Read the section below, explain why a business would want to enter the international market for:

1. Access to Resources
2. Access to Markets
3. Increased Quantity
4. The Benefits of Cheaper Labour
5. Increased Quality of Goods

Benefits for Business(International Business) -

From The World of Business Textbook Chapter 4 (Pg. 113-127)

International trade offers many benefits for businesses, including

access to markets, cheaper labour, increased quality and/or

quantity of goods, and access to resources that may not be

available at home.

Access to Markets

Most countries rely on international trade for their economic

survival. Trading abroad makes sense for Canadian businesses.

Why? With a world population of over six and one-half billion

people, the international market for Canadian products and

services are roughly 200 times as large as the domestic market!

However, larger markets don't always translate into greater

sales. Sometimes, Canadian companies have difficulty adapting

their products to suit a foreign market. Consumers in other parts of

the world has different wants and needs. A company must

understand these wants and needs before it tries to sell its goods

and services internationally. A global product is a standardized

item that is offered in the same form in all the countries in

which is sold. Some examples of global products are pencils,

soccer balls, and cameras.

Packaged food items are not global products. They are

usually difficult to market as global products because people in

different parts of the world have different tastes. For example,

some people in Great Britain, Ireland, Scotland, and Atlantic

Canada may enjoy blood sausage (sometimes called blood

pudding). But this is not a meal that would go over well in

many other countries. It would not be on everyone's menu!

Cheaper Labour

Why do Canadians buy items made in other countries? If you

guessed that the prices are cheaper because of cheaper labour

costs, you identified the number one reason. Canadian businesses

attempt to reduce their costs of production and in the process

maximize their profits. However, in doing so, other costs, which

may affect the Canadian business, can surface when dealing in an

international market.

Increased Quality of Goods

Doing business internationally can help producers improve the quality of the products they sell. For example, let's examine a luxury car to demonstrate how one car manufacturer improves quality by taking advantage of what other countries have to offer. The BMW X5 is an illustration of how goods manufactured in different countries can come together to form a final product. The X5's engine is assembled in Munich, Germany, and then it's shipped across the ocean in finished form to the production plant in South Carolina, United States. Magna Corporation, in Ontario, Canada, manufactures the rear-view mirror. The leather on the seats comes from South Africa. And the Michelin tires? They are manufactured in France. Automotive engineers at BMW search the world for parts that will help them create the best possible products for their customers. The BMW X5 was so popular when it was introduced that it resulted in another version, which was designed to expand the market for BMW, called the X3.

Increased Quantity

As access to international markets increases, so does the potential for increased sales (as long as the product has international appeal). As a result, companies may need to step up production to meet increased demand. Sometimes, the need for more products can be met by increased efficiency or longer hours of operation at existing production facilities. At other times, a company may decide to set up a new facility, perhaps in another country where goods are to be sold.

Access to Resources

In Chapter 1, you read about three types of economic resources: natural resources, human resources, and capital resources. International connections can give a business access to all three types of resources. For example, a Canadian company that makes bamboo furniture likely imports some or all of its bamboo-a natural resource-from another country, since bamboo is scarce in Canada. A company that builds a new factory in China may do so, in part, to take advantage of China's cheaper labour cost (human resources). A company that buys specialized machinery (a capital resource) made in Japan for use in a new plant they're building in Ontario is also taking advantage of international resources.