CHAPTER 1: OVERVIEW OFINTERNATIONAL BUSINESSCourse Learning Outcomes (CLO)CLO1:Discusstheexternalandinternalenvironment factors and forces that relatedto the operation of international business(C2, PLO1)
CHAPTER 1 :OVERVIEW OF INTERNATIONAL BUSINESS1.0 What is International Business (IB)IB is all business transactions that involve two or more countries.IB consists of business transactions between parties from more than onecountry.International Business comprises a large and growing portion of the world’stotal business.Any firm that engages in International trade or InvestmentA business that is primarily based in a single country but acquires somemeaningful share of its resources or revenues (or both) from othercountries
1.1.1 What is International BusinessInternational business refers to business activities that involvethe exchange many physical and intellectual assets includingproduct,resources, goods, services, knowledge, skills, orinformation across national boundaries.A specificentity, such as amultinational corporationorinternational business companythatengagesinbusinessamongmultiple countries.
1.1.2 MEANING OF DOMESTIC BUSINESSTrading that is aimed at a single market andreferred to as domestic trading.The firm faces only one set of competitive,economic, and market issue and essentially mustdeal with only one set of customers.
Difference between Domesticand international BusinessDifference between domestictradeand foreign trade are asfollows:➢DistanceThe distance involved in export of goods in external trade isgenerally greater than on the domestic trade.Language differencesThere are differences in the languages of the nations of theworld. The overseastradersshould be very careful in preparingthe publicity material in the languages of thetradingcountryCultural differenceA producer should have full knowledge about themarketof hisproducts. For exporting goods particularly a thorough research isundertaken.
Difference between domestic andinternational BusinessDocumentationsIn the home trade there are few documents involved in the exchangeof goods.PaymentsIn the internal trade, the goods are exchanged in thecurrencyunit ofthe country. In case of foreign trade currencies differ widelythroughout the world and those also vary in value.Transport and insurance costThe transport and insurance costs are less in case of domestic trade.For the exports, on the other hand the cost of transport is high andthe insurance is complicated.Technical differenceIn the national market the difference in the technical specification forgoods and their requirements is not wide.Tariff barriersIn the national trade, there are no custom duties, exchangerestrictions, fixed quotas or other tariff barriers.
1.2 International environments in internationalbusiness.