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International business and ease of doing business

International business and ease of doing business ------------------------------------------------------------------------------------------------------------------------------------------ Why do companies expand their business overseas? Some of the reasons for doing so include the following: (1) to diversify the business beyond the domestic market to reduce risk since diversification is one of the most commonly accepted ways of risk reduction; (2) to take advantage of expertise that a company may have in technology or management; (3) to respond to the needs of a growing market for the company’s products; (4) to overcome the problem that arises from tariff barriers; and (5) to reduce costs. Companies often conduct rigorous capital budgeting exercises to see whether Net Present Value (NPV) is positive and Internal Rate of Return (IRR) is greater than required Rate of Return (RRR). All of this is fine at the firm level. But an important concept that is gaining more attention with the increasing international competition is the concept of ‘Ease of Doing Business’. In fact, for some years, the World Bank has been publishing an ’Ease of Doing Business’ ranking wherein each country can see its rank and compare itself vis-à-vis others. The corporate method of looking forward to potentially establishing business in other countries may draw upon this ranking before taking their decision. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Advances in Management Research Emerald Publishing

International business and ease of doing business

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0972-7981
DOI
10.1108/JAMR-05-2016-0039
Publisher site
See Article on Publisher Site

Abstract

------------------------------------------------------------------------------------------------------------------------------------------ Why do companies expand their business overseas? Some of the reasons for doing so include the following: (1) to diversify the business beyond the domestic market to reduce risk since diversification is one of the most commonly accepted ways of risk reduction; (2) to take advantage of expertise that a company may have in technology or management; (3) to respond to the needs of a growing market for the company’s products; (4) to overcome the problem that arises from tariff barriers; and (5) to reduce costs. Companies often conduct rigorous capital budgeting exercises to see whether Net Present Value (NPV) is positive and Internal Rate of Return (IRR) is greater than required Rate of Return (RRR). All of this is fine at the firm level. But an important concept that is gaining more attention with the increasing international competition is the concept of ‘Ease of Doing Business’. In fact, for some years, the World Bank has been publishing an ’Ease of Doing Business’ ranking wherein each country can see its rank and compare itself vis-à-vis others. The corporate method of looking forward to potentially establishing business in other countries may draw upon this ranking before taking their decision.

Journal

Journal of Advances in Management ResearchEmerald Publishing

Published: Aug 1, 2016

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