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Nature, Scope, Need and Problems For International Business

International business involves trade and investment across national borders. It has grown due to factors like falling trade barriers, cheaper transportation and communication costs, and technology expansion. There are both needs and problems associated with international business. The needs include achieving higher profits by expanding production beyond the domestic market due to limited home market size, severe competition, availability of resources, and political conditions. However, problems include risks from political instability, high costs of foreign investment, exchange rate instability, trade barriers like tariffs and quotas, and corruption.

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294 views2 pages

Nature, Scope, Need and Problems For International Business

International business involves trade and investment across national borders. It has grown due to factors like falling trade barriers, cheaper transportation and communication costs, and technology expansion. There are both needs and problems associated with international business. The needs include achieving higher profits by expanding production beyond the domestic market due to limited home market size, severe competition, availability of resources, and political conditions. However, problems include risks from political instability, high costs of foreign investment, exchange rate instability, trade barriers like tariffs and quotas, and corruption.

Uploaded by

Globalkaraokeshop
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Nature,scope, need and problems for international business

Definition: International Business is the process of focusing on the resources of the globe and objectives of the organisations on global business opportunities and threats. International business defined as global trade of goods/services or investment. More comprehensive view does not focus on the firm but on the exchange process Free Trade occurs when a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country.The Benefits of Trade allow a country to specialize in the manufacture and export of products that can be produced most efficiently in that country.The Pattern of International Trade displays patterns that are are easy to understand (Saudi Arabia/oil or Mexico/labor intensive goods). Others are not so easy to understand (Japan and cars).

Nature of International Business

1. Accurate Information 2. Information not only accurate but should be timely 3. The size of the international business should be large 4. Market segmentation based on geographic segmentation 5. International markets have more potential than domestic markets Scope of International Business 1. International Marketing 2. International Finance and Investments 3. Global HR 4. Foreign Exchange Need for International Business 1. To achieve higher rate of profits 2. Expanding the production capacity beyond the demand of the domestic country 3. Severe competition in the home country 4. Limited home market 5. Political conditions 6. Availability of technology and managerial competence 7. Cost of manpower, transportation 8. Nearness to raw material 9. Liberalisation, Privatisation and Globalisation (LPG) 10. To increase market share 11. Increase in cross border business is due to falling trade barriers (WTO), decreasing costs in telecommunications and transportation; and freer capital markets Reasons for Recent International Business Growth

1. Expansion of technology 2. Business is becoming more global because Transportation is quicker Communications enable control from afar Transportation and communications costs are more conducive for international operations 3. Liberalization of cross-border movements 4. Lower Governmental barriers to the movement of goods, services, and resources enable Companies to take better advantage of international opportunities Problems in International Business 1. Political factors 2. High foreign investments and high cost 3. Exchange instability 4. Entry requirements 5. Tariffs, quota etc. 6. Corruption and bureaucracy 7. Technological policy

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