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What Financial Risks Does a Company Face as It Starts to Trade Internationally? Research Paper Example

Pages: 2

Words: 580

Research Paper

Undoubtedly, international trading is of focus for most entrepreneurs nowadays, as globalization is rapidly escalating. However, the issue of risk taking should be of as much interest as possible. Even if it is, most of the time, the expectable step to take in the life of a business, it must only be made carefully, accounting for each and every significant variable which would affect, in any way, the profits of the business.

First and foremost, the country in which the business aims to trade further should be thoroughly researched in terms of financial possibilities, market demand, competitors and levels of receptivity of the traded products. Since the sales strategies which work in one country will not always apply to a very distinct society, these variables ought to be characterized contextually so as to adapt the strategy already constructed to the very new market.

Secondly, the business plan should be constructed efficiently, taking into account not only the sales strategy, but also the possible risks the business might have to face. Among the most probable risks to appear we count not only financial instability of the country, but also those regarding transportation. The financial instability of the country, since it will interfere highly with the profit of the business, should be tackled with attentively, probably most efficiently with the aid of economic professionals capable of making accurate predictions by means of which the risk plan to be able to bring the most appropriate measures, should problems appear. On the other hand, transportation is the issue which offers the management issues easier to tackle. Making the right decision when signing partnership contracts will help avoid most frequent problems, among which could be counted those of delays, failure to complete orders or even bad customer relations.

Therefore, the decision of starting international trade ought to be made only after all risks have been acknowledged for and, hence, the decision is still prone to be translated into a significant rise in profit. The risks should be identified through thorough analysis, written down and discussed in terms of solutions. How could they be avoided and, if applicable, how could they be managed after having resulted in actual problems? Even if most of the risks identified above are relative to facts which could only be predicted, it must be accepted that they might happen, even if the only thing that led to them are predictions. In other words, the management ought to pay great attention to the risks such a plan involve and, also, invest in gathering a team of specialists prone to discuss each risk possible in part and what resources it might necessitate in order to save the business in the chosen country. The final plan should account for both the profit the firm might get in good conditions and also for the one lost, should problems arise. This paper should consist of a number of lists in which profit is predicted in these two situations, the risk management plan is thoroughly described and, also, the calculations which highlight whether the international shift in the company is profitable or not.

In conclusion, international trade should be regarded both with excitement and care. A risk plan constructed well should help avoid most frequent problems from rising.

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