The nature of international business.
Nature of international business lies in the following:
1. Proactive or Reactive: International expansion can be seen generally as either proactive or reactive. Proactive international ventures take advantage of perceived opportunities whereas, reactive ventures respond to actions that are taken by other parties or defend against perceived threats.
2. Differs from Domestic Business: International business is different from the purely domestic as it involves operating effectively within different national sovereignties; under widely disparate economics, with people living within different value systems and institutions; as part of an industrial revolution that is set in the contemporary world, often over greater geographical distance & in national markets which are varying greatly in population and area.
3. Surrounded with Political Risk : International managers are required to consider the political risk of operating in foreign environments, they have to factor changes in foreign exchange values into their decisions and they must be aware of how cultural and national forces affect their marketing efforts.
4. Involvement of Commercial Activity: International business involves commercial activities which cross national frontiers and concerns the international movements of the goods, capital, services, employees and technology; importing and exporting; cross borders transactions in intellectual property (patents, trademarks, know-how, copyright materials, etc.) through licensing and franchising, investments in physical and financial assets in foreign countries, etc.
5. Keen Competition : International business has to face keen competition in the world market. The competition lies in between unequal partners, i.e. developed and developing countries. In this keen competition, developed countries and their MNCs are in a favourable position as they produce superior quality goods and services at very low prices.
6. Benefits to Participating Countries: International business provides benefits to all participating countries. But the developed countries get the maximum benefits. The developing or poor countries also get benefits. They get foreign capital and technology. They get rapid industrial development, etc.
7. Dominated by Developed Countries and MNCs: International business is dominated by developed countries and their Multinational Corporations (MNCs). MNCs from U.S.A., Europe and Japan dominate foreign trade today because they have large financial and other resources. They also have the best technology and Research and Development (R & D).
8. International Restrictions: International business faces various restrictions on the inflow and outflow of capital, technology and goods. Many governments do not allow international businesses to enter their countries.
9. Sensitive Nature: The international business is very sensitive in nature and any changes in the economic policies, technology, political environment, etc., have a huge impact on it. Hence, international business must conduct marketing research so as to find out and study these changes.
10. Special Role of Science and Technology: International business gives a lot of importance to science and technology that, help the business to have large-scale production.
11. Large-Scale Operations: In international business, all of the operations are conducted on a very huge scale. Production and marketing activities are conducted on a large scale.
12. Integration of Economies: International business integrates the economies of various countries because it uses finance from one country, labour from another country and infrastructure from another country.
