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.
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