Acta academica karviniensia 2011, 11(2):129-135 | DOI: 10.25142/aak.2011.029

FIRM INCENTIVES TO ENGAGE IN INTERNATIONAL TRADE

Bohuslava Mihalčová¹, Luboš Socha², Pavol Bajusz²

¹ Bohuslava Mihalčová, doc. Ing. PhD., mimoriadna profesorka, Ekonomická univerzita v Bratislave, Podnikovohospodárska fakulta v Košiciach, Katedra manažmentu, Tajovského 13, 041 30 Košice, Slovensko, mihalcova.b@seznam.cz

² Ing. Luboš Socha, PhD., Ing. Pavol Bajusz, Technická univerzita v Košiciach, Letecká fakulta, Rampová 7, 040 12 Košice, Slovensko, lubos.socha@tuke.sk, pavol.bajusz@tuke.sk

As a rule, we identify four reasons for which companies seek to be engaged in international trade. Firstly, there are limits to the increase in the turnover within a national market due to limited number of customers, their purchasing power, competition and quality of production or services. Secondly, it is outsourcing, when a company capitalizes on the comparative advantages of national economies. Thirdly, we talk about diversification of sales when operators try to eliminate volatility in the turnover by better timing the sale of its products going beyond national markets. Finally, the competitive risk reduction by using comparative advantage to strengthen the economic position of the company that is able to go international to compensate for loss of profits at home, so that it can remain competitive both in domestic and foreign markets. Before real courses of actions are taken, the incentives are to be subjected to validation in terms of the validation criteriae as outlined in the final part of the article.

Keywords: Company, competitiveness, international business, diversification, capacity, break-even point, payback, internal rate of return

JEL classification: F13

Published: June 30, 2011  Show citation