International Business Overview

Study Notes

International business is any commercial activity that crosses national borders.
It includes both private and government-related transactions.
International business is significant because it comprises a large and growing portion of the world's total business.

Political environment: International business is highly affected by political decisions and changes.
Economic policies: Alterations in economic policies impact international business significantly.
Technological advancements: Upgrades in technology influence the operation and development of international business.

Expand sales: Accessing a wider range of customers with higher purchasing power.
Acquire resources: Sourcing capital, technology, and information from foreign markets to reduce costs or gain access to unavailable resources.
Minimize risk: Diversifying operations across different countries to mitigate the impact of business cycles.

Multinational Company: Adapts products and services to each local market.
Global Company: Offers standardized products and services across multiple countries.
Transnational Company: Invests in foreign operations while maintaining a central corporate facility. Decision-making, research and development, and marketing are localized in each market.

Large-scale operations: Fulfill global demand by integrating operations across multiple countries.
Integration of economies: Companies leverage resources such as labor, materials, finance, and facilities from various countries, fostering mutual growth.

International restrictions: Governments impose various restrictions on foreign trade including foreign exchange controls, trade blocs, and trade barriers.
Political and Legal Differences: Navigating diverse legal frameworks across different countries.
Economic Differences: Adapting to varying economic conditions in different markets.
Differences in Currency Units: Dealing with currency conversions and exchange rate fluctuations.
Differences in Language: Communicating effectively in different linguistic environments.
Differences in Marketing Infrastructure: Adapting marketing strategies to diverse market conditions.
Trade Restrictions: Managing import controls and other trade barriers.
High Costs of Distance: Managing higher transportation costs and longer delivery times.
Differences in Trade Practices: Understanding cultural nuances and adapting to different business customs.