DOMESTIC VERSUS INTERNATIONAL BUSINESS

International business has been the outgrowth of domestic business.  Almost every big corporation such as Honda, Mitsubishi and Toyota began their operations in the domestic market before expanding into the international market.

Several Indian pharmaceutical firms like Ranbaxy, Dr.Reddy’s Lab also started operations domestically before making their foray in the international market as an exporter.  As a firm increases its scale of operations it enters into international market. Although international business is an extension of domestic business, yet there are significant differences between the two :Business firms face risks on account of the unpredictability of operational and financial outcomes. International business  firms operate in situations of increased risk arising out of the multiplicity and diversity of their working environment.  International corporations work in multiple financial environments, receive payments in different currencies, and deal with harmonization of firm accounts from subsidiaries in different countries. Market supply and demand conditions in the domestic market differ significantly from the international market. There are some of the differences and complexities, which create more opportunities as well as more risk and uncertainty for international business firms.