Domestic versus International Business

A firm needs to identify its potential market, locate adequate and available sources of supplies of raw materials and labor, raise initial amount of capital, hire personnel, develop a marketing plan, establish channels of distribution, and identify retail outlets. As an overlay upon this comprehensive system, the firm must also establish management controls and feedback systems, as well as accounting, finance and personnel functions.

When it comes to international business we have to consider about economies, cultures, government and political systems too. For example, economies can range from being market oriented to being centrally planned and political systems from democracies to autocracies.

It is more likely that domestic firms enter foreign markets in a progressive way, beginning with exporting, which involves the least amount of resources and risk, before moving to a full-scale commitment in the form of establishing wholly owned overseas subsidiaries. It must evaluate its own resources; personnel, assets, experience in overseas markets and suitability of its products or organization for transplantation overseas. These factors must be reviewed in light of the competition expected in markets abroad and the potential business opportunities that are so be created by the international operation.
All these factors must be weighted in terms of the overall short term and long term strategic goals and objectives of the firm.

Methods of Going International

  • Exporting
  • Licensing
  • Franchising
  • Management Contracts
  • Contract Manufacturing
  • Direct Investment
  • Strategic Alliances
  • Wholly Owned Subsidiaries
  • Globalized Operations
  • Portfolio Investments

Reference : International Business by Karel Cool

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  1. Dean says:

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