What is a disadvantage of high capital costs for international businesses?

High capital costs for international businesses can pose a significant disadvantage by leading to restricted market entry. When a company seeks to expand its operations into a new country or region, it often requires substantial investment in infrastructure, technology, and local labor to establish itself. These high upfront costs create a barrier that can prevent smaller or financially constrained companies from entering the market.

As a result, only those businesses that can afford these high capital expenditures will be able to compete, thereby limiting overall market accessibility. This situation may reduce the diversity of options available to consumers and can restrict the competitive landscape, leading to market monopolies or oligopolies. The financial burden of high capital costs can also lead established firms to hesitate in exploring new international markets, further solidifying the barriers to entry and limiting opportunities for growth and innovation in those markets.