Before discussing the scope, let’s first get familiarized with the term International Business (I.B.). If we see any business activity i.e. exchange of goods or services for money, between two or more countries then it is known as International Business. In this era of digitalization, it is comparatively easy and plays a vital part in the nation’s economy. Now let’s discuss the scope of I.B. and see what all it covers.
1) Foreign Investment–When one country invests in another country then it is foreign investment. It can be of two types i.e. portfolio and direct investment. Investor and investee both get benefited as Investor might get heavy profits and investee might get the employment opportunities which ultimately foster development. It also leads to the exchange of culture and the working process between the countries.
2) Exports and Imports of Merchandise – International business widens the market and leads to the export and import of merchandise. It makes the market more vibrant and provides new business opportunities to the sellers and provide better quality goods, due to competition, to the buyers.
3) Licensing and franchising–Licensing is getting legal approval for a particular thing like we get a driving license or I can say permission to drive a motor car. In business terms, it means getting the permission of pursuing certain business whereas franchising is when big business houses provide permission to use their name, trademark to the franchisee in return of certain royalty, for example, pizza hut, subway, etc.
4) Service exports and imports – As goods, services can also be exported and imported. I.B. provides access to foreign countries that helps services export and import. For example, an Indian professor providing lectures in Canada. Because of the intangibility of services this trade can be known as Invisible Trade.
5) Growth opportunity – It is limitless. After 1991 reforms in India global companies entered Indian markets and also Indian companies got the opportunity to move out of their cocoon and expand their businesses globally. By exporting, importing and franchising businesses are growing day by day.
6) Benefiting from currency exchange – Every county has different currency and every currency holds different values. This difference in the value provides benefits in terms of business as it increases foreign investments, increases tourism, increases export and import and provides growth opportunity altogether.
7) Limitation of domestic markets–I.B. helps in overcoming the limitations caused by the domestic markets like business dealing in certain products faces difficulty in the domestic market due to low demand but it might get high demand in another country due to shortage of the product in that country. Hence it provides seamless benefit.
International business is bringing countries closer in terms of business as well as in terms of culture and support. Companies nowadays tend to follow the path of corporate social responsibility as they utilize the resources of the foreign country and hence they try to provide social benefits that lead to the development of the country.
- Aman Jindal, BBA Department, Division A, Morning Shift.
- New Delhi