AN OVERVIEW OF INTERNATIONAL BUSINESS

7/28/2024 火村 7376

Understanding the General Overview of International Business

In theory, international business relates to any situation where the production or distribution of goods or services crosses nations’ borders. As it involves transaction across borders where business is conducted between countries, international business additionally refers to the performance of trade and investment activities by firms across the globe. Globalization, as we know, has shifted our country’s economy towards more independent and integrated; creating greater opportunities for companies to go internationally. In short, international business is all about cross border business which is conducted not only by the private sector, but also by the public sector or the government, which includes trading, manufacturing, investing (e.g. FDI – Foreign Direct Investment), and other services which also covers a whole range of sectors such as transportation, tourism, advertising, construction, retailing and mass communications.

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To start off, such globalization can take place in terms of markets where trade barriers are falling and buyer preferences are changing. What’s more, international business encompasses a full range of cross-border exchanges of goods, services, or resources between two or more nations that can go beyond the exchange of money for physical goods to include international transfers of other resources, such as people, intellectual property (e.g., patents, copyrights, brand trademarks, and data), and contractual assets or liabilities (e.g., the right to use some foreign asset, provide some future service to foreign customers, or execute a complex financial instrument).

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The entities involved in international business are ranging from large multinational firms with thousands of employees doing business in many countries around the world to a small one-person company acting as an importer or exporter. This, as a result, broaden the definition of international business, in which it also encompasses for-profit border-crossing transactions as well as transactions motivated by nonfinancial gains such as corporate social responsibility and political favor that can affect businesses in the future.

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Furthermore, a business can be either a person or organization engaged in commerce with the aim of achieving a profit. Business profit, as we know, is typically measured based on financial and economic terms. However, some levels of sustained financial and economic profits are needed for a business to achieve other sustainable outcomes gauged as social or environmental performance. For example, many companies that are for-profit businesses also have a social and environmental mission such as Ben & Jerry’s (part of Unilever) and SC Johnson.

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Meanwhile, the global part of a firm’s business can vary considerably from importing to exporting to having significant operations outside its home country. An importer buys products and services that are sourced from other countries, while an exporter on the contrary sells products and services in foreign countries that are sourced from its home country. Beyond these two activities which are importing and exporting, some organizations maintain offices in other countries, and this as a result forms the basis for their level of foreign direct investment where a firm is investing assets directly into a foreign country’s buildings, equipment, or organizations. In many cases, some foreign offices are carbon copies of their parent company in which they all have the value creation and support activities just in a different country.

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