INTRODUCTION TO INTERNATIONAL BUSINESS
International business - is all commercial transactions private and governmental between
two or more countries.
Private companies undertake such transactions for profit;
governments may or may not do the same in their transactions.
The international business environment is more complex and diverse than the domestic business
environment.
Because of different cultural, political, economic, and legal systems, and so on, countries are
different.
The issues at the international business level are more complex than those at the domestic level.
International business transactions involve converting money into different currencies.
A company’s relative competitiveness will vary because of the differences in the local and foreign
competitors that are present.
International business consists of transactions that are devised and carried out across national borders to
satisfy the objectives of individuals and companies.
Companies engage in international business in order to:
Minimize competitive risk
Acquire resources
Expand sales
Diversify sources of sales and supplies
The four types of risks in International Business
Cross – cultural risk
Country risk
Currency risk
Commercial risk
Modes of Entry into International Business
1. Exporting and Importing
Exporting and importing is a very common mode to enter into international business. Selling goods and
services to a company in a foreign country is referred to as Exporting. Purchasing goods from a foreign
company is known as Importing.
2. Contract Manufacturing
According to Contract Manufacturing, every well-known company in a nation accepts responsibility for
promoting the goods and services created by a business in another nation.
Contract manufacturing is a type of international business, in which a firm enters into a contract with
another firm in a foreign country to manufacture certain components or goods as per its specifications.
3. Licensing
