Features of International Business

Meaning of International Business

Business which is conducted internationally in more than one country is termed as International business. International business involves trade of goods & services between two or more countries. It is also termed as Global business. International business is a trade which is conducted at the global level & involves cross border transactions of goods. These businesses are very large in size as they are done at a global level. Their scales of operation are vast due to their presence in many countries.

Countries which are geographically separated and have large distances between them are able to connect with each other due to the expanding of business operations internationally. Firms by conducting business internationally are able to raise their profit. They grab various opportunities available in different countries and sell their products at high prices. International businesses provide employment to a large number of peoples and also enhances the development prospects of the country. It is served as an important source for earning foreign exchange for the country.

All payments in these businesses are done in foreign currencies of different countries. These businesses help in improving the standard of living of people in different countries by supplying them with high quality goods. International business is conducted in different ways: Imports and exports, franchising, licensing, foreign direct investment, Outsourcing and offshoring etc. Features of International Business can be well understood from points below:

Features of International Business

Features of International Business
Features of International Business

Separates Producers from Buyers

In international business, producers and buyers are at distant places. This business involves the production of products in one country and is sold in another country. Buyers and producers are not in close contact with each other like in case of Domestic business. They belong to different nations which make it difficult to contact with each other.

Immobility of Factors

There is a large degree of immobility of factors in international business. Factors like labour and capital cannot move freely like in case of inland trade. There are certain laws and regulations like immigration laws, qualification, citizenship etc. which impose several restrictions on the movement of these factors. Government of different countries have different fiscal policies and therefore they accordingly prohibit the flow of capital in their countries. 

Heterogeneous Markets

International markets are homogeneous in nature and differ from each other. These markets lack homogeneity due to difference in culture, tradition, climate, habits, preferences, weigh and measures etc. These markets are different from those which are in a single country. Behaviour of buyers in international business differs from country to country due to difference in the socio-economic environment of different nations.

Large Operations

International businesses are conducted at a very large scale. They perform their operations in different countries globally. Their business activities are very large in size ranging from production, marketing and selling of their products. These businesses along with the demands of local markets where they are present also serve the demands of different countries globally. That’s why they produce a large amount of goods and services to cater to the large demands.

Foreign Currency Payments

International Business involves different currencies of different countries as all payments are done in foreign currency. These businesses serve as an important source of earning foreign exchange for the country. Foreign currencies of many countries are involved for transactions in these businesses. This helps in maintaining adequate foreign exchange reserve for country.

International Rules and Regulations

International businesses are bound to follow several international rules and regulations of different countries where they operate. They face large restrictions while carrying out there activities and are not allowed to inflow and outflow goods, technology and several resources in different countries. International businesses are also restricted by government of many countries to not enter into their countries. They face several foreign exchange barriers, trade barriers and trade blocks which are harmful for international business.

Large Middlemen

There are large numbers of persons involved in International business for their proper functioning in different countries. These businesses are very large in size and their scale of operations is not limited to one country but performs in several countries globally. This requires a large no. of middlemen’s for performing different activities. These all person renders their services properly for the efficiency of business. Their services help the business in easy expansion & growth.

Multiplicity of Documents

International business requires large no. of documents from importing and exporting goods among different countries. These documents are like commercial invoice, shipping bill, Certificate of origin, inspection and insurance certificate, mate receipt etc. There is a series of documentation followed right from the point when an order for goods is received by exporter till the time when they are finally delivered at their destination.