Contents
Meaning of International Business
International business is the process of implying business across the boundary of the country at a global level. It focuses on the resources of the globe and objectives of the organization on the global business.
International business refers to the global trade of goods/services outside the boundaries of a country. International business conducts business transactions all over the world, it is also known as Global Business. It includes transaction between the parties in different global location.
If you are making a transaction with the International e-commerce websites i.e, AliExpress, Amazon, E-bay than you are making an International transaction. The trade allows a country to specialize in producing and exporting the most efficient products that can be produced in that country. International business consists of the movement to other countries of goods, products, technology, experience of management and resources.
Advantages of International Business
Increased Revenues
The revenues of the companies which are trading internationally are much more than the companies which are trading in the domestic country. The customers of the MNC’s are more because they have customers all over the world and their reach to customers is higher than the domestic companies. This leads to higher selling of goods in the global market and it leads to increased revenues of the company.
Reaching new customers
International business is all about reaching new customers in the market of different countries. The domestic companies are restricted to their home customers and MNC’s are having a large customer base all over the world. MNC’s reach customers at a global level because they expand their business in different countries. Products of MNC’s are reached to the customers globally.
Accessing new talent
The success of a company depends on the employees and management who are working with the company. This plays an important role in decision making and actions of the company. Expanding to the international level could give you access to talented, valuable employees and business partners who helps you in taking the enterprise to new heights.
Optimum utilization of available resources
International business reduces the wastage of resources as it works in the different countries and uses the resources of all the countries, they are working in. This leads to the optimum utilization of resources. Every country which is producing the goods are producing it at maximum advantage.
Benefits to consumers
In the international market, consumers can choose between domestic goods and international goods. Consumers can have a good quality of products at a low price compared to that of the quality and price of domestic products. Consumers have a large variety of goods to choose from according to their taste and preference.
Product flexibility
If there is a product whose demand is less in the domestic market then it can be sold in the international market if there is demand for it in the foreign markets. The companies have to find countries in which the demand for their product is higher and they can also sell it on the higher prices if there is high demand. It can also offer a wide range of products in the global market.
Brand image
If the company deals in the international market and target the customers of the different countries globally then the brand name is popularized among the country and it enhances your brand image in the foreign market. Image of the brand is enhanced by international growth and the rapid market boost leads to brand image development. It can also lead to expansion of property, copyrights, trademarks to new countries.
Disadvantages of International Business
Language Barriers
Language barriers are one of the major disadvantages of international business. Different countries have their distinct local languages and culture, which makes it quite difficult to communicate efficiently with peoples. These differences create barriers in developing better trade relations among nations.
Economic Dependence
International business leads to more dependence of under-developed countries on developed countries. They import large amounts of goods for their development from these developing nations. Too much reliance on other nations led to exploitation of the economy and industrial development of importing countries.
Mis-utilization of Natural Resources
Another major disadvantage of international business is that it may exhaust the natural resources of nations due to the excessive exports. Several nations make over-utilization of their resources for the sake of earning more profits which will have adverse effects on their economy in the long run.
Exploitation of Home Industry
International business leads to exploitation of home industries of an importing country. Developed nations even adopt dumping policy and sell their products at prices below the cost of production. This excessive foreign competition and unrestricted imports create a threat for the survival of domestic industries.
Servicing Customers
International business finds it difficult in providing after-sale services to its customers. Differences in cultures and languages create main problems in communicating to people for solving their issues. Companies are required to communicate as per different time zones, distinct languages, and should set up 24×7 customer service centers.
Rivalry Among Nations
International business may also lead to tension among nations due to intense competition of exporting more and more products. This can hamper international peace and can often lead to war among nations.