What international business is

International business means business activities that cross national frontiers. It covers much more than trade in goods: it includes the movement of goods, services, capital, people, technology and intellectual property (such as patents and trademarks) between countries. International trade (exports, imports, and entrepot trade, where goods are imported in order to be re-exported) is only one part of it.

Why do nations trade at all? Because natural resources and productivity differ from country to country. Each country is better at producing some things than others, so it produces those and trades for the rest. This is called geographical specialisation.

India opened up its economy to the world in 1991, after a serious balance of payments crisis, when it had very little foreign exchange left to pay for its imports.

How international business differs from domestic business:

• Nationality: buyers, sellers and other stakeholders belong to different countries.
• Mobility of factors: labour and capital move much less freely between countries than within one.
• Customer heterogeneity: customers in different countries differ in tastes, habits, language and culture.
• Business practices differ from country to country.
• Political systems and risks: changes of government or policy abroad affect the business.
• Regulations and policies: each country has its own rules on trade, taxes and investment.
• Currencies: more than one currency is used, and exchange rates keep changing.

So a firm going abroad must adapt its product, price, promotion and distribution to suit each market. International business is more complex and more risky than domestic business.