Question

Please answer the following questions in a well written paragraph for each in your own words. (please use general knowledge and dont copy and paste something from a website)

1. The textbook points out that not all firms should go global. In view of the vast opportunities, why should some firms not pursue international business?

2. The text points out that from a resource-based view, you and your firm need to develop overwhelming capabilities to offset the liability of foreignness. However, howdoes a small firm do that?

Answer 1

1. In spite of business opportunities, some firms may not want to go global. There can be multiple reasons for the same. Firstly, international business is subject various risks such as exchange rate fluctuations, economic downturns, etc. Some firms may not want to take an increased risk by going global. Secondly, international business would require a firm to decentralize decision-making and control. The management of a firm may not be interested in losing control or decentralizing decision-making. Thirdly, international business brings a higher amount of challenges in terms of cultural barriers, demographic differences, political issues, legal issues, etc. The management of a firm may not be interested in facing these challenges. Fourthly, a firm might deal with niche products which might not have significant demand in foreign markets.