International Expansion Essay
The trade across the globe has increased due to the high demand of the international products. This has enabled billions of dollars to be transferred every day for transaction purposes. Much of the activities in transaction take place in markets that are outside the country, such markets are called Euromarkets as they take place outside Europe. Although there has been pervasive growth in the market penetration, any country that involves in the international market cannot avoid the substantial external impact in its economy (Gros & Thygesen, 1992). It is therefore essential for the company to understand the implication that will come when they decide to go globe so as to avoid their effect on the operation of the company. Despite the marketing and the economic problems that the company might experience in operating outside the European Union, the company will sell their products to the numerous markets.
This is unlike when the company decides to operate in the European Union where they will be only restricted to a limited number of consumers that are in the countries of European Union Members. The world has a larger market in the European Union. Therefore the vast potential of the international market should not be ignored as this will enable the company to be financially stable. Since the main objective of any business is to make a profit, the diverse market will enable more sales hence subsequently leading to more profit to the company. There will be a diversity of the market which will enable the company to sell most of its product, and in return, there will be high sales hence high profit for the company.
The company will be able to sell their products despite the crisis that European nations might be going through. Acquiring company outside European Unions has some disadvantages that the company will deal with as they try to diversify in the foreign market. First are trade restrictions. The company will face the trade restriction if they go to countries that are outside European Unions. A company within European Union Trading within European Union has brought the European single market which is the largest single market in the world. This has both advantages and disadvantages. The advantages of trading in the European Union include the following: first, the introduction of Euro allows single currency to trade with. This helps the company since they don’t have to deal with the fluctuation of currencies or incur the cost of changing the currencies.
Besides, the company can plan in their sale before they release their goods to the market since they are pretty sure of the price of their goods. First, it restricts the company to certain market. When the company only depends on the European Unions to trade, they are limited to the only population that is in the countries belonging to European unions. Thus there is no diversity in their market. Sovereign risk in the credit swap market is also a disadvantage of acquiring the company in the European Union; in addition to that, there is also contract laws, and liabilities which can bring drawback. Of the credit in an economy has defaulted then the result can be in the collapse of the entire market.
From $10 to earn access
Only on Studyloop