4. International Business
Buying and selling of goods and services
between two countries are called external
trade or foreign trade or
international business
It facilitates specialization and efficient
utilization of resources
5. International Business
Reasons for International Business
Some countries being in a better position
to produce better quality products or at lower
costs than what other nations can do
Oil
Extraction
7. Differences: Domestic Vs. Internatinal Business
Basis Domestic Business
International
Business
Nationality
Buyer and seller
belong to one nation
They are from
different countries
Suppliers,
Other
Stakeholders
employees,
middlemen,
shareholders etc. are
the citizens of same
nation
Various stakeholders
form different
countries
More heterogeneous
Customer
heterogeneity
Customers are more
homogeneous in
nature
in the matter of
language,
preferences,
customs etc.
8. Differences: Domestic Vs. Internatinal Business
Basis
Business system and
practices
Domestic
Business
Relatively same
system
International
Business
Different systems
and practices are
followed
Political system and Subject to the same Subject to different
risk country countries
Business regulations
and policies
Currency
Subject to the rules,
laws, taxation policies
of the same nation
Currency of the
domestic country
Subject to the rules
and policies
prevailing the
concerned nations
Currencies of more
than one countries
9. Scope of International Business
1 Merchandise exports and imports
Merchandise means tangible goods
ie, thosethat can be seen and touched
10. Scope of International Business
2 Service exports and imports
It means trade in intangibles, i.e., those that
cannot be seen ortouched
It is also known as invisible trade
Eg. Travel & Tourism, transportation, entertainment,
communication, educational service etc.
11. Scope of International Business
3 Licensing and franchising
Permitting a person/firm in a foreign country
to produce andsell goods under your
trademarks, patents or copyrights for a fee
Eg. Pepsi, Coca-Cola etc.
Franchising is similar to licensing with the difference
that it is connected with services
Eg.Mc Donald (fast food restaurants), KFC etc.
12. Scope of International Business
4 Foreign Investments
It means investment abroad in exchange for
financial return
It can be in FDI (Foreign Direct Investment)- directly
invested in properties, and FPI (Foreign Portfolio
Investment)- investing by way of acquiring shares or
granting loans
13. Benefits of International Business
1 Benefits to Nations
Earning of foreign exchange, more efficient
use of resources, improvinggrowth prospects
and employment potentials, increased
standard of living etc.
14. Benefits of International Business
2 Benefits to Firms
Higher profits, increased capacity utilization,
prospects for growth, way out to intense
competition in domestic market, improved
business vision etc.
15. Modes of Entry into International Business
1. Exporting and Importing
2. Contract Manufacturing
3. Licensing and Franchising
4. Joint Ventures
5. Wholly owned subsidiaries
