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What are some factors that make financial decision making more complicated for firms that operate in foreign countries than for purely domestic firms?
Wiki User
∙ 12y ago
Foreign trade is more complex than domestic as in addition to the considerations and resources needed for the domestic market a business also has to take into consideration cultural, language, monetary and legislative variances.
Before considering entering into a foreign market a PEST or PESTLE report would normally be commissioned. PEST is an acronym for Political, Economic, Social and Technical and considers all aspects of the macro market i.e. the big picture.
In addition, a business would need to consider the market itself in terms of size, accessibility, competitors, potential etc.
If the market still looks attractive then a business would need to consider if it has sufficient resources to enter the target market. This is done by commissioning a micro analysis which is in essence an internal audit of a business's resources and capabilities. SWOT analysis is one of a number of tools used to do this.
Secondary research will provide many of the answers but in my experience it is always necessary to carry out some primary research i.e. field research to validate the secondary research and to ask qualitative questions unanswered by other market research sources.
Wiki User
∙ 13y ago
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