International business is a concept which may seem too big to comprehend. But, in reality, the concept has the same criteria as doing business within one’s own country. The difference comes in because of a lack of knowledge of a country’s social and environmental views. All the same business concepts are used. For example, a business must still calculate their policy, advertising, pricing, and distribution, but they must do it with an international view. This understanding of the international community includes each county’s legal system, economic system, accounting processes, local culture, and language to name a few.
A company’s objectives and how they will carry out their business in a global environment is affected by societal and physical factors. Some of these factors include modes of transportation, political and legal policies of the participating country, competition regarding price and innovation, and cultural differences. A possible problem that many companies don’t realize is the cultural differences between them and a different county from their own. This is why research and development is so important prior to the actual transfer of their products and services. Shipping is an expensive part of globalization and if the end consumer can’t afford the end price of the product,, there won’t be a lot of sales made. This causes the company to lose money instead of showing a profit. In some cases, doing international business can be more detrimental to a company than an asset.
International business and globalization of most countries is a result of several different changes in recent history. Some of these include but are not limited to technology, political relationships, and the removal of government restrictions. The rise of international business has been due to both the previous changes listed and also the economic struggles most countries are having right now. These companies are hoping to expand their reach to people who are not having the same economic problems which are taking place in their own country.