Question

What is international business? How is it different from domestic business?

Answer 1

International business consists of all the trade and manufacturing activities that take place across national boundaries. These activities involve the exchange and movement of goods, services, capital, technology, skills and patents across countries. The following table highlights the key differences between domestic and international businesses.

Basis of difference	Domestic business	International business
Meaning	Trade within the national boundaries of a country.	Trade between two or more countries.
Degree of mobility	High factor mobility within the country.	Low factor mobility across national boundaries.
Nature of market	Markets are homogeneous due to similarity in tastes and preferences across markets.	Markets are heterogeneous due to differences in customers, preferences, languages, etc.
Regulations and policies	Subjected to rules, laws or taxation system of one country.	Subjected to rules, regulations and laws of many countries.
Currency used	Domestic currency is used for payment.	Foreign currency is used for payment.