Management > International Business Management > Introduction to International Business > Comparative Study of International Business and Domestic Business
Characteristics of International Business:
- It is one which is engaged in an economic transaction with several countries in the world.
- It is carried out across borders and national territories of a country (Inter-country)
- Many restrictions are imposed while doing business internationally or entering a foreign market e.g. Tariff and non-tariff barriers, exchange controls, local taxes, etc. International and host country regulations are applicable
- Huge capital investment is involved.
- The market culture widely varies among different nations and regions.
- Liking and disliking of the customers are heterogeneous
- The risk in international business is high.
- An international business deals in multiple currencies. Hence we have to consider the exchange rate of the currency.
- Multilingual, multi-strategic and multicultural human resource is necessary for smooth operations of an international business
- Global human resource practices are carried out in an international business
- Marketing and advertising strategies vary from country to country due to language barriers
- Price differentiation is carried out
- Quality standards are very high. Global standards are set
- It is very difficult and costly. Reliability of information depends upon the individual country.
- Advantage of location economies and cheap resources are available
- It is affected by factors like domestic, foreign and international environment.
- Each country may be at a different level of development.
- Movement of factors of production is restricted.
Characteristics of Domestic Business:
- A business is said to be domestic when its economic transactions are conducted within the geographical boundaries of the country.
- It is carried out within the national or geographic borders of the country (Intra-country)
- Tariffs and quotas are not present and very few local restrictions are imposed on domestic business. Only local regulations are applicable and are uniform throughout the country.
- Less capital investment is involved.
- There is less difference in the market culture of local areas and regions within a country. The market culture is relatively uniform.
- Liking and disliking of the customers are homogeneous
- The risk in domestic business is less.
- A domestic business deals in a single currency (the currency of the country).
- It can succeed in a human resource with minimum skill and knowledge.
- Employees are usually from the same country.
- Keeping the knowledge of domestic requirements, practices and culture, domestic marketing and advertising strategies are used.
- Generally, the same price is charged for similar products.
- Quality standards may be low.
- To conduct business research, demand analysis, and customer survey is easy.
- Cost advantage cannot be enjoyed.
- A domestic business is only affected by the variables in the domestic environment.
- The level of development may be the same throughout the domestic market.
- Factors of production can be moved freely.
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