Internationalisation
Business: AQA A Level (2023 Specification), topic 9.3.1
Assessing Internationalisation
Internationalisation can give businesses greater opportunities.
Advantages of internationalisation
- Accessing international markets gives businesses access to a larger market of customers which can increase sales revenue and profit.
- Accessing international markets can reduce a business’ risk in case demand in the home market declines rapidly following a change in tastes and fashions.
Exporting
- Exporting allows a business to access international markets by selling products abroad.
- For example, Foxconn export to markets such as America and the United Kingdom which allows it to access international markets.
Licensing
- Licensing allows a business to access international markets by providing overseas businesses with a license to sell and produce its products in that country.
Alliances
- Alliances allow a business to access international markets through working in partnership together to share risk.
Direct investment
- Direct investment allows a business to access international markets through investing in facilities, such as a production centre, abroad.
Attractiveness of Internationalisation
Various factors affect a business choosing an international market to enter.
Size of the local market
- The market’s growth rate and size must be considered as a large or growing market will be more attractive.
Political stability and culture
- The political stability and culture of the country in which the international market is located must be considered as this can affect the complexity of entering the market.
Local competition
- Local competition must be considered as this can affect the likelihood of a foreign business being able to access the market with success.
Test yourself on Internationalisation
What allows a business to access international markets through working partnership with another business?
Which of the following is least likely to be an attractive market to join?