The Hustler's Digest StaffDo you want to know about international business? Follow this article to have an in-depth view of its importance and other information.
To start an entrepreneur journey, you should know what an international business is. Businesses on large scales are not limited to one specific place in today’s world. International business relates to any situation where the presentation or distribution of goods or services crosses country borders. A more interdependent and integrated global economy creates more excellent opportunities for international business.
However, such globalization can occur in markets where trade barriers are falling, and buyer preferences change. Moreover, it can also be seen in production, where a company can source goods and services quickly from other countries. Some managers consider the purpose of international business to relate morally to “business,” as suggested in the Google case.
International business professionals must be able to work within the boundaries of their company’s finances, so possessing some knowledge of costs is essential. If you’re looking to reach a manager or director position, the ability to propose strategic solutions that fall within or under budget is especially desirable.
What does international business mean?
International business focuses on any commercial activity or transaction between companies, organizations, individuals, or government entities that cross borders into different countries and regions. The interesting thing about international business is that it demands more than traditional business skills. People in this field frequently travel to or live in other countries and must understand diverse cultures, economies, laws, and business practices.
International business is a kind of very fascinating and challenging career journey. Global transactions are not confined to a specific currency, interest, or asset. International commerce comprises value exchanged between the involved parties, such as goods and services, technology, capital, employees, and intellectual property. Like domestic business, international business is a vast field that encompasses many different specializations. Your specific responsibilities will depend on your role and the kind of industry you work in, but may include:
- Sales
- Customer service
- Data analysis
- Contract negotiations
- Logistics
Developing your leadership skills helps you grow from within. Taking the initiative on projects and speaking up about your contributions demonstrates your investment in the organization and your capacity to lead others toward success. The global economy is trending toward the use of bitcoin and other types of digital currency, in addition to traditional stocks, bonds, and safeties.
In addition, cross-cultural competence is necessary if your goal is to pursue a career in international business. You must be capable of approaching your work with consideration for different perspectives and sensitivity to others’ diverse backgrounds. As technology becomes more intertwined with business transactions, a foundational understanding of marketing and data analytics can benefit you well in helping to determine emerging markets and how best to suit their needs.
Types of international business
Sales
Sales are essential for any company that sells or promotes its products and services across borders or oceans. International businesses rely on their sales staff to cultivate relationships with potential customers and motivate them to make a purchase. Business professionals who specialize in sales may also be interested in marketing campaign development and contract management.
Finance and investments
Companies seek out finance and investment professionals to help them identify areas of opportunity in additional countries and regions. They are also expected to reckon with economic risks, emerging financial markets, and trade policies. Those specializing in finance can perform for multinational corporations, financial institutions, or consulting firms.
Analytics
This specialization involves using data mining, analysis, and forecasting methods to offer international businesses insight into short- and long-term market trends and sales performance. Analysts perform an essential function by isolating potential issues before they result in financial loss. By focusing on analytics, you can help your organization encounter new business opportunities globally.
Marketing
Marketers meet an essential need in international business by helping companies promote their products and services in other countries. They must be able to tailor brand messaging to different cultures, behaviors, and demographics while being sensitive to the nuances of each market. Global marketers continuously develop new strategies, research competing products, and services, and analyze potential risks.
Interpreting and translation
If you are fluent in another language, it is considered a valuable skill in the business world. You can usually find work as an international interpreter or translator. Those specializing in this field help minimize language barriers, enabling their companies to perform business functions in other countries and regions. Having a trained interpreter on staff can make the difference for a company trying to close a business deal or secure a signed contract.
Benefits of international business
If executed properly, globalization can bring your organization numerous benefits. Here are some benefits of international business you can watch or practice by yourself:
International business improves your practical life skills. When you work with business professionals worldwide, you may communicate in person, by phone, or in writing. One of the essential international business skills is conveying your message clearly and professionally regardless of the medium. Foreign language skills such as Spanish, Mandarin Chinese, and Arabic are precious in this field.
Global business can take your access to a more significant number of customers. If your product or service is a success, you can enjoy increased revenues from the customers even if you have saturated your markets domestically. Globalizing could be precisely the shot of life your company needs to take its payments to new heights.
Another excellent benefit of taking your business global is accessing a new pool of potential employees with unique skills and mindsets. The solutions your business offers undoubtedly have the potential to help your clients improve their lives in some way. When you take your business global, you can help an exponentially more significant number of people find the answers to your questions or challenges your company helps solve.
Working in international business involves daily decision-making. You’ll analyze complex data and sometimes act swiftly with limited information, crucial for aspiring managers. Operating globally provides insights into new cultures, enhancing organizational diversity and customer relations. Successfully expanding globally boosts your company’s reputation and markets offerings to new demographics.
International business examples
1. Apple
Apple Inc. was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in the 1970s and is now considered one of the most significant international companies. Headquartered in the United States, Apple designs, develops, sells electronics, software, streaming, and online services worldwide. The company produces consumer electronics such as computers, tablets, mobile phones, etc. Its devices are considered the most secure, with high security and quality.
Apple not merely sells products internationally but has supply chains from 43 countries that ship supplies to China for final production and assembly. By maintaining a tight-knit and strong relationship with suppliers, strategic inventory, and a focus on sustainability, Apple stands as one of the world’s most successful companies.
2. McDonald’s
Two brothers, Maurice and Richard McDonald, converted their drive-through barbecue restaurant in San Bernardino, California, into a burger and milkshake restaurant, which is now known as McDonald’s, in 1948. McDonald’s has been internationally successful, thanks mainly to its business and model’s consistency.
Every person is familiar with McDonald’s as it wins the favoritism of people. The fact that a Big Mac tastes the same regardless of which country you order it is a testament to the country’s long history. Now there are 38,000 restaurants in over 120 countries.
3. Coca-Cola
Pharmacist John Pemberton created Coca-Cola in 1886 at a soda fountain in Atlanta, Georgia. It was used as a tonic for common ailments due, in part, to the addition of cocaine and caffeine derived from the Kola nut, which was a significant ingredient at the time and was later removed from the recipe in 1903.
Coca-Cola presently has over 900 bottling and manufacturing facilities worldwide, numerous of which are in North America, Asia, and Africa.
4. Financial Times
The Financial Times is a formerly British daily newspaper owned by the Japanese holding company Nikkei. The mission is to deliver unbiased, informed investment and financial information to empower individuals and companies to make confident investment decisions.
The Financial Times had a rocky start attempting to break into the international market. During the tenure of Andrew Gilchrist (former managing director of Financial Times), the Financial Times prioritized entering the global market in India. Despite a large English-speaking population and powerful government support, domestic journalism was considered culturally and legally suspect.
The Financial Times was eventually tied up in legal knots because the local newspaper barons could challenge every move through the courts. Ultimately, the Financial Times’ attempt to go international in India led to an economic slowdown and sluggish company growth.
What is international business management?
International business management is the management of business operations in an organization serving markets and operating in more than one country. Exposure to global business management helps them understand different cultures, markets, and businesses. Most importantly, international business management allows students to understand how globalization has made the world more connected.
It requires knowledge and skills beyond normal business expectations, including familiarity with the local market and competitive conditions, the legal and financial environment, the capability to do multi-currency transactions, and managing across borders. In addition, it demands extensive knowledge of regional conditions and adaptability.
International business management conducts transactions of goods and services on a global scale. International business is large and employs a large number of people. The business is foreign currency earners for the countries they are based in.
What is an international business manager?
An international business manager handles an organization’s daily operations and business relationships on a global platform. They develop and execute marketing strategies to secure business growth and expansion. They typically work in large multinational corporations in large-scale petroleum, telecommunications, and information technology industries.
An international business manager is responsible for coordinating with executive officers regarding the forecast and strategic plans in line with the organization’s goals of seeking new markets and enhancing global profitability. Discussing and closing contracts with foreign clients are also among their significant responsibilities. They must have a comprehensive background and competitive intelligence in marketing, sales, finance, and human resources.
The international business manager ensures the corporation’s compliance with international procedures and protocols and cultural, environmental, and political considerations. Their professional domain extends to the execution of training programs for the corporation’s leaders and the recruitment of foreign personnel. It takes a broad range of expertise to be an international business manager.
Most companies prefer nominees with a master’s degree in international business or a related field. They earn $31.05 an hour, equivalent to an annual income of $64,592. Excellent networking and cross-cultural communication skills are also required. Pursuing this position requires advanced degrees.
What are the main types of international business?
All the primary international business conducted in the world comes in seven types. Have a look at each given below in detail:
Licensing
Licensing is one of the most effortless ways to expand business internationally. When a company has a standardized product with ownership rights, it can use licensing to allocate and sell the products in the international market. Licensing comes in different forms, such as patent, copyright, trademark, etc. Products such as books and movies are distributed internationally through licensing agreements.
Imports and exports
The simplest and most generally used method, imports and exports, can be seen as the foundation of international business. Imports are an inpouring of goods into the markets of the home country for consumption. In contrast, export represents selling goods to foreign countries. Simply, imports mean inflow, whereas export represents the outflow of goods in any form.
Franchising
A very effective method to expand a business nationally and internationally, franchising is similar to licensing. In this, a parent company gives the right to another company to conduct business using the parent company’s name, brand, or products. The parent organization becomes the franchiser, and the receiving organization becomes the franchisee. Many of the biggest restaurant chains in the world have used the franchise model to expand internationally. Some examples include McDonald’s, Pizza Hut, Starbucks, Domino’s Pizza, etc.
Outsourcing and Offshoring
Outsourcing means giving out contracts to international firms for specific business processes. For example, giving out accounting procedures to an international firm. This is typically effective when conducting these processes is comparatively much cheaper in some other countries than in the home country.
Offshoring is similar to outsourcing because a function is moved away from home. However, it is different because the facility is physically moved to another country, but the management stays with the company itself. For example, Apple Inc. is conducting its manufacturing function in China. However, it is entirely controlled by Apple Inc.
Joint ventures and strategic partnerships
A joint venture is a contract between two parties, and one is an international company while another company is local to where the business has to be executed. Both parties contribute to the equity and management of the enterprise. As a result, both share the profit sufficiently. These parties can mutually fix the percentage of equity and profit-sharing.
These ventures and partnerships come into existence when both parties have something to offer. For instance, the local company may have the brand name and network within the country, while the international company may have advanced technology.
Sometimes, international companies have government restrictions against holding 100% equity in specific areas such as defense. In such cases, multinational companies can benefit from the new market through a joint venture.
Multinational companies
As the name suggests, multinational companies are conducting business in multiple countries. They set up the whole industry in numerous countries. Some examples are Amazon, Coca-Cola, Citigroup, etc.
These companies have independent functions in each country, and each country has its own set of offices, employees, etc. Even the products and marketing campaigns are customized as per local requirements. For example, Nestle introduced a Matcha flavor Kit Kat in Japan as the taste is prevalent. However, they don’t deliver the same flavor in India. This customization is one of the many advantages of being a multinational company.
Foreign direct investment
Foreign direct investment is an investment made by an individual or a company in one country to the business interest in another foreign country. In this, the investment company usually commits more than capital. They share management, technology, processes, etc., with the company they have invested in. Foreign direct investments can take many shapes, such as a subsidiary company, associate company, joint venture, merger, etc.
These are the significant types of people, companies, and governments that conduct international business. However, means of business are just one minor speck of the global business environment. You must consider many issues and challenges when setting up any business internationally.
Unlocking Global Success: The Essence of International Business
International business is the cornerstone of firms’ cross-border trade and investment activities, creating a vast network of global opportunities. From strategic planning to operational execution, companies like Coca-Cola and McDonald’s exemplify the integration into the global economy, transcending political and economic barriers.
Strategic planning is crucial, involving comprehensive SWOT analysis to assess strengths, weaknesses, opportunities, and threats in both domestic and international markets. This framework ensures informed decision-making and sustainable growth across borders.
Entering foreign markets requires meticulous research into political, legal, and economic landscapes, essential for mitigating risks and capitalizing on opportunities. Strategic alliances and cultural sensitivity further enhance market penetration and product positioning, aligning business objectives with local market needs.
In today’s interconnected world, international business not only drives economic growth but also fosters cultural exchange and technological advancements. By embracing globalization, firms expand market reach, leverage diverse resources, and optimize operational efficiencies on a global scale.
In conclusion, international business is not merely about expanding geographical boundaries but also about creating value and fostering sustainable growth through strategic planning, cultural adaptation, and global partnerships. As businesses navigate the complexities of global markets, strategic foresight and adaptability remain paramount in achieving enduring success in the international arena.
Disadvantages of international business
You may need to overcome several disadvantages of international trade if your company is truly successful.
Language barrier
Despite the availability of online translators, language is still one of the significant disadvantages of international trade. While translation tools can be used to formulate instructions and communications in another language, they are outlying from foolproof.
The marketplace is filled with samples of poorly translated products with names that got misconstrued in another language. To solve this, think of using a marketing agency in the targeted country or region to review all the company’s materials before rolling out the product or service.
Cultural differences
One of the significant disadvantages of international trade is that cultural differences are often never documented. There are unwritten rules of commerce in the country that are hard to uncover and can be even more challenging to solve. For example, the word “yes” in Western cultures generally means agreement. However, in some Eastern cultures, it can mean that the person understands what you are saying but does not necessarily agree.
Servicing customers
After international customers complete a purchase, how will they be serviced when they are so far away? Again, language and cultural differences need to be considered to overcome one of the significant disadvantages of international trade. Your company needs to be prepared upfront to communicate with these customers in different time zones, preferably in their language. If you cannot staff 24/7, expectations for when a reply will be received need to be set upfront.
Returning products
Since not all international customers will be satisfied with a company’s products, a strategy must be in place to return them and process a refund.
Conclusion
International business on a large scale is not limited to one specific place in today’s world. It helps you to improve your practical life skills. International trade comes with many types that you can practice. In addition, you get to benefit from interacting with more people globally. However, Know the essential aspects of international business to try new strategies.
