International Business - Meaning, Process, Types & Factors

International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross-border transactions of goods and services between two or more countries. Transactions of economic resources include capital, skills, and people for the purpose of the international production of physical goods and services such as finance, banking, insurance, and construction. International business is also known as globalization.

International business is also defined as the study of the internationalization process of multinational enterprises. A multinational enterprise (MNE) is a company that has a worldwide approach to markets, production and/or operations in several countries. Well-known MNEs include fast-food companies such as: McDonald’s (MCD), YUM (YUM), Starbucks Coffee Company (SBUX), Microsoft (MSFT), etc. Other industrial MNEs leaders include vehicle manufacturers such as: Ford Motor Company, and General Motors (GMC). Some consumer electronics producers such as Samsung, LG and Sony, and energy companies such as Exxon Mobil, and British Petroleum (BP) are also multinational enterprises.

To conduct business overseas, multinational companies need to bridge separate national markets into one global marketplace. There are two macro-scale factors that underline the trend of greater globalization. The first consists of eliminating barriers to make cross-border trade easier (e.g. free flow of goods and services, and capital, referred to as “free trade”). The second is technological change, particularly developments in communication, information processing, and transportation technologies.

International business managementSee more from basic to advanced

Internalization Theory

1. The Issue of Transaction Costs The internalization theory of Buckley and Casson (1998) is based on the transaction cost approach of Coase published in

Location Theories of Internationalization

1. Historical Foundations The location discussion in connection with international trade theories has a long history. The mercantile doctrine, the major economic theory from the

The International Product Life-Cycle Theory

1. Market Entry According to the Product Life-Cycle Phase The international product life-cycle theory developed by Vernon was introduced in 1966 (Vernon 1966). Based on

The Uppsala Model of Internationalization

1. Incremental Market Entry Through Accumulated Knowledge During the mid-1960s, Carlson, one of the pioneers of internationalization process theories, argued that firms pass cultural barriers

The Eclectic Paradigm

1. Advantage Categories 1.1. Ownership-Specific Advantages The more ownership-specific advantages are possessed by an enterprise, the greater the inducement to internationalize them; and the wider

The EPRG Model of Internationalization by Perlmutter

In 1969 Perlmutter was ahead of his time claiming that the multinational corporation is a new kind of institution which, from his point of view,

Decision Determinants of an International Market Entry

1. Entry Rapidity and Proximity to the Market The strategic concept of international market entry requires a clear formulation of the firm’s objectives in the

Hierarchical Modes of Market Entry (Foreign Direct Investment)

As the foreign business develops successfully, the firm may consider enlarging its engagement in its target markets abroad through foreign direct investments (FDI), which has

Cooperative Modes of Market Entry

1. Strategic Alliances Strategic alliances, which belong to the category of cooperative market entry strategies, are formal mechanisms that are established to strengthen the participating

Contractual Modes of Market Entry

1. Indirect and Direct Export Export describes business activities where goods and/or services are sold outside the country in which the major value-added activities took

About Strategy and Internationalization

The term ‘strategy’ goes back to Chandler, who defined strategy ‘as the determination of the basic longterm goals and objectives of an enterprise and the

Network Theory of Internationalization

1. Inter-Organizational Relationships In general, a network is a model or metaphor that describes a number of entities that are connected (Axels- son & Easton

The Internationalization Case Study of Samsung

1. Samsung Management Philosophy – History and Today The Korean economy is characterized by local-market-dominating Chaebols with highly centralized decision structures that consist of many

Delivery Hero: Instant Internationalization Through Digitalization

1. Launching a New Business Concept and the Role of the Founding Entrepreneur The foundation of Delivery Hero goes back to initial brainstorming ideas developed

The Phenomenon of Disruptive Technologies Applied in the Automotive Industry: The Case of Tesla Inc

1. Disruptive Technologies Disruptive technologies introduce a very different package of product and service attributes compared to the product characteristics of the industry mainstream. Therefore,

Environmental Analysis in Business Practice: Strong in Technological Forecasting but Poor in Marketing Implementation

A milestone in the history of Sharp was its ambiguous strategic decision to start developing alternative display concepts for television set production that might replace

What Exactly is Meant by Panasonic’s ‘Core Business’?

1. Company Background In 1918, Konosuke Matsushita established the company known as Matsushita Electric Housewares Manufacturing Works, which was changed to Matsushita Electric Manufacturing Works

The Internationalization Case Study of Sony

1. Company Origins (The Period from 1945 until the 1980s) In September 1945, a thirty-eight-year-old engineer named Masaru Ibuka, with about twenty employees and USD

Dynamics of Entry Mode Decisions

Once started in international business, a company will gradually change its entry mode decisions in a fairly predictable fashion. Increasingly, it will choose entry modes

Factors Influencing the Choice of the Entry Mode

A company’s choice of its entry mode for a given product/target country is the net result of several, often conflicting, forces. The variety of forces,

Classification of Entry Modes

An international market entry mode is an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management, or other resources

The Elements of Entry Strategy

Entry strategy for international markets is a comprehensive plan. It sets forth the objectives, goals, resources, and policies that will guide a company’s international business

The Internationalization Case Study of LG Electronics

1. About the Firm LG Electronics (LG) is the second largest Korean Chaebol in consumer electronics after Samsung. Established in 1958, LG was originally known

Contract Manufacturing: The Case Study of Foxconn

In 1974, the Taiwan-based firm Hon Hai Precision Industry Company Limited, better known in Western markets by the name Foxconn Technology, was founded by Terry

Preliminary Screening of Country Markets

After choosing the candidate product, company managers can turn to the identification of the country market with the highest sales potential. We discuss the process

Adapting Products for International Markets

Manufacturers may need to adapt their products to foreign markets to gain a desired level of buyer acceptance. Adaptation may be called for in the

Choosing the Candidate Product

The most critical element in planning international market entry strategies is the choice of the product. A company with a single product needs only to

Target International Market

In planning international market entry strategies, managers are striving to match products against markets. Which products shall we market abroad? To which countries? These are

A Logical Flow Model of the Entry Decision Process

Figure 4 presents a logical flow model of the entry decision process. In the remainder of this text, we shall flesh out this model, with

The International Marketing Plan

The design of a company’s market entry strategy for a given product/target country requires the formulation of a marketing plan as well as the choice

Import - Export businessSee more from basic to advanced

Importance of International Trade to the Global Economy

International trade allows manufacturers and distributors to seek out products and services produced in foreign countries. Companies acquire them because of cost advantages or in

A Brief History of International Trade

1. Ancient Period International trade based on the free exchange of goods started as early as 2500 BC. Archaeological discoveries indicate that the Sumerians of

How to Start an Import-Export Business

Import export businesses can be very profitable in the long run. And the good news is that it doesn’t take much to get started in

The GATT and the WTO

The General Agreement on Tariffs and Trade (GATT) was established in 1945 as a provisional agreement pending the creation of an International Trade Organization (ITO).

The Impact of the Financial Crisis on Exports

In view of the higher risk and working-capital needs of exporting, firms rely more on banks for their exports than for their domestic sales. As

The Limitations of Export-Led Growth

International trade played an important role in the economic development of North America and Australia in the nineteenth century and that of East Asian economies

Important Developments in International Trade

Regional Trade Agreements After the implementation of the Uruguay Round, members of the World Trade Organization (WTO) launched a subsequent round in Doha, Qatar, in

Volume and Direction of International Trade

In 1990, the world reached a milestone when the volume of international trade in goods and services measured in current dollars surpassed $4 trillion. By

Determinants of International Trade

Why do some countries export or import more than others? Several studies have been con¬ducted to establish major factors that influence exports. The trade and

Export-Import Business or Trade Name

A sole proprietorship or partnership that is engaged in an export-import business can operate under the name of the sole proprietor or one or more

Ownership Structure of Export-Import Business

In this section, we examine different forms of business organizations: sole proprietorships, partnerships, corporations, and limited-liability companies. 1. Sole Proprietorships A sole proprietorship is a

The Euro Crisis and Implications

Serious intraregional divergences in competitiveness and the related buildup of regional imbalances have been the root cause of the crisis in the euro zone. The

The European Union and Trade Agreements

The European Union (EU) is the oldest and most significant economic integration scheme, involving twenty-eight Western and Eastern European countries: Austria, Belgium, Bulgaria, Croatia, Cyprus,

The North American Free Trade Agreement (NAFTA)

The North American Free Trade Agreement (NAFTA) established a free-trade area for Canada, the United States, and Mexico. The agreement came into effect on January

Regional Integration Agreements (RIAs)

WTO members are permitted to enter into RIAs under specific conditions. RIAs must be consistent with the WTO rules, which require that the parties to

Assessing and Selecting the Product for Export

Although the basic functions of exporting and domestic selling are the same, international markets differ widely because of great variations in certain uncontrollable environmental forces.

Taxation of Export-Import Transactions

1. Taxation of U.S. Resident Aliens or Citizens U.S. citizens and resident aliens are taxed on their worldwide income. In general, the same rules apply

General Principles of Taxation for Export-Import Business

The United States levies taxes on the worldwide income of its citizens, residents, and business entities. The United States, the Netherlands, and Germany are some

Organization for Export: Industry Approach

The Small Business Administration (SBA) states that, besides multinational firms such as General Motors or IBM, there are many small-scale industries that export their output.

Location and Use of Professional Services for Export-Import Business

When the export-import business is small, it is economical to use one’s home as an office during the early phase of the operations. Besides saving

Bank Accounts, Permits, and Licenses of Export-Import Business

An export-import firm must open a bank account with an international bank that can accommodate specialized transactions such as letters of credit, foreign exchange payments,

Developing Export Markets

A recent survey by Babson College and the London Business School on entrepreneurship noted that middle-income countries have a larger share of individuals engaged in

Overseas Travel and Trade Promotion

Once market research is conducted and the target countries are selected, the next step is to visit the countries in order to locate and cultivate

Export Counseling and Assistance

A number of assistance sources are available to U.S. exporters. 1. The U.S. Department of Commerce Through the local district office, the exporter has access

Developing an International Business Plan for Export

A business plan involves a process in which an entity puts together a given set of resources (people, capital, materials) to achieve defined goals and

International Market Assessment

International market assessment is a form of environmental scanning that permits a firm to select a small number of desirable markets on the basis of

International Market Research

International market research deals with how business organizations engaged in international trade make decisions that lead to the allocation of resources in markets with the

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