The 8 Most Influential Drivers Of International Business

james torpey business

Over the past several decades, international business has grown at an incredible rate. There are a number of reasons why international business has grown at such a rapid pace, ranging from advancements in technology to improved political positions. Here are the eight most influential drivers for the growth of international business.

1) Saturation of Domestic Markets

In developed countries, the continuous production of similar products over the years can lead to the saturation of domestic markets. Eventually the majority of the population owns the product and has no need to replace the product. Take Japan for example: 95% of people have all types of electronic appliances and there is no growth of organization there, as a result they have to look out for new markets overseas.

2) Opportunities in Foreign Markets

While domestic markets become saturated, there are many developing countries where the markets are blooming. Organizations have great opportunities to boost their sales and profits by selling their products in these markets. These blooming markets have growing economies that demand new goods and services at unprecedented levels.

3) Availability of Low Cost Labors

Labor in developing countries is relatively much less expensive than it is in developed countries. Therefore, organizations find it cheaper to shift production to these countries where they can produce goods for a much lower cost and increase their profits.

4) Increased Demand

Consumers in countries that did not have the purchasing power to buy high-quality products are now able to purchase them due to improved economic conditions. A growing international demand draws more organizations into these growing markets.

5) Diversification

In an effort to combat the cyclical pattern of business, companies expand and diversify their business. Through international expansion, companies are able to uncover new markets, allowing them to attain higher profits.

6) Reduction of Trade Barriers

Many developing countries are relaxing their trade barriers and opening their doors to foreign multinationals. Furthermore, these countries are giving their companies at home the opportunity to set-up their organizations abroad. The reduction in these trade barriers has stimulated trade between countries and opened markets that were previously unavailable for international companies.

7) Development of Communications and Technology

The growth of technology and communications has been an instrumental driving force for international business. This technology has allowed people to connect with others throughout the world instantaneously. Organizations can easily learn about the demands, products, and services offered in other parts of the world. Furthermore, technology has helped reduce the cost of transport and improve efficiency, leading people to expand their business.

8) Consumer Pressure

The growth of technology and communications has allowed led to a more aware consumer. As a result, consumers around the world are demanding new and better goods and services. This pressure has led to companies researching, merging or entering into new markets.