Why Companies engage in international business?

Why Companies engage in international business?

International business may be defined simply as business transactions that take place across national borders. Any business transaction between parties from more than one country is a part of international business. The buying and selling of goods, product or services across the national boundaries of a country are known as international business.

Companies engage in international business for several reasons. Some of them are discussed below-

(1) To earn a profit: This is the main purpose of engaging in international business. Companies invest in foreign trade and import-export business for earning a profit.

(2) To acquire resources and supplies: Every business organization has to acquire resource and supplies for continuing their business. So it can be another reason for engaging in this business.

(3) To export of excess goods: There is a huge opportunity to the export of excess goods abroad. That encourages participating in the international business.

(4) To satisfy regional human needs: It is a good option to ensure regional human needs. Companies can be provided with all of the necessary goods by importing from other countries.

(5) To spread their business activities: They have another option to spear their business activities in the domestic market and abroad. In international business a firm contents various branches.

(6) Proper utilization of resources: Companies can utilize national resources properly. Regional resources are used in domestic and foreign both sectors.

(7) Formulation and develop new industry: New industries are formulated and developed with the development of international business. So, it is another most important reason for engaging in international business.

(8) To modify research and development activities: Research and development activities are essential for the development of the business. International business engages this opportunity to the businessman.

(9) To increase national income: Net income of a businessman contributes to increasing the national income of a country. As a result, international business helps to increase national income.

(10) To improve living standard: International business also contributes to an improvement of living standard. Only international business contributes to the opportunity for using foreign and standard goods which are improved living standard.

(11) Develop a friendly relationship among the countries: It is a good way to make smart relation with the trading countries. International business helps to build friendly relationship among the countries.

(12) Attracting foreign aid: International business can be a good option to attract foreign aid like developing countries. By making a good relationship with the developed country it will be very easy to achieve foreign aid.

There are also much importance of international business for which companies engage in international business.