International Business

International trade is also called external trade. Whenever we are purchasing inside India, it is internal trade and if outside India, it will be called external trade or international business. It is also a cold trade between the two countries. 

There are Three Types of International Trade

  1. Export

  2. Import

  3. Entrepot


Nature of International Business

  • Involvement of Two Countries - In international business, two countries are always included, such as if any item exports from India to the USA, there is a difference in the language and ethnic culture of the two. Due to this, the processor is very hectic. Hence the legal transaction too becomes quite difficult in such a case.

  • Payment in Foreign Countries - In such cases, you have to pay in foreign currency only. No matter what country you deal with, you have to pay in the same currency that operates there. On the other hand, if the other country is dealing with your country, then it has to pay money in the currency of your country.


Problems of International Business

  1. Legal Purchase - Purchasing is the most hectic in international business. A lot of legal formality has to be fulfilled in it, which takes a lot of time. Its procedure includes nearly 15 to 16 steps, which makes purchasing a hectic in international business.

  2. Restrictions - There are some restrictions to purchase in international business in certain areas or upon certain things. We cannot buy from there because of restrictions. There are some items that you cannot purchase from some areas because of these restrictions.

  3. High Risk - In international business, such companies invest money in a business in which they do not know anything. So, a little risk is created due to this. It also costs more money to export goods from such a place, due to which there is a maximum risk involved in it.

  4. Different Language - It is a matter of obvious fact that when you deal with another country, you will definitely find a difference between their language and your language, which makes it difficult to communicate. So, you have to ensure that you either learn their language well or opt for some other way, so that their words make sense to you because you will not be able to make a successful deal until you are unable to explain them properly.

  5. Arrangement of Foreign Currency - If you are dealing with an outside country, want to do business with them, then you have to make sure that you have money in the currency that they have. So that you can do business easily.


Reasons for International Business

  1. Not every country is not able to make all quality things. If it makes the products in the same way, it cannot be sold out because of its cheap quality. That is why it depends on the other country.

  2. Neither all the countries do not have every natural resource available nor they are good in every department, like if a country has good manpower, but does not have the financial aid, so they have to be dependent on others.

  3. Not every country has everything, because of this, it has to depend on the other country, somewhere something is available and somewhere else, because of this, international business has to be done.

  4. In every country, there is a difference in labour, productivity, and also in the production cost. 

  5. No country is in a position to produce a better quality product at lower cost


Benefits of International Business

  1. Benefits to Nations

  • Whenever we export anything in the foreign countries, whatever payment is received is always received in the currency of the other, the currency which is accepted in the other country. Due to this, we get foreign currency and the country gets foreign exchange, which is very important in the development of a nation.

  • Now we can use resources in a better way, we can use resources in an effective way, which means that anything that is too much in the country soon will not get wasted. We can export it in another country which was not available there before.

  • Due to this, nations witness financial growth. It means that when a lot of countries start business internationally, then the revenue is higher. Therefore, due to which the growth rate of GDP increases. Hence the number of jobs also increases and poverty will be eradicated.

  • Due to this, the living standard also rises for humans because now they will get more jobs, when they get jobs, they will get more money, due to which their lives will be good, due to this, the entire nation also has an impact, that is, unbalanced regional development will now become balanced regional development, it will start to decrease the difference between rich and poor.


  1. Benefits of Firm

  1. When someone does a domestic business, then the chances are quite limited to earn a profit there because the product he owns can be spread in a limited area only. However, the coverage of international business has increased at the same time. Due to which, the profit is increased exponentially.

  2. Due to international business, the production capacity of a company increases because the normal thing is that earlier you had to sell in a limited area but now that you are getting more coverage, you can sell your goods for a greater distance.

  3. Chances of growth in international business increase because the product you are selling is now sold at the global level. With the help of this, the company can earn a lot of fame.

  4. There is a lot of competition in the domestic market in every country because of this it is very difficult to grow in the domestic market. That is why you get more benefits in international business.

  5. Due to international business, the vision of the business also gets a lot of improvement because now you have to sell your product globally. Due to which you start thinking distant things, now you start making more products, and it will help in growing your vision.


Export Trade

Export trade refers to selling goods and services that are produced in a home country to a foreign country or across the border.


Objective of Export Trade

  • For selling surplus goods.

  • To make better utilisation of resources.

  • To earn foreign exchange.

  • To increase national income

  • To generate employment

  • To increase government revenues

  • To create International place and cooperation

FAQ (Frequently Asked Questions)

1. Mention Three Benefits of International Business About The Nation

Benefits of international business about to nations-

  1. Whenever we export anything in the foreign countries, whatever payment is received is always received in the currency of the other, the currency which runs in the other country. It is very important in the development of a nation.

  2. Now we can use resources in a better way, which means that anything that is too much in the country soon will not get wasted. We can export it in another country which was not available there before.

  3. Due to this, the growth of any nation starts, it means that when a lot of countries start business internationally, then the revenue is higher. Due to which, the growth rate of GDP increases along with the number of jobs.

2. How Many Types of International Trade Are There?

There are 3 types of international trade

1) Export

2) Import

3) Entrepot

3. What are the Objectives of Export Trade?

The following list contains all the objectives of export trade. Take a look.

  • For selling surplus goods.

  • To make better utilisation of resources.

  • To earn foreign exchange.

  • To increase national income

  • To generate employment

  • To increase government revenues

  • To create International place and cooperation