Globalization of business provides many opportunities to entrepreneurs. Cost cutting is one of the main opportunities brought by international businesses. Firms seek to reduce costs to gain a competitive advantage. Lowering costs allows a firm to charge competitive prices. It also increases the profit margins, and this allows firms to make more profit at the same sales level. Comparative advantages vary across countries where the cost of producing a particular product varies across countries. The international business allows firms to cut costs by taking production activities to countries with low cost of production. Samsungâ€™s activities are spread across the globe to enable the company to realize low production costs associated with operating in a foreign market. Sales maximization is another opportunity created by international business. Business success is evaluated based on the market share, revenue, and profit. These three measures are increased through sales maximization. International businesses allow firms to maximize sales by accessing the international market. Globalization reduces trade barriers which enhances the ability of a business to sell its products the global market. As a result, businesses can maximize sales that also support exploitation of economies of scale. Samsung and other multinational companies sell their products in the international market allowing them to sell more.
Most of the companyâ€™s sales are from international market making Samsung South Koreaâ€™s largest exporter. International business enables a company to manage risk. The unpredictable business environment exposes businesses to many risks. Some of these risks are specific to a market segment or an economy. For instance, a foreign exchange risk exposure varies across countries implying that some countries are more exposed than others. Operating in the global business environment enables a business to enhance operations in markets or countries considered less risky. Political risk is a serious concern for multinational companies. Some countries experience more political volatility than others. Expanding in politically stable countries enables a company to leverage political risk thus enhancing business survival. Financial risks are also relevant to international businesses. The interest rates vary across countries. Making financing decisions in the international business environment requires investors to consider the interest trends in the host country to control the cost of capital. International business also allows businesses to control market risk associated with sales fluctuations stemming from changes in demand and competition.
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