While having a vague idea, many students may not be entirely clear on what international business is. The explanation is both simple and involved. The following is an in-depth look at doing business across international borders and both the unique challenges and advantages of the practice.
At its most basic, international business consists of the exchange of services, goods and even knowledge across country borders. This term can also be used to refer to the study of how businesses enter and grow in international markets. Companies that do business in multiple territories are responsible for abiding by all applicable laws in place in each nation as well as international agreements. Factors that affect operations and finances can include tariffs, currency exchange rates, labor laws, environmental standards, regulations governing imports and exports, and more. Companies that choose to go international must plan their strategy for the entry into the global market carefully because it is a significant undertaking with substantial room for failure.
The World is Becoming More Globalized
Doing business internationally is becoming more of an attractive option or even a necessity as the world becomes more globalized overall. The Internet, in particular, has opened up countless options and opportunities for businesses to expand and work with employees and customers overseas. As business opportunities evolve and international demand grows, the way business is conducted must evolve too. For example, many businesses outsource work to other countries, sometimes several at the same time. Many more businesses want to take advantage of local markets in other countries and have an eye to expand their enterprises globally. There are plenty of untapped and/or lucrative markets in other countries that can make a business very successful.
Risks of International Business
No business venture is without risks, and internationalization poses some key ones. For example, governments can change and put in place policies that have strong negative impacts on business operations. Not planning an internationalization strategy effectively in advance is likely to be a recipe for disaster. Technology, while useful and even necessary for doing business overseas, comes with its own drawbacks which include security concerns and logistical difficulties in its use by employees. It is important for any business looking to enter the international market or students wanting to get into conducting business internationally to thoroughly understand the risks involved and have strategies in place to mitigate them.
Getting Into International Business
There are a number of ways someone can enter the international world of business and a few factors that contribute to their success. Some schools offer programs specifically in this area, while other students may be just fine with obtaining a basic business degree or a degree in another subject entirely. Many students who study a language opt to go into business internationally to use that ability. Learning a new language, or multiple languages is necessary to be able to communicate with local markets in their own language and a useful skill to have in general. In addition, understanding cultural differences is also necessary. Doing so helps prevent serious misunderstandings as well as helps companies appeal to local consumer bases, according to Inc.
Related Resource: Top 30 Most Affordable MBA in International Business Online Programs
Opportunities for doing business internationally are only going to grow in the future. It is therefore important to understand what is international business along with the advantages and pitfalls it presents.