Any business transaction between parties from more than one country is a part of international business. The buying and selling of goods, product or services across the national boundaries of a country are known as international business.
International business has grown most recent years at a faster pace than global production. So what has happened in recent decades to bring about the increased growth in international business? The answer lies in the following factors:
(1) The rapid increase in and expansion of technology: tremendous advancements in communication and transportation technology enabled people in one part of the world to know about and products and service developed in another part of the world. Business is becoming more global because:
- Transportation is quicker,
- Communication enables control from far,
- Transportation and communication costs are more conductive from the intentional operation.
(2) Utilization of cross-Border Movements: Government today impose fewer restrictions on cross-border movement that they did a decade or too ago. They have lowered barriers for the following reasons:
- Their citizens have expressed the desire for easier access with a greater verity of goods and service at a lower price.
- The reason that their domestic producers will become more efficient as a result of foreign competition.
- They hope to include other countries to reduce their barriers to inter movements.
(3) Development of support service institutions: Companies and government have developed services that case international business. Banks have developed effective means that allow companies to receive payment for their foreign sales. Today most producers can be paid relatively easily for goods and services sold aboard because of bank credit agreement, clearing agreement for foreign exchange, insurance coverage for damages etc.
(4) Consumer pressure: Consumers want more new, better and differenced product. This development has spurred the companies to respond by spending on research and by searching worldwide using modem telecommunication technology.
(5) Global competition: The pressure of increased foreign competition and persuade a company to expand its business into the international market. Today companies can rapidly too many foreign sales opportunities.
More companies operate internationally because:
- New products quickly become known globally.
- Companies can produce in different countries.
- Domestic companies” competitors” and customers” have become international.