Defining International Business

Why companies trade?

There are two basic types of trade between countries: 

• the first in which the receiving country itself cannot produce the goods or provide the services in question, or where they do not have enough. 

• the second, in which they have the capability of producing the goods or supplying the services, but still import them. 

The rationale for the first kind of trade is very clear. So long as the importing country can afford to buy the products or services they are able to acquire things which, otherwise they would have to do without. Examples of differing significance are the import of bananas into the UK, in response to consumer demand, or copper to China, an essential for Chinese manufacturing industry. 

The second kind of trade is of greater interest because it accounts for a majority of world trade today and the rationale is more complex. Example :The UK imports motor cars, coal, oil, TV sets, domestic appliances and white goods, IT equipment, clothing and many more products which it was well able to produce domestically until it either transferred production abroad or ceased production as local industries became noncompetitive. 

At first sight, it would seem a waste of resources to import goods from all over the world in which a country could perfectly well be self-sufficient. However, the reasons for importing this category of product generally fall into three classifications: 

• the imported goods may be cheaper than those produced domestically; 

• a greater variety of goods may be made available through imports; 

• the imported goods may offer advantages other than lower prices over domestic production – better quality or design, higher status (eg prestige labelling), technical features, etc.

And there comes the need for International business. Let's look at the definition:

International business is  defined as the process of  stretching out the business activities from inside a country to any  country with a purpose of marking a name internationally. It is also formed as the conduction  of business activities by any company across the nations. It can also be defined as the expansion of business purposes, used in different countries with an end of putting into effect the needs and wants  between nations customers.

Other definitions:

1) IB field is concerned with the issues facing international companies and governments in dealing with all types of cross border 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. 

Features of International business:

• Large scale operations
• Integration  of Economies of many countries
• Benefits to participating countries
• Sensitive in nature
• Special role in science and technology
• Keen competition
• International restrictions

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