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Major Difference between Domestic and International Business

Updated on January 9, 2015

Domestic Business and International Business

Conducting and managing international business operations is more complex than undertaking domestic business. Differences in the nationality of parties involved, relatively less mobility of factors of production, customer heterogeneity across markets, variations in business practices and political systems, varied business regulations and policies, use of different currencies are the key aspects that differentiate international businesses from domestic business. These, moreover, are the factors that make international business much more complex and a difficult activity.

Differences between International Trade and Domestic Trade

Scope: Scope of international business is quite wide. It includes not only merchandise exports, but also trade in services, licensing and franchising as well as foreign investments. Domestic business pertains to a limited territory. Though the firm has many business establishments in different locations all the trading activities are inside a single boundary.

Benefits: International business benefits both the nations and firms. Domestic business have lesser benefits when compared to the former.

  • To the nations: Through international business nations gain by way of earning foreign exchange, more efficient use of domestic resources, greater prospects of growth and creation of employment opportunities. Domestic business as it is conducted locally there would be no much involvement of foreign currency. It can create employment opportunities too and the most important part is business since carried locally and always dealt with local resources the perfection in utilization of the same resources would obviously reap the benefits.
  • To the firms: The advantages to the firms carrying business globally include prospects for higher profits, greater utilization of production capacities, way out to intense competition in domestic market and improved business vision. Profits in domestic trade are always lesser when compared to the profits of the firms dealing transactions globally.

Market Fluctuations: Firms conducting trade internationally can withstand these situations and huge losses as their operations are wide spread. Though they face losses in one area they may get profits in other areas, this provides for stabilizing during seasonal market fluctuations. Firms carrying business locally have to face this situation which results in low profits and in some cases losses too.

Modes of entry: A firm desirous of entering into international business has several options available to it. These range from exporting/importing to contract manufacturing abroad, licensing and franchising, joint ventures and setting up wholly owned subsidiaries abroad. Each entry mode has its own advantages and disadvantages which the firm needs to take into account while deciding as to which mode of entry it should prefer. Firms going for domestic trade does have the options but not too many as the former one.

To establish business internationally firms initially have to complete many formalities which obviously is a tedious task. But to start a business locally the process is always an easy task. It doesn't require to process any difficult formalities.

Purvey: Providing goods and services as a business within a territory is much easier than doing the same globally. Restrictions such as custom procedures do not bother domestic entities but whereas globally operating firms need to follow complicated customs procedures and trade barriers like tariff etc.

Sharing of Technology: International business provides for sharing of the latest technology that is innovated in various firms across the globe which in consequence will improve the mode and quality of their production.

Political relations: International business obviously improve the political relations among the nations which gives rise to Cross-national cooperation and agreements. Nations co-operate more on transactional issues.

© 2009 Dilip Chandra

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    • profile image

      mallinath 

      3 years ago

      Thanx for good information

    • dilipchandra12 profile imageAUTHOR

      Dilip Chandra 

      4 years ago from India

      Garo - the above information was the analysis of the author, that is me. It was gathered after reading many books of different subjects.

    • profile image

      Garo 

      4 years ago

      please what is the sponsor of this website

    • profile image

      ceejay 

      4 years ago

      can you include information on the differences over domestic and foreign banking

    • profile image

      anu 

      4 years ago

      thanks for giving some valuable information

    • profile image

      meanguy 

      4 years ago

      can you suggest some ways in which an enterprise can deal with greater likelihood of major change in international compared to domestic marketing.

    • profile image

      Joshua Magwesela 

      5 years ago

      Very helpful and am so thankful

    • profile image

      rass 

      5 years ago

      need more information

    • profile image

      jody 

      6 years ago

      1-international investment is more costly than local investment because of the unexpected taxes such as withholding taxes on dividends .

      2-Reliance on foreign legal remedies: if you have a problem with your investment,you may not be able to sue the company in your home country. Then you have to rely on whatever legal remedies are available in the company`s home country.

    • profile image

      PRIYA BANSAL 

      6 years ago

      GOOD INFORMATION PROVIDE BY YOU IT HELPS MANY STUDENTS,THANKS!

    • profile image

      LOKESH DADHEECH 

      6 years ago

      helpfull for my study and increment of knowledge . thanks for sharing

    • profile image

      Md. Emtiaz Ahmed Sohan 

      6 years ago

      Thanks for the differences but need more difference points, overall good...

    • profile image

      trupti 

      6 years ago

      need some more information

    • profile image

      Chands 

      6 years ago

      Well done, mate! This is pretty informative. However, I do believe that there are more differences than you have mentioned.

    • profile image

      Grace .E.Robert 

      6 years ago

      Thanks a lot. My assignment was made easy.

    • profile image

      Ajayi Gabriel.unergraduate fedpolyede 

      6 years ago

      What a commedable write-up indeed. Despite its age,it still relevant with the current studies. Nevertheless,it will be more appreciative and helpful if research can be caried out on the similarities between the two forms of business.thanks for the good work.

    • profile image

      Ajayi Ronke 

      6 years ago

      This is indeed a great job,but i shal be grateful if u can write something on d similarities btw d two.GOD bless

    • profile image

      Taiwo samson 

      6 years ago

      to much, i realy apriciate this write up it help me in my assignment in school. but i will be very grate if i can see the similarity of international trade and domesric trade.

    • profile image

      skaiser 

      6 years ago

      thanks for providing such knowledge..

    • profile image

      Owen 

      6 years ago

      Tabulated differences would do it better for me.

    • profile image

      pradnya zope 

      6 years ago

      thanks for giving an usefull information.can u please give me in detail the difference between international and domestic companies.

    • profile image

      navneet rai 

      6 years ago

      it is quite and simple to understand

    • jacobspage profile image

      jacobspage 

      6 years ago from Texas

      Great info, Great HUB.

    • profile image

      vaishnavi 

      6 years ago

      i found this topic quite interesting after reading this article thanxxx

    • profile image

      mktmamun 

      6 years ago

      you infromation is really good.which will help me lot to make my assignment great

    • profile image

      kavitha 

      6 years ago

      Nice work. Felt very happy by reading this. keep it up. Thank you so much..

    • profile image

      gaurav 

      6 years ago

      thanks for giving some nice information.

    • profile image

      Onyemalu Janevine Adaora 

      6 years ago

      Nice work. It really helped me in my International Economics Assignment. But pls I need more differences

    • dilipchandra12 profile imageAUTHOR

      Dilip Chandra 

      6 years ago from India

      Sharath Lee, received your e-mail and i've gone through the same as well. Before you write your assignment, difference between international and domestic business, instead of directly jumping into differences between the said two, try to put some information on International business and Domestic business. Go through my articles on them. Follow the links:

      https://hubpages.com/education/International-Trade...

      https://hubpages.com/education/Domestic-Trade...

      Please feel free to contact me if you have any questions or comments.

    • profile image

      roshini 

      6 years ago

      Thanks a lotttttt........ it is very usefull 4r my assignment.......

    • profile image

      s.vijayvarman cms 

      6 years ago

      this page useful for my seminor topic thank uuuuuuuuu

    • profile image

      Dungar 

      7 years ago

      i want more difference.

    • profile image

      sushma sharma 

      7 years ago

      thank uuuuuu

    • profile image

      Jobayer 

      7 years ago

      Thanks a lot.

    • profile image

      nitsimran singh 

      7 years ago

      itzz nice.. thanks 4 info.

    • profile image

      rakshika 

      7 years ago

      thanx

    • profile image

      SIVA 

      7 years ago

      IT HELPED ME A LOT IN MY SEMINAR. THANK YOU.

    • profile image

      md fahim bin nizam 

      7 years ago

      kub nice akta assignment leklam.........thnx of google...

    • profile image

      nancy leone 

      7 years ago

      thax so much GOD BLESS

    • profile image

      fajfA D aaslaa 

      7 years ago

      hi like to see this site

    • profile image

      Excellency 

      7 years ago

      Encouraging.u can do better dan dis...

    • profile image

      NJOUFAC EMELDA 

      7 years ago

      THE INFORMATION WAS OF GREAT HELP.THANKS

    • profile image

      Faith 

      7 years ago

      Usefull and helpfull info. Nice work.

    • profile image

      nyasha 

      7 years ago

      thank you for the wonderful info.it actually helped me than i thot.keep on helping.thank you once again

    • profile image

      musie_melese 

      7 years ago

      much thanks for the articles u included , but somewhat need to add additional significant difference b/n them...

    • profile image

      kanwal 

      7 years ago

      this is really helpful but i want more information

    • profile image

      Bhavik 

      7 years ago

      nice, helped me a lot in my social studies assignment..............

    • profile image

      ammar 

      8 years ago

      thnax

      it helped me alot in my assignment :)

      keep rocking :)

    • profile image

      tipu 

      8 years ago

      enough for my assignment...thnx...:)

    • profile image

      Avinash yagati 

      8 years ago

      very important informations thanks every body must know the basic differences between domasti and international markets.

    • dilipchandra12 profile imageAUTHOR

      Dilip Chandra 

      8 years ago from India

      Deeksha... Also see International Trade for more information. Thanks for the comments.

      https://hubpages.com/education/International-Trade

    • profile image

      DEEKSHA 

      8 years ago

      Its Really Good, But its Better to give More Information..

    • profile image

      fareed tamim 

      8 years ago

      it help me a little bit,but you need to make more clarification, so that one can understand easily

    • profile image

      zn 

      8 years ago

      helpful,but limited.

    • profile image

      Abiodun. O. Blessing 

      8 years ago

      Kudos to you with this comprehensive effort you have made to put something relevating for the entire nation to see and utilized, please can you put more effort....,

    • dilipchandra12 profile imageAUTHOR

      Dilip Chandra 

      8 years ago from India

      Nenu, Amrut, AHTSHAM and AHMER thanks for ur comments. AHTSHAM and AHMER i got ur requests, well i'll do my best... perhaps i'll open a new hub for this or else i'll publish them in my blog... i'll write that here when am done.

      thank u again for ur comments.

    • profile image

      AHMER 

      8 years ago

      I WANT THE BUSINESS DIFFERENCE IN HEADINGS FOR MORE EASY UNDERSTANDING

    • profile image

      AHTSHAM 

      8 years ago

      we need more comments not only comments . we want actual shape of differences with the middle line at one side show domestic and other side show international differences

    • profile image

      Amrut 

      8 years ago

      Thank You For Giving A Nice Information.

    • Nenu profile image

      Nenu 

      8 years ago

      Thanks For Giving Such A wonderful Peace Of Information.

      I Would Like To Put it on my blog.

      Keep It Up.

    • dilipchandra12 profile imageAUTHOR

      Dilip Chandra 

      8 years ago from India

      aishwarya, Devaki, sreya - i have already added more differences.

      shailesh gururani - international business hub was opened, follow the link given at the end.

      murtala k ceesay and all others, thank you for your comments

    • profile image

      murtala k ceesay 

      8 years ago

      this is really helpful in the studies of so many people around the world, thank you soo very much

    • profile image

      sreya 

      9 years ago

      very helpful information,need some more differences..

    • profile image

      Devaki 

      9 years ago

      Nice to see your effort. Could you please develop more differences here?

    • profile image

      shailesh gururani 

      9 years ago

      this is really helpful but i want in detail from beginning what is international business,scope, difference and almost all topics about this

    • profile image

      aishwarya 

      9 years ago

      we need more differences.... pls..

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