Many a people are involved in business but some of them don’t know the actual meaning of business. Because they are supposed to run their father’s or uncle’s business with due care, it does not matter whether they are familiar with this term or not. Their knowledge may be ample for domestic business but in case of an international business they must be acquainted of some differences. When business transactions are carried out among parties within a country’s borders is called domestic business. And when the business transactions occur between parties from more than one countries or cross border activities is termed as International business. The business transactions comprise of buying materials in one country and transport them off to another country for dealing out, shipping finished products from one country to another for retail sales, installing a new plant in a foreign country to take advantage of lower labour costs, or borrowing money from a bank in one country for the funding of operations in another. These business transactions are not associated with only one type of party it may involve transactions between private business owners, governmental agencies, individual companies, and groups of companies.
International business can differ from domestic business for a number of other reasons including the following:
The first difference involves the dissimilarity in currencies. Countries involved in business may use different currencies; it may force at least one party to switch its currency into another. In other words, one of the parties would have to follow the prevailing market currency exchange rate to make its business transactions viable.
Next you may face the difference in legal systems of countries; it may compel one or more parties to adjust their practices to comply with local law. Occasionally, the consent of the legal systems may act as a barrier and be irreconcilable, creating complications for international managers.
Difference in cultures is also considered as dissimilarity in domestic and international business. The cultures of the countries may vary according to the use of trading product and it may force each party to adjust its behavior to meet the expectation of the others. For example the difference in the use of pork and wine face different attitudes in western and Muslim cultures.
Last is the difference in availability of resources by country. One country may be rich in natural resources but poor in skilled labour, while another may enjoy a productive, well-trained work force but lack natural resources. Thus, the way products are produce and the types of products that are produced vary among countries. Currently, this is the major difference noticed in the business between developed and third world countries.
Before going to start an International business, people must be well-informed about cultures, legal, political and social differences among countries. They must choose the countries in which to sell their goods and from which to buy inputs with assurance and hoping that a good business is waiting ahead for them.
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