12 Essential Features of International Business

The important features of international business may be summarized as under:

Features of international business

  1. Separation of producers from buyers: In case of inland trade, buyers and producers are in close contact with each other, as they belong to the same nation. But in the case of international business, producers and buyers are separate from each other, as they belong to different nations.
  2. Payment in foreign currency: In international business, payment is made in foreign currency. Here, different currencies of different countries are involved.
  3. Idea about international rules: People in international business should have a clear idea of international rules and the mechanism to exchange one currency for another.
  4. Large number of middlemen: The procedure for export and import are too complicated and involves a large number of middlemen. They render their services for the easy development and expansion of international business.
  5. Intense competition: In the case of international business, the competition is intense. Producers from many countries compete with one another to sell their products. Here the quality, design, packing, price, advertisement, etc., all play a very important role in decisions-making.
  6. Involving greater risk: A greater risk is involved in international business as the commodities have to be carried long distances and even to cross the oceans.

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    Features of International Business

  7. Law of comparative cost: A country specializes in the production of those goods for which the country has maximum advantages. It exports such goods together countries. It imports those goods which it cannot produce or for which it has no specific advantage.
  8. Territorial specialization: International business arises for regional specialization. India has a specific advantage for the production of jute and tea. Therefore, India exports these commodities. The U.K. has a specific advantage for production of quality steel at a low cost, which India cannot. So, India imports steel from U.K. and exports jute and tea to U.K.
  9. Reciprocal assistance: Developed countries (like the U.S.A., U.K., Germany, etc.) help India for its industrial development by exporting technical know-how, capital, etc., to India. Similarly, India assists under developed countries (like Bangladesh, Vietnam, etc.) towards their industrial development.
  10. Conversant with different laws of the country Traders engaged in international business must be conversant with the different laws of the countries concerning trade activities. Traders should also be aware of trade restrictions imposed by foreign countries for the national interest.
  11. Domination and control of the government: Each Government of a country dominates and controls international business in matters of:
  • Determination of exchange rates,
  • Permission to import or export, etc.

12. Multiplicity of documents: A good number of documents are required in international business, right from the stage when the exporter receives an order to the stage when goods are finally delivered.

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