3. Conducting and managing international business
operations is more complex than undertaking
domestic business.
Differences in:
the nationality of parties involved,
relatively less mobility of factors of production,
customer heterogeneity across markets,
variations in business practices and political
systems,
varied business regulations and policies,
4. Use of different currencies are the key
aspects that differentiate international
businesses from domestic business.
Moreover, these are the factors that
make international business much
more complex and a difficult activity.
6. International Businesscan be
defined as business
transactions beyond national
boundaries of a country.
Simply, it is the business
carried out across the
national boundaries
between two or more
nations.
7. Scope of international business is quite
wide.
It includes not only exports, but also
trade in services, licensing and
franchising as well as foreign
investments.
Domestic business pertains to a limited
territory.
Though the firm has many business
establishments in different locations all
the trading activities are inside a single
boundary.
8. Firms conducting trade internationally can
withstand these situations and huge
losses as their operations are wide
spread.
Though they face losses in one area they
may get profits in other areas, this
provides for stabilizing during seasonal
market fluctuations.
Firms carrying business locally have to
face this situation which results in low
profits and in some cases losses too.
9.
10. Dimension Domestic businessoperations Internationalbusiness
operations
Environment The economic, political, legal,
socio-cultural, competitiveand
technology environments are
known, hence one can take
necessary precautions
The environment is not fully
known. Innumerable hidden
factorswhichmay emerge at
times to pose threats
Competition The maximum domestic
competitive forces operateand
one can understand their
movement
International competitive
forcesplay a vitalroleand itis
very difficult to understand
their motiveand movement
11. Currency Localcurrency is used for
transactions. Costing,
pricing, revenue and
marginsare computed in
single currency
Transactions are carried
out in variouscurrencies.
Fluctuations in cross
country movement and
associated risks are
common.
Business risks Comparatively one can
predict future risk and
shock and they will not
haveamajor impacton the
business houses
Very difficultto predict and
risks may cropup any time,
due to the political
situation, the society itself
or otherunknown factors
Research Itis reasonableand easy to
conduct businessresearch,
demand analysis and
customer survey. It is also
reliable for business
ventures
Very difficultandcostlyto
conduct. Reliability
depends on individual
countries and the output
has nouniformity
12. Humanresources Due to past laurels and
established systems,
corporate can succeed
even if the human
resources haveminimum
skills andknowledge
Multilingual, multi
strategic and multi-
cultural humanresources
are necessary and they
should be able to
withstand largerisks
Organizational visionand
objective
Narrowed downto work in
a single country with a
steady growthobjective.
Eachonewillunderstand
the vision and objective
very quickly
Broadened cover many
countries and geographic
and culturaldiversitymay
influence the vision and
objective
Productdevelopment Adapted to the local
environment, as per the
requirements of domestic
customer’s affordability,
beliefs,valuesandcultural
elements
Varies from countries to
countries subject to the
regulations of the host
country.This is especially
true for consumer and
medicinalitems.
13. Legalaspects Only local regulations are fully
applicable to conduct business.
There is minimum adherence to
international regulationsrelated
to IPR.
International regulations and
host countries regulations are
applicable.
Investment Depending on the size of the
business one can start with a
minimum investment.Involvement
of regulatory bodies is minimal.
Pricing A majority of companies use cost
plus margin pricing or competitive
pricing.
All overseasoperationsexcept
exports, call for huge
investments to set up and
expand the business in many
countries. Special regulatory
bodies are involved in the
process since foreigncurrency
is transacted.
Companies use marginal cost
pricing or competitive pricing
or transferpricingto succeed.
14. Distribution The business houses can
useits discretion to select
any channel to reach the
customer
The distribution channel is
governed by the government or
market practice.Cash and carry,
shopping malls and mail order
services arebecoming popularin
internationalbusiness.
Promotion Advertising, personalselling,
and other promotional
methods are not restricted
through strict legal frame
work if they are not socially
objectionable
Differentcountrieshavedifferent
restrictions, For example,
advertisement of liquor and
cigarettes are not permitted in
some countries and campaign
using female models are banned
inothers.
International players with
advancedtechnology areinvolved
Logistics Domestic players are
involvedinallactivities
15. Nationality ofthe
participants
Nationality of the
participants is limitedto
domestic countryonly.
Nationality of the
participants here isof
foreign origin.
Nationality ofthe
stakeholders
Itis of domesticmarket
only.
Here,itis of variedorigin.
Heterogeneity of the
customers
Degree is low indomestic
business.
Degree is higher in
internationalbusiness.
