INTERNATIONAL

BUSINESS
What is International Business?
 International business refers to the exchange of goods and services beyond
national boundaries.
 Definitions
 1) IB field is concerned with the issues facing international
 companies and governments in dealing with all types of crossborder
 transactions.
 2) IB involves all business transactions that involve two or more
 countries.
 3) IB consists of transactions that are devised and carried out
 across borders to satisfy the objectives of individuals and
 organizations.
 4) IB consists of those activities private and public enterprises
 that involve the movement across national boundaries of goods
 and services, resources, knowledge or skills and information.
International business-Example of
IKEA

IKEA is the producer of household furnitures and fixtures

It purchases wood in Norway
It than produces furniture parts and assemblies in
sweden,which may have been designed in Denmark.
After Shipping to US it is put on display in the stores.
IKEA has 465 stores located across
63 markets

IKEA revenues stand at an astounding 42 billion euros as on 2022

Entities in International Business
 Individuals
 NGO’S
 Government
 United Nations
 WTO
 IMF
 But the main Entity in IB is MNE
OECD defines an MNE as
“an enterprise that engages in FDI and owns or controls
value adding activities in more than one country”.
Why International Business is different?
 Operate in different countries with different
cultures, political systems, economic systems, and are at
different levels of economic development
 Interact with different governments
 conflict between nation-state and MNC
 Work within the limits of international trade
and investment systems
 Complexity of managing intl. businesses
 Deal with foreign exchange changes
Reasons for International Business –
Benefits for the Nation and the Firm
To the nations:
Through international business nations gain by
way of :
• Earning foreign exchange,
• more efficient use of domestic resources, greater
prospects of growth,
• and creation of employment opportunities.
Benefits to the Nation Contd..
International business obviously improve the political
relations among the nations which gives rise to Cross-
national cooperation and agreements.
Nations co-operate more on transactional issues.
Benefits to the Firms
 To the firms: The advantages to the firms carrying
business globally include
 prospects for higher profits,
 Greater utilization of production capacities,
 way out to intense competition in domestic market
 Improved business vision.
Contd>>
 Profits in domestic trade are always lesser when
compared to the profits of the firms dealing
transactions globally.
Market Fluctuations: Firms conducting trade
internationally can withstand these situations and
huge losses as their operations are wide spread.
Though they face losses in one area they may get
profits in other areas, this provides for stabilizing
during seasonal market fluctuations.
Contd>>
Sharing of Technology: International business
provides for sharing of the latest technology that is
innovated in various firms across the globe which in
consequence will improve the mode and quality of
their production.