Economic Risk in International Expansion

Economic Risk in International Expansion

Introduction

International expansion in business, in addition to the introduction or increase in the level of exports of goods and services means investing beyond our borders, buying companies, acquiring distribution channels and bring in venture capital to other regions . It aims at Identifying and implements different ways of competing businesses. This globalization not only strengthens the companies involved but also benefits the national economies of the companies that are expanding.

There is no "one" best way to access a market. The best mode depends on the competitive circumstances, legal environment, and degree of urgency, among others. It has been found that very successful international companies are able to access various markets a variety of ways. Expanding internationally means seeking business opportunities outside their own country and aim to be bigger and at the same time be better, achieve greater market share and competitive advantage. International expansion can be considered from the perspective of the importance of the national economy and from the strengthening of the business itself. If businesses limit itself only in the home country, they could actually compete to extract savings and wealth of a country the size of theirs. However, when companies cross borders of their own country, enter currency cash flows and capital savings of individuals, governments and businesses around the world, it results in extending the possibilities of wealth creation and larger horizon promotes the growth of national economy. A country grows as money flows and decreases as it departs.

International expansion in its overt look may seem appealing and they thrive for growth and profitability motivates businesses to extend their scope from their own shell and penetrate into the international market. Risk has been referred to the uncertainty that might occur anytime. The probability of any events if arises would either have positive or negative effect on the project. When a person plans any project, there are possibilities of unforeseen risk. There is no investment in the world which is totally risk-free. All investments, be those economically managed or financially, contain risks. Most of the investments contain very high and considerable risks. The goal of the investor is to balance his or her expected returns with the magnitude of risk that they are assuming. In other words, any sane investor expects a rate of return which is at least commensurate with the level of risk that they are assuming. This shows the risk-averse nature of all or most of the investors.

Scope of the Study

There is no investment in the world which is totally risk-free. All investments, be those economically managed or financially, contain risks. Most of the investments contain very high and considerable risks. The paper aims to discuss and analyze various economic risks that are involved in international expansion. The evaluation would be supported by analyzing the expansion of international business to India and the various risk confronted by them. While evaluating various economic risks faced by those businesses, the paper would also evaluate the economic environment ...