Difference between Domestic and International Business

Domestic Business

Domestic business involves those economic transactions that take place inside the geographical boundaries of a country. Both the buyer and seller belong to the same country in this form of business. Domestic business is also known as ‘Internal Business’ or ‘Home Trade’. It is relatively easier to conduct business research in domestic business when compared to companies from abroad, and the degree of risk is also much lower. The selling process, currency, type of customers, taxation laws, and other regulations are more or less uniform, which can significantly benefit any organisation.

International Business

International business involves those economic transactions that take place outside the geographical boundaries of a country. The buyer and seller do not belong to the same country in this form of business. Companies involved in international business are known as ‘Multinational’ or ‘Transnational’ companies. It is much more difficult to conduct business research on international business firms when compared to domestic companies, and the degree of risk is also higher. The selling process, currency, type of customers, taxation laws and other regulations are different for the buyer and seller, which can be a hindrance for any organisation to conduct business.

Differences between Domestic and International Business

The main differences between Domestic and International Business are as follows:

Domestic Business

International Business

Definition

Domestic business involves those economic transactions that take place within the geographical boundaries of a country.

International business involves those economic transactions that take place outside the geographical boundaries of a country.

Buyer and Seller

Both the buyer and seller belong to the same country in domestic business.

The buyer and seller belong to different countries in international business.

Currency

Domestic businesses deal with the same currency since both the buyer and seller are from the same country.

International businesses deal with different currencies since the buyer and seller are not from the same country.

Customers

There is greater homogeneity in terms of the nature of customers of domestic businesses.

There is greater heterogeneity in terms of the nature of customers of international businesses.

Geographical Boundaries

Geographical boundaries limit domestic businesses.

Geographical boundaries do not limit international businesses.

Business Research

Business Research is less complex and relatively cheaper for domestic businesses compared to international organisations.

Business Research is more complex and relatively expensive for international businesses compared to domestic companies.

Capital Investment

Capital investment is lower for companies that are involved in domestic business.

Capital investment is higher for companies that are involved in international business.

Factors of Production

The domestic business has greater mobility of factors of production compared to international business.

The international business has lesser mobility of factors of production compared to domestic business.

Restrictions

Domestic business involves lesser restrictions than international business.

International business involves greater restrictions than domestic business.

Quality Standards

The quality standards for domestic business tend to be relatively lower than international business.

The quality standards for international business tend to be relatively higher than domestic business.

Conclusion

The difference between Domestic and International Business indicates that a company must do both to survive and grow in the market. Both these forms of businesses have their advantages, for any organisation that wants to succeed in these markets must design its business strategies accordingly.

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