business includes any type of business activity that crosses national borders.
Though a number of definitions in the business literature can be found but no
simple or universally accepted definition exists for the term international business.
At one end of the definitional spectrum, international business is defined as
organization that buys and/or sells goods and services across two or more
national boundaries, even if management is located in a single country. At the
other end of the spectrum, international business is equated only with those big
enterprises, which have operating units outside their own country.
In the middle
are institutional arrangements that provide for some managerial direction of
economic activity taking place abroad but stop short of controlling ownership of
the business carrying on the activity, for example joint ventures with locally owned
business or with foreign governments. In its traditional form of international
trade and finance as well as its newest form of multinational business
operations, international business has become massive in scale and has come to
exercise a major influence over political, economic and social from many types
of comparative business studies and from knowledge of many aspects of foreign
business operations. In fact, sometimes the foreign operations and the
comparative business are used as synonymous for international business. Foreign
business refers to domestic operations within a foreign country.
business focuses on similarities and differences among countries and business
systems for focuses on similarities and differences among countries and
business operations and comparative business as fields of enquiry do not have
as their major point of interest the special problems that arise when business
activities cross national boundaries. For example, the vital question of
potential conflicts between the nation-state and the multinational firm, which
receives major attention is international business, is not like to be centered
or even peripheral in foreign operations and comparative business.
market may enjoy certain preferential relationships with other markets. That
is, everything influences everything else. Inasmuch as the number of options a
firm faces is multiplied as it moves into international market, decision-making
becomes increasingly complex the deeper the firm becomes involved
internationally. One is dealing with multiple currencies, legal,
economic, political, and cultural systems. Geographic and demographic factors
differ widely. In fact, as one moves geographically, virtually everything
becomes a variable: there are few fixed factors.
international business strategy different from the domestic are the differences
in the marketing environment. The important special problems in international marketing
are given below:
1. POLITICAL AND LEGAL DIFFERENCES
and legal environment of foreign markets is different from that ofthe domestic.
The complexity generally increases as the number of countries inwhich a company
does business increases. It should also be noted that thepolitical and legal
environment is not the same in all provinces of many homemarkets. For example,
the political and legal environment is not exactly thesame in all the states of
2. CULTURAL DIFFERENCES
differences, is one of the most difficult problems in international marketing.
Many domestic markets, however, are also not free from cultural diversity.
3. ECONOMIC DIFFERENCES
environment may vary from country to country.
4. DIFFERENCES IN THE CURRENCY UNIT
unit varies from nation to nation. This may sometimes cause problems of
currency convertibility, besides the problems of exchange rate fluctuations.
The monetary system and regulations may also vary.
5. DIFFERENCES IN THE LANGUAGE
international marketer often encounters problems arising out of the differences
in the language. Even when the same language is used in different countries,
the same words of terms may have different meanings. The language problem,
however, is not something peculiar to the international marketing. For example:
the multiplicity of languages in India.
6. DIFFERENCES IN THE MARKETING
availability and nature of the marketing facilities available in different countries
may vary widely. For example, an advertising medium very effective in one
market may not be available or may be underdeveloped in another market.
7. TRADE RESTRICTIONS
A trade restriction, particularly import controls,
is a very important problem, which an international marketer faces.
HIGH COSTS OF DISTANCE
When the markets are far removed by distance, the
transport cost becomes high and the time required for affecting the delivery
tends to become longer. Distance tends to increase certain other costs also.
DIFFERENCES IN TRADE PRACTICES
Trade practices and customs may differ between two
of International Business Survival
Because most of the countries are not as fortunate
as the United States in terms of market size, resources, and opportunities,
they must trade with others to survive; Hong Kong, has historically underscored
this point well, for without food and water from china proper, the British
colony would not have survived along. The countries of Europe have had similar
experience, since most
European nations are relatively small in size.
Without foreign markets, European firms would not have sufficient economies of
scale to allow them to be competitive with US firms. Nestle mentions in one of
its advertisements that its own country, Switzerland, lacks natural resources,
forcing it to depend on trade and adopt the geocentric perspective.
International competition may not be matter of choice when survival is at
stake. However, only firms with previously substantial market share and
international experience could expand successfully.