It is exciting and diverse. It is changing quickly. It relies on the weather, uses an incredible

Figure 6. The process of picking carrots in agriculture
*Source: Photo taken by an agricultural worker

slow, or no, sales growth. A related advantage of serving a larger international market is to achieve scale economies because of larger production volumes.

Name or brand recognition is another benefit a company works toward in globalization efforts. Global recognition of corporate logos and brands increases both the efficiency and effectiveness of a company’s advertising efforts. Brands are very expensive to develop, and if a firm can spread those development costs across a broader market, profits can increase. As a result, many companies competitively vie for sponsorship of world-televised sporting events.
Agribusinesses may be able to reduce their overall risk exposure by broadening the number of markets from which they purchase inputs and sell products because they are not dependent on a single, local market. Organizations with operations in several countries may stand to be less affected by slow periods in their domestic market when actively engaged in business abroad. Sourcing inputs internationally may also significantly lower costs of production. Such cost advantages allow firms to lower prices, giving them an important advantage.
Global firms may also have easier access to credit and gain valuable experience from operating in other markets. Firms serving international markets can move technology around the world, locating new markets for the results of their research and development in the process. For example, firms in the hybrid corn seed business regularly rely on genes from seed obtained from such places as Argentina, Italy, and northeast Iowa to develop a superior hybrid that performs well across the same latitudes worldwide. In other cases, firms may identify a new product opportunity in an international market, and be able to bring this idea home to the domestic market.
Political, social, and economic changes over the last decade alone have dramatically altered the way business is done in the international marketplace as well as the number of entities ready and willing to conduct international business. That growth and excitement has been building significantly over the course of the last five to six decades.
The WTO’s efforts stretch beyond its parent organization’s focus of reducing tariffs on manufactured goods. Tariffs tend to distort markets because market signals (supply and demand) are not communicated as efficiently or effectively. The reduction of tariffs (taxes on imported or exported goods) allows products to trade more freely. It is generally recognized by most economists that free trade benefits society because costs and benefits are more evenly distributed. The WTO works to eliminate nontariff barriers as well. It can be used to mediate trade disputes, or to challenge environmental, health, and other regulations that may serve legitimate social goals, but which may be regarded as impediments to international trade.
A reduction in global trade barriers has led to an increase in trade over the past several decades. While the WTO has numerous objectives, one of the primary ones is the reduction of tariffs. The WTO has been successful in cutting worldwide tariffs to 5 percent down from 40 percent at the end of World War II. In addition, it has made trade more transparent, as it has negotiated with countries to convert non-tariff trade barriers into tariffs. Such changes clearly support the importance of the international market- place for food and agribusiness firm managers. While some criticize and others praise the WTO, one fact is clear: growth in international trade and investment is developing at a faster pace than before and a lot of that growth can be attributed to the existence of the WTO.
The path to successfully doing business in international agribusiness markets certainly has its challenges. Some of the more dominant issues that firms face entering these markets are discussed in this section. These challenges include: cultural differences, exchange rate fluctuations, accounting system differences, uncertainty of the political and economic climate, property rights issues, regulations, sanitary and phytosanitary (SPS) rules, trade specifications, and the challenges of management in an international environment.