Characteristics of International Business

Characteristics of International Business

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.

Characteristics of International Business –

(1) Large scale operations: In international business, all the operations are conducted on a very huge scale. Production and marketing activities are conducted on a large scale. It first sells its goods in the local market. Then the surplus goods are exported.

(2). Integration of economies: International business integrates (combines) the economies of many countries. This is because it uses finance from one country, labor from another country, and infrastructure from another country. It designs the product in one country, produces its parts in many different countries and assembles the product in another country. It sells the product in many countries, i.e. In the international market.

(3) Dominated by developed countries and MNCs: International business is dominated by developed countries and their multinational corporations (MNCs). At present, MNCs from USA, Europe, and Japan dominate (fully control) foreign trade. This is because they have large financial and other resources. They also have the best technology and research and development (R & D). They have highly skilled employees and managers because they give very high salaries and other benefits. Therefore, they produce good quality goods and services at Low prices. This helps them to capture mid dominate the world market.

(4) Benefits to participating countries: International business gives benefits to all Participating countries. However, the developed (rich) countries get the maximum benefits. The developing (poor) countries also get benefits. They get rapid industrial development. They get rapid industrial development. They get more employment opportunities. All this results in the economic development of the developing countries. Therefore, developing countries open up their economies through liberal economic Policies.

(5) Keen competition: International business has to face keen (too much) competition in the world market. The competition is between unequal partners i.e., developed and developing countries. In this keen competition, developed countries and their MNCs are in a favorable position because they produce superior quality goods and services, at very low prices. Developed countries also have many contacts in the world market. So, developing countries find it very difficult to face competition from developed countries.

(6) The special role of science and technology: International business gives a lot of importance to science and technology. Science and Technology (S & T) help the business to have large-scale production. Developed countries use high technologies. Therefore, they dominate global business. International business helps them to transfer such top high-end technologies to the developing countries.

(7) Sensitive nature: The international business is very sensitive in nature. Any changes in the economic policies, technology, political environment, etc. have a huge impact on it. Therefore, an international business must conduct marketing research to find out and study these changes. • They must adjust their business activities and adapt accordingly to survive changes.

(8) Multinationals were not there the domestic companies would pay less.

(9) Increased investment opportunities: with globalization companies can move the capital to whatever country offers the most attractive investment opportunity. This prevents capital from being trapped in domestic economies earning poor returns.

(10) Earn foreign exchange: Countries export their goods and services all over the world. , This helps to earn valuable foreign exchange. This foreign exchange is used to pay for imports. Foreign exchange helps to strengthen the economy of its country.

(11) Optimum utilization of resources: International trade makes optimum utilization of resources. This is because it produces goods on a very large scale for the international market. International trade utilizes resources from all over the world.