Principles Of Management Essay Example | Topics and Well Written Essays - 2000 words

Principles Of Management - Essay Example Before delving into the business environment it is imperative to determine why firms engage in international business. The first reason as stipulated by Andexer is to increase market size. Businesses undergo a lifecycle and as they mature, they need to venture into new business or offer different products so as to remain relevant and competitive. Besides, every firm needs to gain a high market share as a growth strategy and also to spread risks of fluctuating economic cycles or currency risks. A business can thus decide to enter international markets depending on the internal and external environment and its resource capabilities.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Another reason a firm may wish to enter new markets is a reactionary measure; that is, reacting to information gathered in the market. If a firm gets information of available opportunities in the foreign market that offers future possibilities, internal growth and prospective profitability, it can react by develop ing strategies to enter into that market. Furthermore, firms aim at increasing returns on their investments, and this can be achieved by entering into more profitable segments.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Globalisation and technology advancements have also led firms to venture into new markets. As business environment is very dynamic, organisations need to keep up with the changes so as to satisfy the changing needs of customers. (Cherunilam, 2010). Development of infrastructure and communication has played a great part in enabling firms to expand into other parts of the world. This is enhanced by trade liberalisation which opens borders for doing business and creates a good environment by reducing restrictions that hinder expansion (Lymbersky, 2008). For example, a firm can now produce products where labour is cheap and export to other countries or it can import materials and make finished products in domestic country. This can be done easier by establishing a subsi diary or licensing another firm to do so. After a firm determines the need to enter a new market, that is not the end, but the