OPPORTUNITIES FOR DOMESTIC FIRMS

Domestic firms may be subject to increased competition from multinational firms as a result of the lowering of trade barriers. On the other hand, many potential opportunities are created for the domestic firms through growth in domestic markets, improved availability to capital, entrepreneurial and managerial talent, cost reductions, new business opportunities, and an improved business environment.

wpe5E.gif (11807 bytes)Globalization may result in growth in the markets within the individual countries as the standards of living improve. These standards of living may improve as the result of several factors:
Jobs and wealth created by utilizing the nationís resources to improve the standard of living.
Jobs and wealth created by exporting natural resources.
Jobs created by exporting products of domestic companies
Jobs created by production operations of multinational companies.
Lower cost of products resulting from the availability of imports.
Lower tax levels leaving more money in the hands of the consumer.

Capital availability may improve reducing the cost of capital. International markets may provide capital. Multinational companies may invest capital in supplier firms and in joint ventures. As governments move toward market economic systems and permit or encourage local stock exchanges, domestic capital markets may evolve.

Availability to entrepreneurial and managerial talent may improve as a result of improved educational institutions, emigration, and absorption of skills and knowledge from multinational firms operating in the country.

Additional markets may become available through growth in domestic markets, export opportunities, opportunities to supply products to multinational firms, and opportunities to sell to the government as it improves the infrastructure.

Firms may be able to reduce costs due to productivity improvements that result through enhanced knowledge and through the use of newer technology. Material costs may reduce through the availability of imports. Governments may reduce corporate tax levels as they become enlightened to the burden that taxes place of economic growth.

There may be new business opportunities. Governments are typically privatizing industry that was previously government owned and operated. There may be new product opportunities for domestic use as the consumer standard of living improves. There may be opportunities to develop and export new products for international markets. Governments may relax restrictive regulations regarding entrepreneurial activity.

The business environment may improve. This can be the result of reduced government regulation. Infrastructure improvements, especially in telecommunications and transportation systems, may aid domestic firms. As the economy grows distribution systems may improve and become more efficient. And the legal system may improve, especially in the areas of contract law and protection of intellectual property.

Web site and publication by Howard Woodward Jr.
Copyright ©1997, 2000 by [hwoodward.com]. All rights reserved.
Revised: 29 Mar 2001 22:25:00 -0500 .