Difference between International and Domestic Business

Business is done in order to earn profits, however some people do business only in domestic markets while others do it internationally. So what is the difference between the two, well given below are the differences between international and domestic business –

  1. While doing international business one is dealing with all types of customers from all over the world and due to that its quite complex to interact with different customers because of various barriers like language, culture, distance and so on but doing domestic business is much more easier as one knows how to tackle the customers because one has live and dealt throughout his or her life in the country and also there is no problem of language, culture and distance which is there in international market.
  2. Factor of production like land, labor and capital are very important for any business, while in international business there is less mobility of these factors due to distance constraint whereas in domestic markets one has the luxury of replacing these factors of production and hence it helps the company in saving lot of costs because in case of international market the factor of production are expensive and also they are difficult to replace whereas in case of domestic markets factor of production are much cheaper and also they can be easily replaced.
  3. Consumer tastes and preference plays a big factor because in case of domestic business one can sell his or her product all over the country without any change being made to product but in case of international business one cannot do that because every country has its cultures, value, tastes and traditions. So for example if food restaurant chain which is popular in America selling non vegetarian food items cannot be successful in countries where majority of people eat vegetarian food products.
  4. In domestic business one has to deal in 1 currency only while in case of international business one has to deal with many currencies and hence the company doing international business must have proper foreign exchange management in order to deal with foreign exchange volatility and also hedge the future positions so that company do not suffer any loss from foreign exchange volatility.
  5. Domestic business scope is limited when one look at potential volume of sales and profits whereas in international business scope is unlimited in terms of potential sales and profits because there are multiple countries where one can sell his or her product.

Hence from the above one can see that there are significant differences between domestic and international business.

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