the expansion into foreign markets.

To begin with, entering international markets seems to be very tempting as it entails

numerous opportunities for the enterprise. One of the top advantages of a global expansion is
that it can open up a new pathway to business growth and increased profits. Reaching new
markets means diversification of the customer base, which in turn can optimize the revenue
potential and increase the demand for a certain product or service. Consequently, with the
production growth, company reduces costs and achieves beneficial economies of scale. What
is more, firms also choose international expansion to gain a competitive edge over their
opponents. For example, businesses that expand in markets where their competitors do not
operate often have a first-mover advantage, which allows them to build strong brand
recognition.

However, when reflecting on possible challenges of expanding a business overseas,

the company should take into consideration the differences between countries that may cause
a misunderstanding of the target market. Each nation has its own legal regulations, accounting
principles, politics, tax schemes or tariff codes, what may serve an obstacles to the growth of
the global business. Moreover, there may occur a problem of misinterpreting the customs and
business etiquette, as countries differ with regard to their attitudes, standards, traditions and
manners. Hence, lack of cultural awareness can lead to mistakes that damage the reputation of
the brand and can be very costly to the bottom line.

By and large, it is crucial that businesses have a clear understanding of what

international trade involves. Therefore, before doing business abroad, it seems vital to conduct
thorough international market research, in order to get a detailed picture of specific country’s
political and economic situation, culture, customs, needs and unspoken rules. It would be also
advisable to do a SWOT analysis in order to enter the international market successfully and
avoid the risk of investment failure. To sum up, going global is a natural evolution and offers
significant opportunities if approached in the right way at the right time.