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Evaluate the pros and cons of having an international business that deals with goods?

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avde94 | Student, Undergraduate | (Level 1) Honors

Posted March 5, 2013 at 1:27 AM via web

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Evaluate the pros and cons of having an international business that deals with goods?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted March 5, 2013 at 1:37 AM (Answer #1)

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International businesses can deal in goods or in services.  Goods are tangible things.  They can be anything from airplanes to computer chips.  Having a business that deals in goods has advantages and disadvantages when compared to dealing in services.

The major disadvantage of dealing in goods is that they must be transported.  An insurance policy or a contract or architectural drawings do not need to be transported.  They can simply be sent electronically.  This means that there are no shipping costs for their products.  It also means that they do not have to worry about delays in shipping.  Firms that deal in goods have to worry about all of these things.  They also have to worry about things like products getting damaged in shipping.

The major advantage of dealing in goods is that there is a wider global demand for goods.  People in every country need computer chips or cell phones or iron ore and there is not that much worry about cultural differences making it hard to trade.  By contrast, it can be very difficult to build and sustain a business that deals in services.  Services might have a harder time crossing cultures while goods do not.

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