The conduct of international business has significant differences in comparison with doing business within the country. Things that national companies do not even have to think about acquire great importance for the successful operation of the international company. In this regard, it becomes obvious that there is the need for a thorough study of the specifics of the conduct and management of the international business, which is exactly what international management does.
International Business Definition
International business can be defined as the business interaction of firms with different forms of ownership or their units located in different countries. Furthermore, it has the main goal of making profit by obtaining benefits from the advantages of international business transactions.
As the phenomenon of international economic relations, an international business form of interaction between subjects of international economic activity is aimed at obtaining benefits from cross-border cooperation.
What Is International Business
As a process, international business is a set of business transactions related to the crossing of national borders and the movement of goods, services, capitals, workers, transfer of technology, and data.
The concept of international business follows the distinction between the concepts of foreign business and comparative business. Foreign business means for a national company a set of operations abroad in one or several countries. It is the part of the business of one company, while international business is a holistic set of international transactions of many companies.
The comparative business focuses on comparing business operations in different countries, their common features and relationships.
Typical Features of the Comparative Business
- International business has as its main goal. It is the extraction of profit.
- International business is based on the possibility of extracting benefits precisely from the advantages of cross-country business operations. This is a key point in understanding the essence of international business.
International business includes any economic transactions that are carried out by two or more countries. Such business relationships can arise both at the level of private and public organizations. In the case of the participation of private companies in international business, business transactions are usually conducted to making a profit. The activities of firms that have a state form of ownership are not always profit-oriented.
The Main Reasons for the Cooperation in International Business Times
- Access to new raw materials;
- access to new labor markets;
- striving for new markets.
Characteristic Features of International Business
- Profit is made using advantages of going beyond national markets;
- enterprises receive additional economic opportunities;
- the outstanding role of the cultural factor in the activities of international companies;
- a system of constantly updated and complex interacting professional knowledge of a fundamentally higher level than existing in any national business;
- the best national samples;
Stages of International Business Development
Commercial Era (1500-1850)
- search for personal benefits associated with the trade in colonial goods in Europe;
- formation of business-service of international business (investment, insurance, infrastructure);
- sovereignty and independence of business in its foreign operations;
- strict dependence of international business on relations between countries;
The Era of Expansion (1850 - 1914)
- reorientation of international business in the export of exotic goods to the extraction of raw materials and systematic plantation in the colonial regions; increased investment in the development of colonial production;
- strengthening the relationship between business and government;
- the emergence of an international division of labor;
The Era of Concessions (1914-1945)
- the growth of the national self-consciousness of the colonial peoples;
- aggravation of rivalry in the world markets of raw materials, semi-finished products, and finished products;
- internationalization of the use of human resources;
- identifying the advantages and limitations of state regulation of foreign economic activity.
The Era of National States (1945-1970)
- expansion of international business in connection with the formation and development of new states;
- the growth of international capital markets, international audit, and consulting;
- formation of multinational business;
- creation and attraction of a multinational service network (banks, universities, healthcare facilities, etc.) that prepared the transition to the era of globalization.
The Era of Globalization (Since the 70s of the XX Century)
- International economic relations covered almost all countries, which significantly influenced the development of both national economies and the world economy as a whole.
- Simplifying the process of information exchange and dissemination of international business news.