International Business

International business includes all commercial transactions that take place between two or more regions, countries and nations beyond their political boundaries. It is not a new phenomenon for people. It exists since the antiquity. One of the most famous examples, which became the fundamental for trading relationships between countries, is the Silk Route.    

Each business has an opportunity to become global. There are two types of strategies:

Internal Strategies

   1)    Exporting is a selling good to customer in another country. It is a relatively low-cost activity to get involved in international business and expand profit. However, The business is further depended on the fluctuation of transportation costs. So, high transportation costs can make such business uneconomical. e.g. International Precious Metals inc.

   2)    E-commerce. The way of buying and selling products through the Internet. This method is chiper, but also has a negative side. There is a probobility of online fraud that leads to loss money and goods simultaneously. eg. Amazon.

   3)    Direct investment when entrepreneur establishes operations in another country. This is expansive process that is a disadvantage.

     External Strategies

   1)    Franchasing when a franchisor allows a franchisee to trade under its name for the percentage of its profit. It is a fast way to expand by multiplying the number of locations through other people’s investment. That allows business to reduce influence of competition and gives opportunity to focus on changing market needs. From the other hand, the is a big risk that the name of a business will be spoiled by misfits. e.g. McDonalds, Costa.

   2)    Strategic Alliance when several businesses share human resources and financial resources on a project. It gives opportunity to a business to reach new markets. Entering a strategic alliance will automatically increase awareness of a brand among an entirely new market. In addition, it helps to access to new customer base. However, there can be some challenges with finding a partner. Choosing the wrong partner can be damaging if it is not able to contribute to the growth of your business.

             Local businesses are easier to manage. There are a lot of risks of operating international business is because to become international each company has to adopt to the rules and laws of location where it want be established. Also there can be high exchange rates that leads to reduction of business. Local businesses do not face such problems as international, for example managment challenges, it is hard to control each store all over the world. However the significant point for international business is a profit. It is much higher .

             In my view, the best way to go global is Franchising. Business almost do not need any extra spandings on it. It is a quick way to create a well-known brand through the people's investment.