What are some of the pros and cons of international sales?
International sales promote international growth of business enterprises that surpasses domestic growth. This effectively benefits business through sustained international to ensure success. Moreover, it spreads business risks and thus effectively protects business from unforeseen global disasters and unrests in markets. Researchers have revealed that it is important because domestic markets can shrink due to economic melt and then affects success of a business enterprise (Reuvid and Sherlock, 2011). Consequently, businesses that thrive abroad through international sales are able to improve their competitiveness by integrating international range and quality of products. Lastly, international sales ensure that enterprises spread foreign exchange risks and this may ensure expansion of business since it will not be impeded by local currency fluctuations and inflation.
Despite business spreading risks abroad, fluctuations of foreign exchange in global markets may affects sales as it may be difficult to forecast revenue accordingly. International fluctuations of foreign exchange affect values of assets and liabilities, as a result a business may be uncompetitive resulting to reduced sales and revenue. Likewise, international sales are often affected by political risks as different countries have different political regimes and changes can pose risks and challenges to businesses. International sales is also affected by cultural risks that can be damaging to business, this can come in form of reduced consumption of a product due to cultural beliefs and values.
How can companies protect themselves from the potential risks of international sales?
Companies need to plan ahead in order to gain over competition by managing international payments to help protect them against foreign exchange risks, this will ensure that a company has a competitive advantage. Moreover, business enterprises must be familiar with international foreign exchange rates that can dramatically affect sales and revenues. Companies must also seek professional advice and support on how to trade in international markets; this will protect the company against unprecedented risks.
Reuvid, J., & Sherlock, J. (2011). International trade: An essential guide to the principles and
practice of export. London, UK: Kogan Page.