I B VS Domestic

INTERNATIONAL
BUSINESS
Vs.
DOMESTIC
BUSINESS
Presented By:-
Prashant Pandia
Domestic Business
 Business, whether Global or Domestic, involves buying n selling.
 Once a commodities cross a country’s border, they become the
subject of different laws.
 Difference between IB and Domestic business are in the area of
currency, interest rates, inflation rates, taxation system, Gov.
policies, language, and cultural and economic barriers.
Globalization is a process of interaction and integration
among the people, companies, and governments of different
nations, a process driven by international trade and investment
and aided by information technology. This process has effects
on the environment, on culture, on political systems, on
economic development.
International Business (IB) is all about commercial

transactions-private and governmental-between two or more
countries. These transactions include sales, investments, and
transportation.
It is extension of Domestic Business
Why to study IB?

Continuously increasing portion of international
trade and investments
Wider impact of global events and competition
Why Companies Engage in IB
To expand sales: A country’s market size always have a limit and
reduction of AFC (average fixed cost) require increased production volume
To acquire resources: Natural resources and locations, products,
services, components, technologies, information from another country can
not be usable without IB
To minimize risk: Taking the advantage of business cycle situations-
recessions to expansions-in different countries
Reasons for recent international growth
Expansion of technology
Liberalization of cross-border movements
Development of institutions that support
and facilitate
international trade
Consumer pressures
Increase in global competition
General Influences Operations
Physical and Social Objectives

Factors •Sales Expansion
•Political policies and legal •Resource acquisition
practices
•Risk minimization
•Cultural factors
Strategy
•Economic factors
•Geographical Influences Means
Modes Functions Overlaying

Alternatives
Competitive Environments •Importing and Exporting •Marketing
Choice of
•Major advantages in price, •Tourism and •Global
countries
transportation manufacturing
marketing, innovation, or
and supply-chain Organization
other factors •Licensing and management and control
•Number and comparative Franchising mechanisms
•Accounting
capabilities of competitors •Turnkey operations
•Finance
•Competitive differences by •Management contracts
•Human resources
country •Direct and portfolio
investment
Terms to Describe International Companies
 Multinational Enterprise (MNE) and Multinational
Corporation (MNC) are used synonymously to express their
international involvement, all the internationally involved
companies are not organized as corporations. Thus MNE is more
preferred term.
 Another interchangeable term Transnational Company (TNC),
mostly used by UN, can be explained as, “an organization in
which capabilities and contributions are may differ by country
but are developed and integrated into its worldwide operations”
 Companies international operations can be globally
integrated or multidomestic/ locally responsive.
 International operations through joint venture, licensing
agreements, management contracts, minority ownership in
each other’s company, long term contractual agreements are
been followed by MNEs as collaborative arrangements, in
addition to wholly owned subsidiaries.
Political and Societal Factors
 Political policies and legal practices: Decisions related to
IB are taken by politicians. Domestic and international laws
are shaping up the do’s and don’ts for businesses.
 Cultural factors: Culture explains people’s social and
mental development, behavior and interpersonal activities.
 Economic forces: Economics explains the need for
exchanging goods & services, economic opportunity and
capital flow, changes in currency value, cost of production
etc.
 Geographical influences: Geographical attributes affect
on communication and distribution channels. Probability of
natural disasters and reserves of minerals have international
considerations for trade and investment.
Internal Vs
The Usual Pattern of Internationalization B
external
handling of
A
foreign
Active search
High operations
for
opportunities
Medium
Passive
response to
Low
proposals
Domestic
business
Mode of
operations
Degree of
similarity
E C
Number of foreign
countries to operate D
/kU;okn

I B VS Domestic

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INTERNATIONAL

International Business (IB) is all about commercial

Why to study IB?

Physical and Social Objectives

Modes Functions Overlaying

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