International Business conducts business transactions all over the world.

These transactions include the transfer of goods, services, technology,

managerial knowledge, and capital to other countries. International business
involves exports and imports. An international business has many options for
doing business, it includes,

1. Exporting goods and services.

2. Giving license to produce goods in the host country.

3. Starting a joint venture with a company.

4. Opening a branch for producing & distributing goods in the host country.

5. Providing managerial services to companies in the host country.

Significance/ 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 utilization of resources: International business makes optimum

utilization of resources. This is because it produces goods on a very large
scale for the international market.

International business utilizes resources from all over the world. It uses the
finance and technology of rich countries and the raw materials and labor of
the poor countries.

3. Achieve its objectives: International business achieves its objectives easily

and quickly. The main objective of an international business 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.

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 minimize the business
risks.

5. Improve organization’s efficiency: International business has very high

organization 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 organizational 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 high-

quality 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.

Nature and characteristics or features of international business are:-

1.Large scale operations: In international business, all the operations are

conducted on a very Huge scale. Production and marketing activities are
conducted on a large scale. It first sells its Goods in the local market. Then
the surplus goods are exported.

2. Integration of economies: International business integrates (combines)

the economies of many countries. This is because it uses finance from one
country, labor from another country, and infrastructure from another
country. It designs the product in one country, produces its parts in many
different countries and assembles the product in another country. It sells
the product in many countries, i.e. in the international market.

3. Dominated by developed countries and MNCs: International business is

dominated by developed countries and their multinational corporations
(MNCs). At present, MNCs from USA, Europe and Japan dominate (fully
control) foreign trade. This is because they have large financial and other
resources. They also have the best technology and research and
development (R & D). They have highly skilled employees and managers
because they give very high salaries and other benefits. Therefore, they
produce good quality goods and services at low prices. This helps them to
capture and dominate the world market.

4. Benefits to participating countries: International business gives benefits

to all participating countries. However, the developed (rich) countries get
the maximum benefits. The developing (poor) countries also get benefits.
They get foreign capital and technology. They get rapid industrial
development. They get more employment opportunities. All this results in
economic development of the developing countries. Therefore, developing
countries open up their economies through liberal economic policies.

5. Keen competition: International business has to face keen (too much)

competition in the world market. The competition is between unequal
partners i.e. developed and developing countries. In this keen
competition, developed countries and their MNCs are in a favourable
position because they produce superior quality goods and services at very
low prices. Developed countries also have many contacts in the world
market. So, developing countries find it very difficult to face competition
from developed countries.

6. Special role of science and technology: International business gives a

lot of importance to science and technology. Science and Technology (S &
T) help the business to have large-scale production. Developed countries
use high technologies. Therefore, they dominate global business.
International business helps them to transfer such top high-end
technologies to the Developing countries.

7. International restrictions: International business faces many restrictions

on the inflow and Outflow of capital, technology and goods. Many
governments do not allow international Businesses to enter their
countries. They have many trade blocks, tariff barriers, foreign exchange
Restrictions, etc. All this is harmful to international business.
8. Sensitive nature: The international business is very sensitive in nature.
Any changes in theEconomic policies, technology, political environment,
etc. have a huge impact on it. Therefore, International business must
conduct marketing research to find out and study these changes. They
must adjust their business activities and adapt accordingly to survive
changes.

Scope of International Business

The term international business was not popular two decades earlier. The
term international Business has emerged from the term ‘international
marketing, which in turn emerged from The term ‘international trade’.

 International Trade to International Marketing: - The producers used to

export their products To the nearby countries and gradually extended the
exports to far-off countries. Gradually, the Companies extended the
operations beyond trade.

 International Marketing to International Business: - The multinational

companies which Were producing the products in their home countries
and marketing them in various foreign Countries. Thus, the scope of
international trade is expanded into international marketing and
International marketing is expanded into international business.

 Wide Scope:-The scope of international business is much broader

involving international Marketing, international investments, management
of foreign exchange, procuring international Finance from IMF, IBRD,
International Finance Corporation (IFC), International Development
Association (IDA) etc., management of international human resources,
management of cultural diversity, management of international
production and logistics, international strategic Management and the like.

 Inter-country Comparative Study: - International business studies the

business opportunities, Threats, consumer’s preferences and behavior,
cultures of the societies, employees, and business Environmental factors,
manufacturing locations, management styles, inputs and human resource
Management practices in various countries. International business seeks
to identify, classify and Interpret these milarities and dissimilarities
among the systems used to anticipate demand and Market products. This
system presents inter-country comparison and inter-continental
Comparison. Comparative analysis helps the management to evaluate the
markets, finances, Human resources, consumers etc. of various countries.
It also helps the management to evaluate The market potentials of
various countries.

Disadvantages of international marketing:

1. Different culture: It is not necessary that the company would find same
culture in both home Country and host country.
2. War: if in any case a war breaks in host country then the company will
be at loss
3. Infrastructure: infrastructure in the host country may not be that
developed which might Create barriers for the company.
4. Government rules: rules of the government n host country might not
be very supporting.
5. Marketing mix: Company might have to develop a totally different
marketing mix for its Product in host country than in home country
which will incur cost.