What is International Business

What is International Business

Any business transaction between parties from more than one country is part of international business. Examples of such business transactions includes buying raw materials or inputs in one country and shipping them to another for processing or assembly, shipping finished products from one country another country for retail sale, building a plant in a foreign country to capitalize on lower labor costs there, or borrowing money from a bank in one country to finance operations in another. The parties involved in such transactions may include private individuals, individual companies, groups of companies, and other governments agencies.

How does International Business differ form domestic business?

Simply put, domestic business involves transactions occurring within the boundaries of a single country, while international business transactions cross national boundaries. More substantively, international business can differ from domestic business for a number of reasons, including the followings:

A] The countries involved may different currencies, forcing at least one party to convert its currency to another.

B] The legal systems of the country may differ, forcing one or more parties to adjust their behavior to comply with local law. Occasionally, the mandates of the legal systems may be incompatible, creating major headaches for international mangers.For example,U.S. law promotes equal employment opportunities for women, while Saudi Arabian law discourages the employments of women when they will have to interact with adult males to whom they are not related.

C] The cultures of the countries may differ, forcing each party to adjust its behavior  to meet the exceptions of the other. For example,U.S. business people prefer to start meetings on time and to get down to specifics quickly, where as Latin American business people are less concerned about promptness and more concerned with learning more about the people with whom they are doing business.

D] The availability of resources differs by country. One country may be rich in national resources but poor in skilled labor, while another may enjoy a productive, well-trained workforce but lack natural resources. Thus the way products are produced and the types of products that are produced vary among countries.



In the most cases the basic skills and knowledge needed to be successful are conceptually similar  whether one is doing business domestically or internationally. For example, the need for marketing managers to analyze the wants and desire of target audiences is the same regardless of whether the managers are engaged in international business or purely domestic business. But although international and domestic business are conceptually similar, there is little doubt that the complexity of skills and knowledge needed for success is far greater for international business.International business people must be knowledgeable about cultural, legal, political and social differences among countries. They must choose the countries in which to sell their goods and from which to buy inputs. International businesses also must coordinate the activities of their foreign subsidiaries, while dealing with the taxing and regulatory authorities of booth their home countries and all the countries in which they do business.

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