Importance of International Business

IMPORTANCE OF INTERNATIONAL
BUSINESS
Abstract
International business is all business transactions-private and
governmental-that involve two or more countries. Why should
one be interested in studying international business? The
simplest answer is that international business comprises a large
and growing portion of the world's total business. Today, almost
all companies, large or small, are affected by global events and
competition because most sell output to and/or secure
suppliers from foreign countries and/or compete against
products
and
services
that
come
from
abroad.
More companies that engage in some form of international
business are involved in exporting and importing than in any
other type of business transaction. Many of the international
business experts argue that exporting is a logical process with
a natural structure, which can be viewed primarily as a method
of understanding the target country's environment, using the
appropriate marketing mix, developing a marketing plan based
upon the use of the mix, implementing a plan through a
strategy and finally, using a control method to ensure the
strategy is adhered to. This exporting process is reviewed and
evaluated regularly and modifications are made to the use of
the mix, to take account of market changes impacting upon
competitiveness. This view seems to suggest that much of the
international business theory related to enterprises, which are
internationally based and have global ambitions, does often
change depending on the special requirements of each country.
Another core issue is the company's growth and the importance

of networking and interaction. This view looks at the way in
which companies and organisations interact and consequently
network with each other to gain commercial advantage in world
markets. The network can be using similar subcontractors or
components, sharing research and development costs or

operating within the same governmental framework. Clearly,
when businesses formulate a trading block with no internal
barriers they are actually creating their own networks.
Collaborations in aerospace, vehicle manufactures and
engineering have all sponsored the development of a country's
or a group of countries' outlook based on their own internal
market network. This network and interaction approach to
internationalisation shows the substance of being able to
influence decisions when knowing how the global network
players
work
interact.
For example, a crucial market network is that of the Middle
East. Middle East countries are rich, diverse markets, with a
vibrant and varied cultural heritage. This means that although
there has been a harmonisation process during the past few
years, differences still exist. Rather than business being simpler
as a result, it should be recognised that because of regulations
and the need those countries have to restructure as they enter
the global market, performing any kind of business can be
highly complex. It should be remembered though that the
Middle-Eastern countries have a low-income average and like to
have their cultural differences recognised. Those firms that will
or have recognised these facts have a good chance of
developing a successful marketing strategy to meet their
needs. Fortunately some firms have realised these important
differences and reacted adequately when strategic decisions
had to be made regarding their penetration to this kind of
markets.
The points below highlight the importance of international business:1. Earn foreign exchange: International business exports its goods and
services all over the world. This helps to earn valuable foreign exchange.
This foreign exchange is used to pay for imports. Foreign exchange helps
to make the business more profitable and to strengthen the economy of its
country.
2. Optimum utilisation of resources: International business makes

optimum utilisation of resources. This is because it produces goods on a
very large scale for the international market. International business
utilises resources from all over the world. It uses the finance and
technology of rich countries and the raw materials and labour of the poor
countries.
3. Achieve its objectives: International business achieves its objectives
easily and quickly. The main objective of an international business is to
earn high profits. This objective is achieved easily. This it because it uses
the best technology. It has the best employees and managers. It produces
high-quality goods. It sells these goods all over the world. All this results
in high profits for the international business.
4. To spread business risks: International business spreads its business
risk. This is because it does business all over the world. So, a loss in one
country can be balanced by a profit in another country. The surplus goods
in one country can be exported to another country. The surplus resources
can also be transferred to other countries. All this helps to minimise the
business risks.
5. Improve organisation's efficiency: International business has very high
organisation efficiency. This is because without efficiency, they will not
be able to face the competition in the international market. So, they use
all the modern management techniques to improve their efficiency. They
hire the most qualified and experienced employees and managers. These
people are trained regularly. They are highly motivated with very high
salaries and other benefits such as international transfers, promotions, etc.
All this results in high organisational efficiency, i.e. low costs and high
returns.
6. Get benefits from Government: International business brings a lot of
foreign exchange for the country. Therefore, it gets many benefits,
facilities and concessions from the government. It gets many financial
and tax benefits from the government.
7. Expand and diversify: International business can expand and diversify
its activities. This is because it earns very high profits. It also gets
financial help from the government.
8. Increase competitive capacity: International business produces highquality goods at low cost. It spends a lot of money on advertising all over
the world. It uses superior technology, management techniques,
marketing techniques, etc. All this makes it more competitive. So, it can
fight competition from foreign companies.

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IMPORTANCE OF INTERNATIONAL

Another core issue is the company's growth and the importance

components, sharing research and development costs or

2. Optimum utilisation of resources: International business makes

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