What is International Business? Meaning, Scope & Challenges

International Business refers to trade and commercial activities that occur across national borders. It includes exporting, importing, investments, and partnerships between companies in different countries. It also has to deal with global markets, legal rules, and cultural differences.

‘Mera joota hai Japani, patloon Englishtani…’

Who would have thought Kishore Da and Raj Kapoor were giving shoutouts to international business before we even knew the term! 

Today, international business isn’t just for big corporations; it’s everywhere. From the Japanese ASICS shoes, which sell over 30,000,000 shoes worldwide every year, to your South Korean Samsung phone that operates in over 70 countries, you can see the effect for yourself. Vibing on BTS while sipping Starbucks is also an example of international trade.  

International business seems huge, and it is, but it also connects people, products, and ideas across the world. This blog will explain what international business means, its scope and its pros & cons.

What Is International Business?

International business is all about buying, selling, or sharing goods, services, capital, or ideas across borders. It can be anywhere between two or more countries. You may require passports and visas, but your services can reach people without such formalities. 

Why It Matters?

There are big networks around the world, all concentrated on providing better goods and services to more people. When countries trade or companies invest in others, they use what they’re best at, like tech from one country and raw materials from another. 

Who Does It?

The MNC (Multinational Corporation) that your siblings work at deals with international business. They have offices in several countries, providing jobs and services to people there. If your ‘Kirana store uncle’ exports local products overseas, he is also a part of the entire ecosystem. 

For example, Priya makes mango pickle using her grandmother’s recipe. In 2024, she partnered with an Indian export platform to sell her pickles to Indian grocery stores in Canada.

This is how she created an international business without any passport or visa:
 

Her profit was ₹220 per jar. So yes, international business isn't just big brands; it’s also Priya's pickles, your fabrics and handcrafts too! 

Scope of International Business

We have explained international business as buying and selling across borders, but it is more than what we have disclosed so far. It includes various methods through which companies operate, invest, and manage work in multiple countries. Let’s see how everything is done.

1. Importing & Exporting

Exporting means sending goods or services from one country to another. Importing is bringing in goods or services from a foreign country to use or sell locally.

For instance, an Indian company exporting handmade carpets to Germany is involved in international trade. Similarly, when an Indian electronics store like ‘Gada Electronics’ imports smart TVs from China (Tony TV), that’s importing.

2. Licensing & Franchising

Licensing is when a company allows another business in a foreign country to use its brand, product, or technology for a fee. Franchising lets someone run a business using your model and brand in another country.

For example, a European company might give permission to an Indian drug maker to use its medicine formula. That is licensing. Similarly, Domino’s in India runs as franchises that follow the rules and brand of the U.S. company.

3. Joint Ventures & Strategic Alliances

A joint venture is when two companies from different countries form a new business together, sharing both profits and risks. A strategic alliance is a more flexible partnership where they collaborate without forming a new company.

For example, Maruti Suzuki is a joint venture where India’s Maruti and Japan’s Suzuki came together to create a new auto business. Meanwhile, Microsoft and Nokia once formed a strategic alliance to improve mobile software without merging operations.

4. Wholly Owned Subsidiaries

This is when a company sets up or buys a business in another country and owns it 100%. It gives complete control over operations but also brings higher responsibility and risk.

For example, Tata Motors bought Jaguar Land Rover in the UK. Tata owns and runs the company fully. Some brands even start from scratch abroad and run their own international branches.

5. Turnkey Projects & Management Contracts

In a turnkey project, a company designs and builds an entire facility or system in another country and then hands it over ready to use. A management contract is when a company manages a business or service in another country without owning it.

For example, an Indian engineering firm builds a power plant in Africa, complete with training and equipment, and hands it over fully functional. In contrast, a hotel chain like Marriott may run a hotel in Dubai that it doesn’t own but manages professionally.

6. Global Supply Chain Management

This means managing the sourcing of raw materials, manufacturing, storage, and delivery of products across multiple countries. It helps companies lower costs and improve efficiency by spreading work globally.

For example, a smartphone might have its screen from Japan, chips from Taiwan, be assembled in India, and be sold in Europe. Managing this entire process smoothly is called global supply chain management.

7. International Financial Management

This involves managing currency exchange, cross-border investments, taxes, and profits earned in different countries. Companies must deal with changing exchange rates, government rules, and banking systems.

For example, an Indian company that earns in US dollars needs to track the rupee’s value. If the dollar falls, they get less money in rupees, which reduces their profit.

Why Expand Internationally? 

‘Bada business Karna Hai toh Bada Socho!’

When you expand internationally, you are doing more than just growing. You learn to survive and thrive in a competitive world. Here’s why global expansion matters for companies of all sizes:

1. Tap into New Markets & Customers

By entering foreign markets, companies can reach entirely new customer bases and increase sales. For instance, Patanjali wanted to export its Ayurvedic range to Southeast Asia and gain 1,00,00,000 - 2,00,00,000 new customers who prefer herbal wellness.

2. Optimise Costs via Global Sourcing & Economies of Scale

Companies reduce production and operation costs by sourcing cheaper raw materials or labour from other countries. Apple, for example, manufactures iPhones in China, where labour and infrastructure are more cost-effective. It helps them maintain competitive pricing globally.

3. Access to International Capital, Tech & Partnerships

Going global opens doors to international investors, new technologies, and innovation through collaboration. Infosys partnered with international universities and startups. This gave access to new tech and enhanced AI services across the U.S. and Europe.

Here is the quick summary of this section in a tabular format:
 

Going global helps businesses grow faster and smarter. Even small companies can benefit if they find the right market.

Major Challenges in International Business

‘Har Rasta Makhhan nahi hota!’

Going global isn't easy. Each new market brings its own risks and hurdles. From legal rules to logistics, companies need to be ready. Here are a few difficulties companies face while going international:

1. Compliance & Regulation

Every country has unique laws around trade, labour, and taxes. Mistakes can result in heavy penalties or bans. For example, Amazon was fined ₹200 crore in India for breaching local FDI norms in retail. It impacted both its reputation and operations.

2. Cultural & Language Barriers

Misunderstanding local values or communication styles can negatively impact relationships or branding. KFC in China initially translated its slogan as "Eat your fingers off". This led to a backlash before correcting it to fit local culture.

3. Currency & Exchange Rate Risks

Fluctuating exchange rates can reduce profits or inflate costs. For example, TCS had to adjust pricing in European contracts when the euro weakened against the rupee. It shows how forex changes impact Indian exporters.

4. Market Competition & Local Adaptability

You’re not just entering a market; you’re competing with seasoned local players. For example, Pepsi had to add new flavours to its product formula in India to suit local taste preferences and stay relevant. While Lahori Zeera bagged a specific space in every Indian refrigerator!

We have summarised the entire section in the table given below:
 

These challenges don’t mean you shouldn’t go global; they just mean you need to plan smartly. With the right strategy, even small businesses can succeed across borders.

Conclusion

‘My Business, My Rulzz’

International business sure sounds like a sweet song to your ears. It sings melodies of growth, more opportunities. However, success depends on strategy, compliance, and cultural understanding. With rising global integration, Indian companies that adapt wisely will thrive across borders. You have to be ready for the challenges of the future! 

Frequently Asked Questions

1. What is the difference between international and domestic business?
International business involves transactions across borders, dealing with foreign currencies, laws, and cultures. Domestic business operates within one country’s rules, currency, and market, making it simpler and more predictable.

2. How do trade agreements impact international business?
Trade agreements like ASEAN or Indo-EU deals reduce tariffs and ease regulations. This helps businesses expand into new countries more smoothly and at lower costs, increasing profitability and reach.

3. What is Foreign Direct Investment (FDI)?
FDI or  Foreign Direct Investment is when a company invests directly in facilities, factories, or assets in another country. It offers more control than exporting, but also brings higher financial risk and regulatory exposure.

4. How do companies choose which country to expand into?
They evaluate market size, customer demand, ease of doing business, tax benefits, and political stability. For example, Indian startups often expand to the UAE first due to proximity and friendly business laws.

5. What role does digitalisation play in international business?
Digital platforms simplify global operations, such as e-commerce, cloud computing, and virtual meetings, enabling companies to run international teams, sell worldwide, and manage logistics without physical presence in every country.

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