The Study of International Business Is Different from the Study of Domestic Business

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1. “Ultimately, the study of international business is no different from the study of domestic business. Thus, there is no point in having a separate course on international business”. Evaluate this statement. The international business differs from the domestic business because: * Countries are different in a range of ways: cultures, political systems, economic systems, legal systems and levels of economic development. * The range of problems confronted in an international business is wider and the problems more complex than those in a domestic business. The managers of an international business must decide where in the world to site production activities so as to minimize costs and maximize value added. They must decide whether it is ethical to adhere to the lower labour and environmental standards found in many less-developed nations. They also must decide which foreign markets to enter and which to avoid. * Firms have to find ways to work within the limits imposed by government intervention in the international trade and investment systems. Even though many governments are normally committed to free trade, they often intervene to regulate cross-border trade and investment. Managers within international businesses must develop strategies and policies for dealing with such interventions. * International transactions involve converting money into different currencies. Currency exchange rates vary in response to changing economic conditions, managers is an international business must develop policies for dealing with exchange rate movements. A firm that adopts a wrong policy can lose large amounts of money, whereas one that adopts the right policies can increase the profitability of its international transactions.
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