Introduction of International Business

Ashwani Kumar on 5/27/2020 8:00:16 AM

The world is becoming a global village where there are no boundaries to stop free trade and communication.
Keeping in mind the way we do business has changed in an extraordinary way.The competition in the global market is at its peak where all the companies wants to sell their products to everyone ,everywhere on the globe.International business is itself is a broad term which include not only movement of goods and services but various other aspects
International business consists of all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national boundaries.
Basically international business is a cross border transaction between individuals, businesses, or government entities. The transaction can be of anything that has value, examples include –

  • Physical Goods
  • Services such as banking, insurance, construction, etc.
  • Technology such as software, arms, and ammunition, satellite technology, etc.
  • Capital and
  • Knowledge



Simplest and most commonly used method, imports and exports can be seen as the foundation of international business. 
Imports are an inflow of goods into the markets of home country for consumption, in contrast, export means selling of goods to foreign countries. 
In short, imports means inflow whereas export means outflow of goods in any form.


Licencing is one of the easiest ways to expand a business internationally. 

When a company has a standardized product with ownership rights, it can use licensing to distribute and sell the products in the international market. Licenses come in many forms, some of which are patent, copyright, trademark, etc. Products such as books and movies are usually distributed internationally through licensing agreements.


A very effective method to expand a business nationally as well as internationally, franchising is similar to licensing. In this, a parent company gives the right to another company to conduct business using the parent company’s name/ brand and products. 
The parent company becomes the franchiser and the receiving company becomes the franchisee. Many of the biggest restaurant chains in the world have used the franchisee model to expand internationally. Some examples include – McDonald, Pizza Hut, Starbucks, Domino’s Pizza and many more.


Outsourcing means giving out contracts to international firms for certain business processes. 
For example, giving out accounting function to an international firm. This is usually effective when the cost of conducting these processes are comparatively much cheaper in some other country than in the home country. 
For example, many developed countries such as the USA, Australia, the UK, etc. outsource its functions to companies in India, China, etc. because it is cheaper.

Offshoring is similar to outsourcing in the sense that a function is moved away from the home country. However, it is different in the sense that the facility is physically moved to another country but the management stays with the company itself. For example, Apple Inc. is conducting its manufacturing function in China, however, it is completely controlled by Apple Inc


A joint venture is a contract between two parties, one is an international company while another company is local to where the business has to be conducted. Both parties contribute to the equity and management of the company. As a result, both share the profit as well. These parties can mutually decide the percentage of equity and profit sharing.

These types of ventures and partnerships come into existence when both the party has something to offer. For example, the local company may have the brand name and network within the country while the international company may have advanced technology. 

A classic example of a joint venture is Tata Jaguar collaboration in India. Sometimes there are government restrictions to international companies against holding 100% equity in certain areas such as defense. In such cases, international companies can take the benefit of the new market by a joint venture.


Multinational companies, as the name suggests, are companies that are conducting business in multiple countries. They actually set up the whole business in multiple countries. Some such examples are Amazon, Citigroup, Coca-Cola, etc.

These companies have independent operations in each country, and each country has its own set of offices, employees, etc. In fact, even the products and marketing campaigns are customized as per local needs. For example, Nestle introduced a Matcha flavor Kit Kat in Japan as the flavor is very popular in that country, however, they don’t offer the same flavor in India. This customization is one of the many benefits of being a multinational company.


Foreign direct investment is an investment made by an individual or a company located in one country to the business interest located in another foreign country. In this the investing company usually commits more than capital, they share management, technology, processes, etc, with the company that they have invested in. The foreign direct investments can take many forms such as a subsidiary company, associate company, joint venture, merger, etc.

These are the major types through which people, companies, and government conduct international business. However, means of business is just one minor speck of the international business environment.

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