What is International Business?

In it’s purest definition, international business is described as any business activity that crosses national boundaries. The entities involved in business can be private, governmental or the mixture of the two. International business can be broken down into four types.

  • Foreign Trade
  • Trade in Services
  • Portfolio Investments
  • Direct Investments

In foreign trade, visible physical goods or commodities move between countries as exports or imports. Exports consist of merchandise that leaves a country. Imports are those items brought across national boards into a country.
In addition to tangible goods, countries also trade in services, such as insurance, banking, travel, consulting and hotels. The international firm is paid for services it renders in another country. The earnings can be in forms of fees or royalties.
Portfolio investments are financial investments made in foreign countries. The investor purchases debt or equity in expectation of nothing more than a financial return on the investment.
Direct Investments are differentiate by much greater levels of control over the project or enterprise by the investor.
By the 1880s the Industrial Revolution was in full swing in Europe and the US, and the production grew to unprecedented levels,abetted by scientific invention, the development of new sources of energy, efficiencies achieved in production and improvements in transportation such as domestic and international railroad systems. Growth continued in upward spiral mass production met and surpassed domestic demands, pushing manufacturers to seek enlarged, foreign markets for their products. It led ultimately to the emergence of the multinational corporation (MNC) as a new organizational entity in the international business world.

Reference : International Business by Karel Cool

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One thought on “What is International Business?”

  1. hanxlk says:

    Valuable stuff… Nice post 😉

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