International Business Revision Notes Business Studies Class 11

International Business refers to business transactions which take place between two or more countries. 

International Business Vs International Trade

International Business is a wider term than International Trade.

Reason for International Business

• Countries engage in international business because of unequal distribution of factors of production in the countries due which countries can not produce all the goods effectively and efficiently.

Difference between Domestic Business and International Business:

Basis	Domestic Business	International Business
Nationality of buyers and sellers	Buyers and sellers are from the same country.	Buyers and sellers are from different countries.
Nationality of other stakeholders	Stakeholders are from the same country.	Stakeholders are from different countries.
Mobility of factors of production	The degree of mobility of factors of production is more.	The degree of mobility of factors of production is less.
Customer heterogeneity across markets	more homogeneous	lack homogeneity
Differences in business systems and practices	more homogeneous	Differ across the countries
Political system and risks	subject to political system and risks of a single country	different degrees of risks which often become a barrier to international business.
Business regulations and policies	subject to rules, laws and policies, taxation system, etc., of a single country	subject to rules, laws and policies, tariffs and quotas, etc. of multiple countries.
Currency used in business transactions	Currency of domestic countries is used.	Involve use of currencies of more than one country

Benefits of International Business

Benefits of International Business to Nations:

1. Earning of Foreign Exchange: International Business helps a country to earn foreign exchange which can be used for importing various goods. 
2. Efficient Use of Resources: It helps in optimum utilisation of resources because surplus production can be exported. 
3. Growth and Employment Opportunities: It helps a nation in improving its growth prospects and also create opportunities for employment.
4. Better Standard of Living:  It makes it possible for people to consume goods and services produced in other countries. This helps in increasing their standard of living. 

Benefits of International Business to Firms:

1. Higher Profits: International business can be more profitable especially when the firms are able to sell their products at higher prices in foreign countries.
2. Growth: International business helps the firm to enhance its growth prospects by entering into foreign markets. 
3. Increased Capacity Utilisation: Firms can utilise their surplus production capacity by getting engaged in international business. 
4. Facing Competition: When there is intense competition in the domestic market, then international business can help the firms to grow. 
5. Improved Business Vision: It helps in improving business vision as it makes firms more competitive and diversified. 

World Trade Organisation

World Trade Organisation was set up on 1st January 1995. The headquarters of WTO is located at Geneva, Switzerland. 

Objectives of WTO:

1. To promote international peace 
2. To facilitate international business by promoting multilateral trade 
3. To promote free trade by reducing trade barriers
4. To mitigate grievances of the member countries
5. To settle disputes among the member countries 
6. To supervise the trade related agreements 

Import Procedure - click here

Export Procedure - click here