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SUBMITTED BY KULDEEP BHARDWAJ

Q1. Define International Business in your own words.
Ans.International business simply means when business is being
done between two parties from different countries. This business
can be of exporting or importing produced goods, raw materials,
software developing service etc. The parties involved in such
transaction may include private individuals, individual companies,
and group of companies or government agencies. In international
business, countries involved may use different currencies. Forcing
at least one party to convert its currency into another. The legal
system of countries may differ, forcing one or more parties to
adjust their practices to comply with local law. Companies can do
international business for many reasons such as increase in
sales, reducing risk and reduction in production cost etc.
International business can help a company in its growth. By
expanding internationally a company can also benefit its own
country because foreign money will come and it well help in
country growth. A company cannot depend on limit customers for
entire period, so by expanding business internationally one
company can get new customer base that can help in to gain
more profits.

Q2.What are the motivators of international business? Explain

any three.
Ans.There are many reasons to motivate a firm to expand
business internationally:
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a) Expanding Sales-Sometimes a business can exhaust its
growth opportunities at home country due to various reasons.
In that case turning to global expansion is a smart choice. In a
home country there are limited customers of a company but
due to expansion a business can build a new customer base
in another country. Entering in international market can help a
company to increase their sale. So, increased sales are a
major motive for expanding into international market and
many of the world largest companies such as Sony, Hyundai
and IBM etc. derive more than half their sales outside their
home countries.

b) Acquiring Resources-There are many countries which are less

rich in resources but have a great knowledge of producing raw
materials into fine goods and sell it into market. For example,
companies from USA.Multinational companies keeps eye on
those countries who are rich in minerals, metals and land so
they can acquire these resources and use them in production.

c) Reducing risk-Operating in countries with different business

cycles can minimize risk of swings in sales and profits. The
key fact is that sales decreases or grow more slowly in a
country that’s in a recession and sales increases or grow
more rapidly in a country that’s in a boom.
Many countries enter into international business for defensive
reason. They want to counter advantages competitors’ might
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gain in foreign markets that in turn could hurt them
domestically.

Q3. What restricts a company to go international? Explain any

three. (4)
Ans. There are various reasons that restricts a firm to go
international:
a) Distance-Let take an example of a company operating from
America. This company want to sell its products to Australia
but the distance between these two is very far.so the shipping
cost on products will be very high. Because of high shipping
cost, selling price of products will also be high. The same
products also come from china at low price because of low
shipping cost. So because of distance, American company
can’t sell its product to Australia.

b) Cultural Difference- When we are working with people from

the same, or similar, culture, it’s these shared rules that help
give us structure and agreement in how to go about doing
things, whether that’s how we communicate, run meetings or
negotiate. However, when we have to work with someone
from a different culture, the rules may no longer be the same.
Bringing different expectations, understandings, motivations,
etc. to the meeting or negotiation table may therefore cause
problems, and it does.
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c) High Nation tariff on import-A tariff is tax imposed by a nation
on imported goods. Due to high taxes, it makes imported
goods more costly, so they are less able to compete in
domestic market.