International Business Vs Domestic Business

1. International Business Vs Domestic Business

2. When a firm conducts its business under the laws of the country or state in which it was corporated or established. It is called Domestic Business. Domestic Business? For example: Maruti Suzuki Ltd. manufactures cars in India and also sales them in India

3. Manufacturing and trade beyond the boundaries of one’s own country is known as international business. It involves the movement of resources across countries International Business? Selling cars by Maruti Lmt in foreign market will be termed as International Business.

4. International Business vs. Domestic Business Conducting and managing international business operations is more complex than undertaking domestic business. Because of variations in:- Political Environment Economic Environment Social Environment Cultural Environment

6. (i) Nationality of Buyers and Sellers Domestic Business International Business The key participants including sellers, buyers, employees and shareholders in Domestic Business are from the same country In case of international Business, buyers-sellers, employees and shareholders come from different countries. This makes the things difficult for them

7. (ii) Mobility of factors of Production Domestic Business International Business Necessary factors for production can be moved freely within the same country. Thus, mobility of factors is high in case of domestic business. Due to various restrictions for the movement of the factors across nations, mobility of factors is less in case of International Business.

8. (iv) Customer Heterogeneity across Markets Domestic Business International Business Since buyers in international markets hail from different countries, they differ in their socio-cultural background. you will face differences in their tastes, fashions, languages, beliefs and customs, attitudes and product preferences while doing IB. While conducting domestic business, you will face people from same culture, religion, product preference and nationality. You can sale your single product across the areas in the country. Although there can be change in these factors but it will be very less compare to business among nations. People in India prefer left hand drive car while in USA, cars are of right hand drive.

9. (iv) Customer Heterogeneity across Markets The differences in business systems and practices are considerably much more among countries than within a country. All such differences make it necessary for firms interested in entering into international markets to adapt their production, finance, human resource and marketing plans as per the conditions prevailing in the international markets.

10. (v) Political system and risks Domestic Business While conducting domestic business, a business person will face the familiar political environment including political party system, political ideology, political risks etc. He/ she can easily understand it and predict the impact of the environment on the business. International Business Political environment differs from one country to another. One needs to make special efforts to understand the differing environments and their business implications. Since political environment changes, one needs to monitor the changes on an ongoing basis in the concerned countries

11. (vi) Currency used in business transactions Domestic Business International Business In case of domestic business, you will just deal with one currency. So no problem of exchange rate or other things like that. This makes the business operation hassle free compare to international businss. International business involves the use of different currencies. Since the exchange rate, i.e., the price of one currency expressed in relation to that of another country’s currency, keeps on fluctuating, it adds to the problems of international business firms in fixing prices of their products and hedging against foreign exchange risks.