What are the benefits and drawbacks of global commerce?
If we get practical, knowing the advantages and disadvantages of international trade is "easy", in the end it is just another market strategy. Best Trading Course elevate our company to a larger showcase? That may be one way of looking at it, but we must not forget that higher exposure also carries higher risk and higher costs.
This is where the key to success in internationalization lies, knowing how to anticipate the advantages and disadvantages of international trade.
Advantages of international trade
Improve our competitiveness
Betting on international trade enlarges the limits of our market. One of the possibilities coupled with this circumstance is the fact that we can count on providers and suppliers that offer more competitive prices than those found in our local market.
Job generator
If we focus on the foreign companies with which we will have to collaborate to carry out our internationalization strategy, we can think that our collaboration will cause an increase in the volume of work for these companies and, therefore, a theoretical increase in employment. that they offer
Attraction of new investors
If we have previously mentioned that international trade means having a greater showcase, we must also understand that this great showcase can attract new investors. Especially if, by making use of new international agreements, we improve our competitiveness and increase the value of our product.
Higher efficiency, higher profits
If we manage to execute the three previous points in a profitable way, it seems inevitable that we will improve the competitiveness of our company and, therefore, profits will increase.
Disadvantages of international trade
Costs derived from licenses and other regulations
Crossing borders also means changing laws and regulations on our products. The fact that we can find a cheaper supplier on the other side of the world does not depend only on the cost that it proposes (added to the added transport) being less than the cost that a local supplier offers us. We must also take into account what the local legislation says and what extra cost it can lead to our logistics chain.
Knowing how to anticipate these costs to determine where the good business is and where the mistake can make the difference between our internationalization strategy being successful or the opposite.
Language can be a trap
Thinking globally also means thinking that there are many other languages in the world to communicate with. It is true that English in the business world opens many doors today, but there are times when not mastering the local language can end up becoming a costly barrier.
This does not mean that you must be a polyglot to obtain benefits from international trade, but it does mean that you must take it into account and hire the services of a professional to help you dodge the bullet.
patience is key
You cannot bet on an international trading strategy expecting to make a profit in a short period of time. Finding partners, investors, suppliers, and, ultimately, adapting our logistics chain to the new circumstances will take time. Knowing this is not only necessary so that you arm yourself with patience, but so that you know how to calculate and anticipate that window of time that will be necessary until you get to obtain benefits and know how to cover yourself against it in the best way.
In the same way, there are circumstances that we cannot control, such as the scarcity of natural resources in a territory or an unexpected price change in them. These unpredictable and uncontrollable changes must be managed if necessary and will lead to an increase in the window of time necessary to achieve profitability.
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