1.
“Ultimately, the study of international business is no different from the study of domestic
business. Thus, there is no point in having a separate course on international business”.
Answer:
Domestic business is a business wherein business transactions are carried out within the
country’s borders, where as international business has business transaction that occur
between parties from more than one countries or cross border activities. The following are
the reasons why managing an international business is different managing a domestic
business:
First, countries are difference because of differences in culture, political systems, economic
systems, legal systems, and level of economic development. These differences vary from
country to country. Thus, managers of international businesses must not only be sensitive to
these differences, but they must also develop appropriate policies and strategies to cope with
it.
Second, the issues at the international business level are more complex than those at the
domestic level. Compared to running a domestic business, an international business needs to
consider where to put its production to minimize costs and maximize its wealth; how to
coordinate and control its production activities; which foreign markets to enter and which one
to avoid; and the appropriate mode for entering that country.
Third, international business transactions involve converting money into different currencies.
It requires that money be converted into the firm’s home currency into a foreign currency and
vice-versa. As currency exchange rate fluctuates, international businesses should have a
policies for dealing with exchange rate movements.
And fourth, international businesses must find ways to work within the limitations and
constraints imposed by the various governments. Managing an international business deals
with understanding of the rules governing the international trading and investment system.
Managers must find ways to work within the limits imposed by specific governmental
interventions and develop strategies and policies for dealing such.
Before engaging in international business, one must be well-informed of the foreign conditions
it is about to face. The basics of this decision - a better understanding of the international
business, can be achieved with the help of an international business course, thus, it is
important to have a separate course for this matter.
