Benefits of International Business:
The benefits of international business to the nations and business firms are:
Benefits to Nations
1. Earning of foreign exchange:
It helps a country to earn foreign exchange which can be used for importing capital goods, technology, petroleum products and fertilisers, pharmaceutical products, etc.
2. More efficient use of resources:
External trade enables a country to utilize the available resources in the best possible manner.
3. Improving growth prospects and employment potentials:
External trade helps to accelerate the economic growth and employment opportunities of a country.
4. Increased standard of living:
Foreign trade helps in raising the standard of living of a country.
5. International relation:
External trade helps to promote harmonious and cordial relationship among the nations.
Benefits to Firms
1. Prospects for higher profits:
When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.
2. Increased capacity utilisation:
It helps firms in using their surplus production capacities and improving the profitability of their operations. Large scale production helps to reduce the cost of production.
3. Prospects for growth:
It helps firms in improving their growth prospects by creating demands for their products in foreign countries.
4. Enhances competition:
External trade enhances competition, which compels the domestic firms to improve the technology of production, production process and quality of the products.
5. Improved business vision:
It improves business vision as it makes firms to grow, more competitive and diversified.