Many firms have become major participants in

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Many firms have become major participants in international marketing and invest on global scale. International specialisation and cross-sourcing have made production much more efficient. By transferring knowledge around the globe, an international firm can build and strengthen its competitive position. Firms that heavily depend on long production runs can expand their activities far beyond their domestic markets and benefit from reaching many more customers. Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries. Firms which do not participate in the global market have to recognise that in today’s trade environment isolation has become impossible as most firms are affected directly or indirectly by economic and political developments that occur in the international marketplace. Those firms that refuse to participate are relegated to reacting to the global marketplace and therefore are unprepared for harsh competition from abroad. In a rapidly changing market environment, the way to obtain and retain leadership, economically, politically, or morally is through a continuous and alert adaptation to the changing world environment. Some industries have recognised this need for international adjustments. Other industries in some countries have been caught unaware and have been unable to adjust. The result is the extinction of firms or entire industries. Chapter 2 Why is international trade important to a nation?

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