Introduction to International Business

• International business is all business activities, including the creation and transfer of resources, goods, services, know-how, skills, and information, which transcend national boundaries.
• Resources may be raw materials, energy, technological know-how, patents, capital, and organizational skills.
• Goods include manufactured parts, sub-assemblies, and assemblies.
• Services may include accounting, financial, legal, consulting, import and export, health care, and transportation.
• Know-how may include product and process technological innovations, copyrights, trademarks, and brands.
• Skills include organizational and managerial skills.
• Information includes databases and information networks.
• International Business is a business whose activities involves crossing national boarders.
• The definition includes not only International trade and foreign manufacturing, but also the growing service industry in such areas as transportation, tourism, banking, advertising, construction, retailing, wholesaling and mass communication.
• Domestic business transaction occurs within the geographical limits of the country.
• A domestic business is a business entity whose commercial activities are performed within a nation, also known as internal business or home trade.
• The producer and customers of the firm both reside in the same country in domestic trade.
• The trade agreement is based on the practices, laws and customs that are followed in the country.

Domestic vs International Business

• Domestic business transactions are conducted within the geographical boundaries of a single country
• International Business engages in economic transactions with one or more nations in the world.
• Domestic businesses operate within the home country.
• International businesses may occur in one or more countries outside its home country.
• Domestic have Relatively Low quality standards
• International have very high quality standards
• Domestic businesses only use single currency
• International businesses use multiple currencies
• Domestic businesses have less capital investment
• International businesses require Huge Capital Investment
• Domestic businesses have few tariffs for trading
• International businesses have many Embargos for trading
• Domestic businesses have Homogeneous Nature of Customers
• International businesses have Heterogeneous Nature of Customers
• Business research is Easy for domestic businesses
• Business research is Complicated for International businesses
• FMobility is Free for a domestic business
• FMobility is Restricted for International businesses
• Skills and knowledge required are basically the same for domestic and International businesses
• Risks and uncertainties make IBT more difficult to operate and manage.
• Need to understand different systems - culture, legal, political, social
• Home/foreign country considerations in terms of production

International Trade vs International Business

• International Trade has a Narrower Scope
• International Business has a Broader Scope
• International Trade focuses on exchange of goods and services
• International Business includes all business activities across borders
• International Trade Activities are narrower, import and export.
• International Business Activities Are broader,Import and Export, FDI, licensing, franchising, joint ventures, global sourcing
• International Trade Focuses Primarily on transactions
• International Business Focus Encompasses operations, strategy, and investment

Advantages of International Business

• Country is able to earn valuable foreign currency by exporting its goods to other countries.
• International business leads to specialization in the production of goods, this results in quality goods that have maximum advantage
• Sale of surplus production of one country to another results in increase in the incomes and savings of the people of the former country raising the standard of living .
• Consumers benefit from variety of better qualitiy good at reasonable prices
• Developing technological know-how enables underdeveloped and developing countries to establish new industries with the assistance of foreign aid this helps in the development of industry .
• International business removes rivalry between different countries and promotes international peace and harmony.
• International business fosters exchange of culture and ideas between countries having greater diversities, so a better way of life, dress, food, etc. can be adopted from other countries.
• International business boosts employment opportunities in an export-oriented market which raises the standard of living of in the countries dealing international business

Disadvantages of International Business

• International business affects the economy of another country. Large-scale exports discourage the industrial development of the importing country and the economy of the importing country suffers.
• Developing countries are unable to compete with developed countries which hampers the growth and development of developing countries unless the international business is controlled.
• The importing country is reduced to a colony sometimes due to economic and political dependence and industrial backwardness.
• International business leads to exploitation of developing countries by the developed countries. The prosperous and dominant countries regulate the economy of poor nations.
• Cultural values and heritages are not identical in all countries and many aspects may not be suitable for the atmosphere, culture, tradition, etc, creating indecency found in the name of cultural exchange.
• Traders prefer to sell goods to other countries instead of their own country in order to earn more profit which results in the shortage of goods within the home country.

An overview of international business. Includes the the movement of resources, goods, services, knowledge, skills, and information across national borders. It encompasses international trade, foreign manufacturing, and expanding service industries.