OPPapers.com

International Business Prospective

1. Introduction to Global Business
International business consists of business transactions between parties from more than one country.
Examples include buying materials in one country and shipping them to another for processing or assembly,
shipping finished products from one country to another for retail sale, building a plant in a foreign country to
capitalize on lower labor costs, or borrowing money from a bank in one country to finance operations in
another. The parties involved in such transactions may include private individuals, individual companies,
groups of companies, and/or governmental agencies.
How does international business differ from domestic business? Simply put, domestic business involves
transactions occurring within the boundaries of a single country, while international business transactions
cross national boundaries. International business can differ from domestic business for a number of other
reasons, including the following:
• The countries involved may use different currencies, forcing at least one party to convert its
currency into another.
• The legal systems of the countries may differ, forcing one or more parties to adjust their
practices to comply with local law. Occasionally, the mandates of the legal systems may be
incompatible, creating major headaches for international managers.
• The cultures of the countries may differ, forcing each party to adjust its behavior to meet the
expectations of the other.
• The availability of resources differs by country. One country may be rich in natural resources
but poor in skilled labor, while another may enjoy a productive, well-trained workforce but lack
natural resources. Thus, the way products are produced and the types of products that are
produced vary among countries.
In most cases the basic skills and knowledge needed to be successful are conceptually similar whether
one is conducting business domestically or internationally. For example, the need for marketing...