Here, we discuss transactions of international businesses and where they happen. International business comprises of all commercial activities that occur when transferring goods, services, resources, people, ideas, and technologies across national boundaries. Therefore, transactions of international businesses can occur in many different circumstances such as the movement of goods from one country to another (exporting, importing, trading), contractual agreements that allow foreign companies to use products and services from other nationals (licensing, franchising), and the formation and operations of sale, manufacturing, research, development, and distribution of goods and services in foreign markets. The article hereby discusses about transactions of international business and where they happen in the context of globalization.
Transactions of international businesses generally impact both domestic and foreign markets, countries, governments, companies and individuals. Normally, successful transactions of international businesses are those that recognize the diversity of the global marketplace and are able to deal with the uncertainties and risks of doing business across borders in a changing global market. Even if taken individually, the American market or the European market can be seen as having huge opportunities, but they may not be enough for many entrepreneurs. Seeking international growth by going global as an importer-exporter offers important opportunities. There are many advantages for engaging in transactions of international businesses, such as extending the sales life of existing products and services by finding new markets to introduce them into, reducing the dependency on the markets in the home country, and exploiting corporate technology and know-how.
Transactions of international businesses can happen everywhere when the following key factors are met. When starting a trade in international business, one must be sure that the targeted product or service will sell in the targeted culture. This is market research. Moreover, one must also see if the target market is or is not familiar with the goods or services the company is trying to sell overseas. For example, if the targeted market is not familiar with the goods or services being sold, the company may have to invest an important amount of time and money in consumer education. On the other hand, if the company is the first one to sell the said goods or services in the targeted market it can then become a big advantage. Consumers will associate the goods or services with the name of the company. Another important aspect that should be taken into consideration is the infrastructure of the country because this will certainly impact the reliability on local suppliers.
However, besides the technical aspects of transactions of international businesses, one must also pay attention to the cultural difference between doing business domestically and internationally. According to Hilka Klinkenberg, founder of Etiquette International in New York City, less than 25 percent of U.S. business ventures abroad are successful. “A lot of that is because Americans don’t do their homework or because they think the rest of the world should do business the way they do business.” Here are some tips to avoid costly mistakes when doing business abroad: build a relationship with the foreign partner before engaging in business overseas, conduct research, understand the language and cultural values, and respect the economic and political environments of the foreign country.
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