What is the Importance of International Business for the economy?
Answer: The points
below highlight the importance of international business:
a) Earn foreign
exchange: International business exports its goods and
services all over the world. This helps to earn valuable foreign exchange. This
foreign exchange is used to pay for imports. Foreign exchange helps to make the
business more profitable and to strengthen the economy of its country.
b) Optimum utilization of resources: International business makes optimum
utilization of resources. This is because it produces goods on a very large
scale for the international market. The international business utilizes resources
from all over the world. It uses the finance and technology of rich countries
and the raw materials and labor of the poor countries.
c) Achieve its
objectives: International business achieves its
objectives easily and quickly. The main objective of an international business
is to earn high profits. This objective is achieved easily. This it because it
uses the best technology. It has the best employees and managers. It produces
high-quality goods. It sells these goods all over the world. All this results
in high profits for the international business.
d) To spread business
risks: International business spreads its business risk.
This is because it does business all over the world. So, a loss in one country
can be balanced by a profit in another country. The surplus goods in one
country can be exported to another country. The surplus resources can also be
transferred to other countries. All this helps to minimize the business risks.
e) Improve organization's efficiency: International business has very
high organization efficiency. This is because, without efficiency, they will not
be able to face organizational competition in the international market. So, they use all
the modern management techniques to improve their efficiency. They hire the
most qualified and experienced employees and managers. These people are trained
regularly. They are highly motivated with very high salaries and other benefits
such as international transfers, promotions, etc. All this results in high
organizational competition efficiency, i.e. low costs and high returns.
f) Get benefits from
Government: International business brings a lot of
foreign exchange for the country. Therefore, it gets many benefits, facilities, and concessions from the government. It gets many financial and tax benefits
from the government.
g) Expand and
diversify: International business can expand and diversify its
activities. This is because it earns very high profits. It also gets financial
help from the government.
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