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International trade has a range of advantages and disadvantages.

Advantages of international trade include:

• Growth – expanding to new international markets allows businesses to grow more easily and quickly, either providing them with cheaper materials or access to more customers.
• Spreading risk – if the business has operations in a number of international locations, risk is spread. For example, if the UK side of the business experiences a fall in demand, the European element of the business may grow. Similarly, if a business is able to source materials from a range of locations, they are less likely to be affected due to weather related production issues.
• Increasing sales and profits – having access to cheaper materials or a larger amount of potential customers is likely to increase the chance of the business making more sales and profits.
• Spreading technical knowledge – often different countries have individuals with different technical knowledge, experiences and expertise. International trade allows businesses to benefit from this.

Disadvantages of international trade include:

• Language barriers – these can be a major issue, for example all packaging, advertising and branding may need to be accurately translated to other languages. If a business is buying or selling to another country, they may make errors if they are unable to communicate in the same language.
• Cultural barriers – it is very important that businesses have a good understanding of different cultures when undertaking international trade.
• Supply chain issues – as a business expands, its supply chain becomes longer and more complex. This provides more scope and opportunity for potential issues.
• Currency issues – most countries use different currencies, and the values of currencies around the world change constantly. This can make it very difficult for a business to accurately predict and monitor finances.
• Local taxes – each country has its own taxes and tax rates. Businesses operating in an international environment must pay each of these taxes, making finances more complex and expensive to manage.
• Local laws – each country has their own laws that businesses must abide by. These can affect the way in which businesses operate, how they deal with consumers and how they deal with employees.