International business entails business transactions across borders. Various commodities and services can be exchanged for money in foreign countries. Other factors that are likely to influence international trade include insurance, banking, finance and construction. International trade therefore views marketing and production as a worldwide issue. Nationwide business on the other hand is one that has several branches within a country’s borders. Such a business operates domestically. Exchanges of commodities and services occur within a country’s borders. Both nationwide and international businesses have differences in terms of levels of: access to markets, management capabilities, technology, business environment and financial base (Maxcy, 1).
Access to Markets
An international business organization is one that has a customer base in more than one country. For this reason, prices of these products vary with regard to that country’s economy. Generally, international trade set lower prices as compared to similar products from companies in the foreign country. As a result, demand for these products rise. A larger market base is therefore created. In addition, international provides goods and services that would otherwise be expensive in case they were offered by domestic companies. Following this, demand for these products rise creating a larger market base for that particular international organization.
Nationwide business on the other hand, has a fixed market size that is limited only to a country’s borders. (Diez-martin, 20). We find that when a business organization establishes several branches countrywide, more customers are obtained and as a result more profits are made. However, the size of customer’s base cannot go beyond a certain number as compared to an organization that practices international trade. In a domestic set up, prices of goods are normally relatively higher than those manufactured by foreign companies or those that are imported. For this reason, profits are likely to go below the targeted amount. Therefore, an international business organization is likely to attain a larger profit margin than that business that only operates within a country’s borders.
An international business organization is able to hire highly skilled labor as compared to that organization that only operates in one country. Managerial posts are sensitive and crucial to an organizations progress and profit making. Human resources management requires highly experienced personnel that are likely to handle the diversified staff who share different beliefs, religion and culture. We can therefore say that an international organization is able to manage staff well in order to realize the best output. This is very important for the survival of the business in an industry that has high competition for market share. A nationwide organization is able to afford skilled and semi-skilled labor (Ruigrok, 1). This means that management of human resource is not likely to become efficient. For this reason, the business may record low levels of output and profits.
Moreover, an international business is bale to establish a strong foundation of marketing when the managerial post is offered to a highly skilled person. Marketing is essential for any business since customers get to know that the products exist and they are also able to know the benefits obtained from consuming such goods. A nationwide business cannot afford that kind of labor and therefore marketing of such products is done in small scale. Generally, a nationwide business has the capacity to collect more profits as compared to a nationwide business since it can hire highly skilled labor.
A nationwide company is likely to purchase small computers that may be used in business operations. They are likely to use cheap mode of transport. This is because they can’t afford to obtain very expensive capital. An international company, on the other hand, is bale to acquire super computers that can be used to develop an integrated system that would smoothen business operations worldwide. They are able to afford better mode of transport since they have the finances to do this. In addition, they have to deliver goods safely to foreign countries which requires them to have better transport systems. Technology has therefore affect both nationwide business and those that operate across borders (Maxcy, 1).
The Business Environment
The political hostility of one country can stop the operations of an international business as opposed to that nationwide business situated in that particular country. Therefore, political environment affects these two businesses in different ways (Ruigrok, 1). The socio-cultural environment also affects these two businesses differently. For instance, an international company experiences a wide range of cultural diversity as compared to that company that is established in a country a small range of cultural differences.
Financially, a nationwide business has a low capital base as compared to that organization that has developed branches countywide. Following this, the quantity of output in an international business is higher than a nationwide business that has a smaller capital base. In respect to this, an international company is likely to make more profits compared to a nationwide business. (Diez-martin, 19)
An international business operates beyond a country’s border as compared to a nationwide business that has its operations limited to the geographical borders of a country. Therefore, an international business has highly killed labor, a lesser challenging business environment, a broader financial base and uses sophisticated machines as compared to a nationwide business.
Maxcy, George. The Multinational Motor Industry (RLE International Business). Routledge, 2013.
Díez-Martín, Francisco, Alicia Blanco-González, and Camilo Prado-Román. “Explaining nation-wide differences in entrepreneurial activity: a legitimacy perspective.” International Entrepreneurship and Management Journal (2016): 1-24.
Ruigrok, Winfried, and Rob Van Tulder. The logic of international restructuring: The management of dependencies in rival industrial complexes. Routledge, 2013.