Differences between international business and domestic business
* Domestic business involves transactions occurring within the boundaries of a single country, international business transactions cross national boundaries.
* the countries involved may use different currencies, forcing at least one party to convert its currency into another
* The legal systems of the countries may differ, forcing one or more parties to adjust their practices to comply with local laws.
* The cultures of the countries may differ, forcing each party to adjust their practices to comply with local laws
* The cultures of the countries may differ, forcing each party to adjust its behaviour to meet the expectations of the other
* The availability of resources differs by country. One country may be rich in natural resources but poor in skilled labour, while another may enjoy a productive, well-trained workforce but lack natural resources.
International business activities
Exporting and importing
* Exporting –selling of products made in one’s own county for use or resale in other countries
* Importing-buying of products made in other countries for use or resale in one’s own country
* Merchandise exports/imports (visible trade)-trade in goods, tangible product
* Service exports/imports (invisible trade)- trade in services, intangible products.
International investments
* International investments-capital supplied by residents of one country to residents of another
1. Foreign direct investments (FDI)-investments made for the purpose of actively controlling property assets or companies located in host countries.
2. portfolio investments-purchases of foreign financial assets for a purpose other than control (such as to raise the rate of return)
Other forms
* Licensing-a contractual arrangement in which a firm in one country licenses the use of its intellectual property to a firm in a second country in return for...