The advantages of competing in the international market come as the result of the widened market. In this course, the advantages will be explored by looking at the operation of an organization, Inter-American Development bank (IDB). Inter- American Development bank was established in 1959 with a major aim of supporting the Latin America and Caribbean economy. Presently it has its headquarters based in Washington, D.C. United States. The official languages used by IDB include French, Portuguese, English and Spanish. This international bank is owned by a total of 48 sovereign states, all of which pay a subscription fee, and has about 2000 staff members. It gives more priority for education initiatives, poverty reduction, climate change and water and sanitation.
The IDP has many advantages as compared to other bank organizations that just work locally. Establishment in many countries ensures that there is diversification of risk. If one of the subsidiaries for example, fails or run in to a loss the others will most likely compensate for that.
They have many customers compared to similar organizations that have not diversified to find new markets. This is not only due to the fact that customers are most likely to trust them but also that they are accessible to many. IDB sale bonds to institutional investors, and offer interests at commercial rates.
IDP enjoys cost advantages, since they have increased sales capacity; it attains economies of scales that reduce the investment cost (Tallman, 2007). The bank has diversified to not only lend to member states but also private sector companies. It also has many sponsors and therefore maintaining and implementing various strategies is more cost effective.
As much as merits for international organizations are many and appear attractive some international organizations have experienced lots of challenges in foreign markets. The United Nations organization for example faced a lot of rivalry in the Islamic countries mainly due to cultural and religious differences.
International organizations have many advantages but may at times face stagnation and losses in the foreign countries (Tallman, 2007). Many considerations should therefore be taken into place while strategizing in setting up international organizations.
Reference
Tallman, S. B. (2007). A new generation in international strategic management. Cheltenham, UK: Edward Elgar.
