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 the 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. An 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. A large number of middlemen: The procedure for export and import is too complicated and involves a large number of middlemen. They render their services for the easy development and expansion of an 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 decision-making.

6. Involving greater risk: A greater risk is involved in international business as the commodities have to be carried long distances and even cross the oceans.

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 as 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 from regional specialization. India has a specific advantage in the production of jute and tea. Therefore, India exports these commodities. The U.K. has a specific advantage in the production of quality steel at a low cost, which India cannot. So, India imports steel from U.K. and exports jute and tea to the U.K.

9. Reciprocal assistance: Developed countries (like the U.S.A., U.K., Germany, etc.) help India with its industrial development by exporting technical know-how, capital, etc., to India. Similarly, India assists underdeveloped countries (like Bangladesh, Vietnam, etc.) in 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. The 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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