Any business transaction between parties from more than one country is a part of international business. The buying and selling of goods, product or services across the national boundaries of a country are known as international business.
Common Scopes of International Business –
Large scale operations: In international business, all the operations are conducted on a very huge scale. Production and marketing activities are conducted on a large scale. It first sells its goods in the local market. Then the surplus goods are exported.
Integration of economies: International business integrates the economies of many countries. This is because it uses finance from one country, labour from another country: and infrastructure from another country. It designs the product in one country, produces its parts in many different countries and assembles the product in another country. It sells the product in many countries, i.e. in the international market.
Dominated by developed countries and MNCs: International business is dominated by developed countries and their multinational corporations (MNCs). At present, MNCs from USA, Europe and Japan dominate foreign trade. This is because they have large financial and other resources.
Benefits to participating countries: International business gives benefits to all participating countries. The developed countries get the maximum benefits. The developing (poor) countries also get benefits. They get foreign capital and technology. They get rapid industrial development. They get more employment opportunities. All this results in the economic development of the developing countries. Therefore, developing countries open up their economies through liberal economic policies.
Keen competition: International business has to face too much competition in the world market. The competition is between unequal partners and developing countries. Developed countries and their MNCs are in a favourable position because they produce superior quality goods and services at very low prices. Developed countries also have many contacts in the world market. So, developing countries find it very difficult to face competition from developed countries.
The special role of science and technology: International business gives a lot of importance to science and technology. Science and Technology help the business to have large-scale production.
International restrictions: International business faces many restrictions on the inflow and outflow of capital, technology and goods. Many governments do not allow international businesses to enter their countries. They have many trade blocks, tariff barriers, foreign exchange restrictions, etc. All this is harmful to international business.